brokers ---? know them

Brokers want your business. The unscrupulous ones (more than you may think) will say almost anything to get it. Others will try to bribe you to sign up with cheap offers, but their service may be incompetent. Be wary. Read the few paragraphs below before you choose your broker

Online brokers

The online broker advantage

Users of the Bargain Hunters' Investment FlexiSystem select their own stocks, although they may take into account the views of others.

Does this describe you? If so, you are better off using an execution-only stockbroker, which will execute your order without giving advice. The majority of these now operate online.

Online brokers have four practical advantages. They are cheap; they are accessible to some extent 24 hours a day; they offer a fast service; and they will deal in small sizes.

Online broker check list

Back up service: check that your broker offers a telephone dealing service in case of system failure.

Security: check that your broker is using 128-bit encryption software. This is a powerful version of the software that scrambles (for security purposes) information passed between you and the broker.

Dealing costs: find a suitable charging structure. A broker with no minimum commission will usually charge less for small deals but more for large ones. This is good if you deal in small sizes. A broker with a substantial minimum commission will work out cheaper if you invest in large sizes.

Limit orders: use a broker that accepts limit orders. These are when you instruct your broker to deal at not more (or less) than a specified price.

Dealing hours: check if your broker deals outside London trading hours, if you want this.

Fantasy trading: some brokers offer a facility for mock trades. This can be good practice, although it is no substitute for the real thing.

Financial news and data: the quality of such provision varies between brokers, but is improving all the time. Similar material is usually available elsewhere on the Web.

One-stop financial shopping: brokers are becoming more like banks. Check that your broker offers, for instance, a good rate of interest on your cash balance. Some offer cheque books.

US and other foreign dealing: Facilities vary between brokers. If you plan to deal a lot in the US, consider opening an account with a US broker.