How To
By
eHow Personal Finance Editor
Difficulty: Moderately Easy
Step1
Know that just as in any profession, there are honest stockbrokers and dishonest stockbrokers. Many economic/consumer advisers recommend that you choose a stockbroker who is paid by the advice he or she gives, not by commission. Many stockbrokers are paid strictly on commission. The commission he or she makes is taken from the investment sold to you. If he's paid only on the amount of investment money you're willing to spend, his main goal may be to sell you stock and he may not be all that concerned about what kind of return you make on your investment.
Step2
Be suspicious when a stockbroker insists that a huge profit is "practically guaranteed." Identify these kinds of promises as stockbroker traps, especially if the stockbroker tries to keep you in the dark about the specifics and details of a type of investment stock opportunity. A good stockbroker should be willing to teach you and help you fully understand definitions and issues of the different kinds of stocks and the things you don't understand about investing. If he withholds information from you, he wants you to depend solely on him.
Step3
Identify stockbroker traps when your stockbroker wants you to make a decision quickly. She says there is no time to investigate a particular investment opportunity and you must move "now." He may act as if he is doing you a great favor by "allowing" you this opportunity to buy.
Step4
Pay attention when your stockbroker has little or nothing to say about potential risks in the stock market. Identify stockbroker traps by noticing how little a stockbroker wants to discuss the possibility of your losing money. Optimism is good, but an honest stockbroker will also be realistic with you and warn you of potential risks in shaky investments.
