What You Need to Know When Opening a Real Brokerage Account

Now that you have spent a few months learning to trade on a stock market game site like WallStreetSurvivor, you might be ready to open a real brokerage account and start investing your real money.

Opening a Real Brokerage Account

Before you risk your real cash, however, you need to be aware of what to expect when you open your first real brokerage account. You should also be aware of what differences you might see between trading in the real world compared to trading on a stock game.

Differences Between A Stock Market Game Account and a Real Brokerage Account

When you are about to open your first real brokerage account, you should consider the following:

  • Choose your first brokerage account wisely. Competition is fierce for new brokerage accounts. That is really good news for people looking to open a new brokerage account. So make sure you find the right broker based on the type of trading you want to do, the frequency of trading you expect to do, and the amount of money that you will put in the account. Currently there are lots of great incentives like “free commission for the first 60 days” and “$600 bonus cash.” So choose the one that’s best for you. Here is a link for the most complete review of the top 17 online stock brokers: See the BEST REVIEW of online brokers.
  • It will take you 3-5 minutes to complete your brokerage application. You will have to give your Social Security Number and agree to some NYSE and NASDAQ Exchange Agreements. The applications also typically ask for your investment skill level and portfolio objectives. Some even ask about how much risk you are willing to take.
  • You probably can’t trade right away. Once you give them all the information they want, you still need to fund the account. Depending on which brokerage you choose, you might be able to fund it with an ACH transfer. Otherwise, you will have to write and mail a check. So that could take a week or longer. Here is a comparison of all of the different requirements by broker.
  • You will find the first couple of trades to be very stressful. When you are using virtual cash in a stock game, you really don’t care too much if you lose money. But when it is your REAL CASH, you should be much more conservative. You should also invest slowly until you get your confidence up. Nothing is worse than opening a brokerage account with $5,000 and losing 5% in the first week. Don’t invest all of your money on the first day your new brokerage account is open. Chances are the market have a 5% correction the next day because the FED did this or the President did that.
  • In the real world, your orders don’t always get filled perfectly. In a stock game, you get quoted a price and your whole order will get filled at that price. But in the real world, the market is extremely dynamic. By the time you see a quote, the quote has probably already changed. For example, you may see an ask price for a stock at $30.00. If you place a market order to buy 500 shares you may get 200 shares filled at $30.05, 200 shares filled at $30.07 and 100 shares filled at $30.10
  • Be aware of hidden fees. Some brokers charge you more if you place an order over the phone. Some may charge you if you want a hard copy statement mailed every month. If you plan on opening a margin account, make sure you know what interest rate you will be charged on your loan balance. See a comparison of broker fees.
  • You can’t undo a trade. Make sure that the trade you are making is the trade you really want to make. In the real world, you can’t cancel or delete a trade. The most common rookie mistake for people opening their first brokerage account is making the wrong trade. They decide they want to sell a stock, they click on the stock in their portfolio and accidentally buy it again instead of selling it. Take advantage of the “order preview” screen! Make sure you are really buying what you mean to buy and selling what you mean to sell.
  • You can’t day trade with a small account. If you open an account with less than $25,000 in it, your broker will only allow you to make 3 day trades in any consecutive 5 day period. If you make more than 3 day trades within a 5 day window, you will not have access to your funds immediately and they will make you wait 3 days before you can trade again.

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