Choosing where to open your trading account is a more significant decision than it may first appear. Finding the right trading platform — the one that best matches your specific needs and expertise while offering the right group of features — is the first step toward creating a successful trading approach.
For most investors, this means wrestling with one of the most common questions in the investment space: Do I use a deep discount brokerage, or go with full service?
How Deep Discount and Full Service Brokerages Differ
In life, you generally get what you pay for — and that’s a rule that certainly applies to brokerages. The fees you pay will correspond with the level of service you receive.
The deep discount model offers comparatively few services and features, often providing little more than the execution of trades for discounted flat fees. The deep discount model, with its limited investor resources and “do it yourself” format, has grown in popularity in parallel with online trading.
While some deep discount brokerages do offer more customized features and functionality, they typically charge an added fee for these services, thereby reducing any cost savings.
Full service brokerages, on the other hand, generally give clients an assigned broker who will then offer a wide array of personalized services. A full service broker can help with research, retirement planning, investment advisory, portfolio updates, tax issues, etc.
In essence, a full service broker will do more than simply execute trades — he will identify trading opportunities and offer counsel when needed. It’s a level of personalized service designed to help you maximize your returns and achieve your specific goals.
How to Choose Between Discount and Full Service Brokerages
Choosing which brokerage model to use is a decision that usually boils down to the needs, preferences and capabilities of the investor.
If you’re an expert trader, fluent in both fundamental and technical analysis, it could make sense to bypass the broader range of resources and professional guidance offered by a full service brokerage.
However, it should be noted that some discount brokerages may not offer the same sophisticated array of trading tools available with full service. In other words, features and functionality may be more limited.
For beginning to intermediate traders (or advanced traders looking for a more robust platform) it may make more sense to choose the full service model. Trading comes with a learning curve, something especially true for futures trading. Professional traders will be using all their skill and expertise to compete against you, so it’s important to be sufficiently prepared.
A full service broker helps even the playing field, and allows you to trade with more certainty and confidence. The insight of an experienced broker can also be invaluable when navigating the complexities of today’s fast-moving global markets.
For those seeking greater flexibility, full-service brokerages such as RJO Futures offer multiple tiers of personalized trading services.
RJO Futures offers a Self-Directed Account that allows more experienced traders to support their own analysis with a range of powerful tools. RJO Futures also offers an Full Service Account featuring an ever larger variety of trading tools and services, including access to a commodities broker.
The Takeaway
Choosing the right brokerage model is one of the first steps toward creating a sound investment approach.
For more advanced traders, a deep discount brokerage may make sense. For most active traders, however, the personalized guidance and larger pool of resources offered by a full service broker could be the ideal fit.
Want to learn more about the RJO Futures services? Visit our Futures Trading Services section for more detail. Or better yet, give us a call at 800-441-1616 and we’ll discuss the right service and platform for your trading needs.
Additional Insight For You:
There are a few common elements to successful futures trading — and choosing the right broker is one of them. Finding a brokerage that offers the right combination of technology, service and features is imperative for traders seeking to maximize returns.