Interactive brokerage allows individuals and companies to trade stocks, mutual funds, bonds, futures, and options online. Investors can choose to self-direct or receive assistance from online tools and investment firm service representatives. Fees and commissions are generally lower than full brokerage services, and some firms offer educational materials and live assistance for higher fees.
The different types of interactive brokerage are mainly focused on online trading. Some of the investment firms handle stocks, mutual funds, bonds, futures, and options. Interactive brokerage can be entirely self-directed by the investor or can include assistance from online tools and investment firm service representatives. Both individuals and companies can participate in interactive brokerage.
Many investors find it beneficial and profitable to trade stocks online through an interactive brokerage firm. Depending on the investor’s knowledge of the stock market, investment strategy, and trading protocol, he or she can reduce their costs by starting trades without the help of a live broker. Fees and commissions vary from one interactive brokerage company to another, but are generally lower than a full brokerage service.
Investors who participate in online trading generally have to know the stocks they want to trade. Some of these companies provide links to information on mutual funds, stocks, and bonds available through their e-commerce platforms. Investors are responsible for reading financial disclosure information related to their trades, including historical financial performance. If they know how to accurately analyze and read statistics and financial information, trading online can be rewarding.
Some interactive brokerage firms realize that not all investors will have the financial savvy to execute trades on their own. Brokerage firms can provide educational materials that allow investors to research different investment strategies and how to diversify a portfolio to achieve those strategies. For example, a young investor might put his age, expected retirement year, and initial investment amount into an online tool. The tool then analyzes this information and directs the investor to a fund strategy that emphasizes stocks.
In addition to educating the investor on the fund’s strategy, the tool can also suggest certain products. These products may include specific mutual funds that invest in a mix of low-, medium-, and high-risk stocks, along with some small stable fund investments. The investor then has the option of selecting the mutual fund or creating their own portfolio from the other available funds offered by the investment firm.
There are some interactive brokerage firms that offer investors the option to speak with a live representative to initiate a strategy or trade. This generally results in higher fees, which investors are informed of when they choose the personal assistance option. The actual trading still happens through the brokerage firm’s e-commerce platform, but the investor is guided through the process and receives specific trading recommendations.
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