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Finding The Right Broker Ok, so you have done some research on the futures markets, and have decided to try your hand at trading. You have by now evaluated which contracts to trade, either by interest in a specific market, or by your belief that you have good information on future market moves through your job, or contacts you deem well informed. The next decision to consider then, is choosing a broker. The current trend in brokerage houses is to offer rock bottom commissions on round turns, but very little in the way of information or support services for their customer base. Although this option is good to have, there are certain issues to consider when looking at these types of brokers. The first realization you should have is an old adage that still holds true, you get what you pay for. Though some traders are experienced enough, and pay for enough outside research to make use of these discount services, most of us will need a lot more help from a professional to be successful long term. With most discount brokerage services, you are on your own. So then, what is the alternative? Full-service brokers can be a good alternative for the novice or intermediate level trader. The basic idea of the full service broker is relatively simple, he or she should be a person who is well informed, accessible to you, and able to help you avoid some of the common mistakes made while trading. Additionally, a broker who is good for you should be well informed on the markets you are trading, and able to give you recommendations when you're struggling with market strategy. If you have traded before, you probably also know the value of having someone reliable to resolve issues dealing with problems with your equity statements, margin, or any other possible office error. The full-service broker should take care of details and problems, leaving your mind free to focus on trading. The question of commission is the last issue to address when evaluating the full-service broker. What is a fair rate? This is a very relative question. Although you should obviously price a few different brokers, to see what others in the field are charging, this question boils down to what kinds of assistance you think you will need to trade effectively. Two questions to ask yourself when negotiating your round turn rate are: A: What is a fair price for the expertise and assistance this broker is offering? B: Is the cost of using this broker an expense that you can cover, and still be profitable, on a per trade basis? Hopefully this article will help some of you to evaluate brokers with some specific criteria in mind. As a licensed futures broker myself, I find that an informed customer is usually the easiest to deal with, and more confident in his or her trading. The goal is to find an ally in your trading, somebody who is invested in you attaining your goals, and this is a good place to start. I always appreciate feedback from the trading community, so feel free to send me any of your experiences or comments. Good Trading! Scott Ervin Futures Broker servin@webvestor.com
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