Your Broker's Trading Secrets
Remember the scene from Oriental martial arts movies where the student learns that the master doesn't always teach all the moves? In other words, the master doesn't share all his secrets.
Your broker may not be your master, but the broker may not also be in a sharing mood all the time. It's always good to know what your broker is doing and why he's doing that.It is certainly not the intention of this post to slander brokers, but in the end it's important for the trader to educate one-self with the strategies of trading. The saying about putting all your eggs in one basket applies here.
Fees
One of the early mistakes a trader commits is not knowing all the fees, and we mean the hidden fees. Sometimes the trader gets too carried away by the profits that they overlook escalating fees that some brokers charge.
Be patient and spend some time shopping around for those with the most straightforward fees. Sometimes a flat fee, though it seems more on face value, may actually end up saving you more than escalating fees.
Honesty
Nothing could be more frustrating than a broker who is not forthcoming with information. Imagine if they have information about a stock that is soon to lose value and plummet and not sharing that information with you?
While this may not absolutely be an honesty issue, the consequences of withheld information is that you financial position is severely compromised.
Or consider that the broker knows about a stock that is soon to skyrocket and the information is not shared with you. You might have potentially lost out on at least a five-digit profit. How does that affect your emotions?
Faith
It's good to have faith in your broker but your broker is only human. Sometimes information that is not shared could be a one-time oversight. But if it habitually happens, then you may actually have faith that is misplaced.
In fact if information is habitually withheld, then you should already think about replacing your broker.
Do Your Own Research
Nothing could protect you better than the power of knowledge. It's not that hard to do research. Publications, subscription services and even business networks on TV can be your allies.
If a broker gets all steamed and upset about you making your own research, that should be a signal for you to unload the broker.
You're probably saying why should you do your own research when that's what you're paying your broker for.
Understand that you're not the broker's only customer. Sometimes they have staff that are probably not as thorough as they should be and they end up with sloppy results. And you have to suffer for their lack of competence.
Where your health is concerned, friends are always well-meaning and they might recommend you to a doctor they say is very good. Sometimes the doctor is not as good as advertised. Same thing happens in the world of trading.
If you are just starting out, it pays all the more to research the broker's track record. Some brokers are overworked, some are poorly staffed, while some just refuse to be forthcoming.
When confronted with these negative situations, it's always good to be prepared. Your financial standing hangs in the balance.
