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If you want that last second advice before you make a decision on an investment, you won't find it with an online broker. Trading online is using your own instinct and using your computer to make trades without investment advice from a stockbroker.
That's not to say that you can't call in your order or use a touch-tone system to place your order. If you call in your trade, anyone answering the phone will not give you any specific investment advice other than the current stock price. Also, you will probably pay more for your trade than if you executed it online. With the touch-tone system, you execute a series of "prompts" over the phone. There is no "human" interaction and the cost of the trade will probably be close to the cost of an online trade.
With a traditional full service broker, you can get specific opinions and investment advice about stocks and your potential trade. However, you could pay 20-30 times what an online broker would charge for the same trade. If you have done your research and feel relatively confident about your choice, then you don't need someone to tell you it is Okay. Besides, you will feel so much more confident about yourself when you make a good trade all on your own. Remember brokers give bad advice and make wrong decisions also. If they were perfect, nobody would trade online. In fact, MsFiscallyFit has made more money by far trading on her own instead of when she used a full service broker. This is not to say that using a full service broker is a waste of money. If you don't have the time to research stocks/investments/mutual funds, maybe you need someone making recommendations to you. Because of the higher cost in commissions you will pay with a full service broker, you are actually paying someone to do your research for you.
Here is something for you to consider. The more you pay in commissions the more your stock/investment/mutual fund has to perform to cover your initial commission cost and begin making a profit.
Example:
Online Broker
You buy 100 shares of XYZ stock @ $20/share. Your commission is $10. If XYZ stock goes up in price only 1/8 point (1/8 point = 12 1/2 cents) to 20-1/8, you have a gain of $12.50 and you have a profit of $2.50. In this scenario, XYZ only needs to increase in value less than 1% in order for you to have a profit.
Full Service Broker
You buy 100 shares of XYZ stock @ $20/share. Your commission is $200. Now XYZ stock must go up in price 2 points (1 point = $1.00) to 22 in order for you just to recoup your commission cost. In this scenario, XYZ needs to increase in value more than 10% in order for you to have a profit.
If you have the time to research potential investments, most of the online brokers have very good research for you and some have access to the same proprietary research that the full service brokers use. You can also subscribe to different research companies and receive probably more information than you will ever need. If you feel you can confidently select your own investments, then save money and trade online. However, if you feel the need to talk to someone about your potential investments and if you don't have the time to research yourself, then you should consider a full service traditional broker. At least you can blame them if your investment doesn't perform.
Next in our series Learning To Trade Online is
"Should I Take The Express Server?"
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