How to Buy and Sell Stocks

Buying and selling stocks has become much easier for traders, who now have many choices in stock brokerages.  Traditional stock brokers are becoming extinct as more individual traders want the freedom, lowered costs, and direct access to cash that online brokers offer. Here are the three ways to buy and sell stock, and the benefits and drawbacks of each option.

Traditional Stock Brokers

Traditional stock brokers come with higher fees and transaction costs than that of online brokers, but provide services that will not be received with discount brokers. A traditional stock broker will charge from $25 to $50 to complete a stock trade. When comparing traditional stock brokers to discount stock brokers on price, the difference is tremendous, but there are more considerations to be made.

Service and Support

Having a stock broker work for you to find quality stocks is one benefit that gives individual investors the advantage. It is the job of the stock broker to make trades, thus they are interested in finding stocks for their clients to buy; however, they must maintain a good record in order to keep the investor. Stock brokers are interested in your financial wellbeing, as their earnings come directly from how much they are able to make their clients.

Stock Brokers are Always on Call

If you enjoy full service, opt for a traditional stock broker. You'll be able to call your stock broker directly to discuss possible investments or to make an independent trade you have found yourself. With large amounts of money, a stock broker in the traditional form always makes more sense, as you will have professional advice at cut throat pricing, along with someone to call and trust.

Discount Brokers

Online discount brokers are at the center for individual investors. More and more people are flowing to online brokers to make stock trades because of the lower rates. People who use discount brokers should not expect the same level of service, but should enjoy the lower commissions of $5-$15 per trade.

Help and Service

Discount brokers offer broker assisted trades, where investors can talk to a stock broker over the phone to complete a trade. For most trades, broker assistance is not needed, but if an investor would like to speak to a professional, the offer is always there. In these cases, you can expect to pay up to $40 per trade, which may be well spent if the help is needed.

Direct Purchase Programs

Stock can also be purchased directly from corporations in direct buy programs. These come with zero commission and generally allow the purchase of up to $100,000 worth of shares without any fees. Unfortunately, this method is best only for long term investment,s as it can take a few days to make a transaction at a price that is not minute to minute. This is ultimately the best option for investors who want to make a decade long ownership purchase rather than buy and sell short term. There are over 1000 companies currently offering this type of service, but only the biggest of names will be found on the list. Smaller companies, as a general rule, do not offer direct purchases.