Market making revisited. How to pick a brokerage house to do your investment?
Many people who started to invest, try different brokerages. Trying to get experiences from other investors, who are just as ignorant; is no way to find a good brokerage house. The way to pick a brokerage is to look at the volume and stocks they handled as a market maker. Volume of stocks you are interested are shown at this web site:
nasdaqtrader.com
After you have seen the market makers involved on the stock you are interested, you can then look up each market maker (symbols needed)and discover all the stocks they do make a market and sometimes as non-registered market maker. Some large brokerages handle 12 pages of stocks. Some smaller ones handle one page of stocks. The volume they handled shows you how big a market they maintain. That is very important, for the size of holding you have to trade at that brokerage house. The liquidity of stock and cash, if you will. Otherwise, every time you trade, the brokerage has to contact another market maker, adding more cost to your transactions. If there are a large number of investors at the brokerage house, and a large volume is traded; you probably will get your best prices. Full service brokerages charge more, but they also offer advice. Internet brokerages has lowest commissions but limits your maximum shares per trade. Discount brokerages offer lower commissions but higher stock prices, when they buy from other market makers. The more business, however, the better standards of business ethics, they will try to uphold. |
