How to choose the best online trading broker
If you are looking to invest, you definitely need a brokerage service that works alongside your investing goals and learning needs. If you are a seasoned player, this may not be tough. Still, it may get confusing to select the right online stock brokers you can trust with your investments if you are new in this area.
You must be aware that trading is not a safe arena, and you may not get returns for your investment at times, but to have any success, you have to choose the best broker, knowing that suits your needs.
So how do you choose a broker? We have listed here a few important points to be noted while selecting one.
Find out the fees:
Let us start with the basics. But, first, you should obviously clarify how much you will pay to a particular brokerage. Remember, you may want to look for the one with cheaper fees, but you will also want to lose a minimum of your investment returns on the trading commission.
Investment diversification:
If you are looking to create a diverse portfolio, you should look for a brokerage that offers various options like individual stocks, mutual funds, bonds, and cryptocurrency trading.
Look for reliability:
You will find countless brokers out there. Some are new, and some have been around for decades. It obviously may feel like going for the seasoned brokers, but that is not the only safe bet. The newcomers are not untrustworthy. You need to verify their credentials and also look at their clientele list. New brokers may bring in an innovative perspective of trading you did not know about. They will also charge lesser. Hence it will be no harm to give them a try for small trade and switch to bigger ones once they gain your trust.
Check for their account minimums:
Most high-ranked brokers do not demand an account minimum, but there are certainly a few who seek minimum initial investment, which can be higher than what you would like to spend. Therefore, you may miss small details if you are not careful in reading all the clauses. Also, many mutual fund accounts need you to invest a minimum amount, despite opening a brokerage account with a small amount. You may find it tough to invest further then.
Consider education tools:
If you are a new player, looking for a brokerage that offers free educational resources such as tutorials, guides and webinars can be beneficial in the long run. In addition, the brokerage should help you learn the trading tools and understand the trading strategies, considering all the risks. Also, support from reliable on-call customer support should be sought in the process.
Trading commissions:
Apart from the brokerage fee, also check out how the brokerage will charge a commission for trades. For example, does it depend on how often you trade or how much you have invested through the brokerage firm?
For example, certain firms charge a trading commission based on the size of your account, whereas others may determine trading commission based on the volume of trade per quarter.
Figure out your trading strategy, and once you know how often you wish to trade, you can find a brokerage that charges a commission based on the parameter, which is beneficial for you.
Also, if you plan on trading, not just stocks but on bonds, mutual funds, and other options, make sure to determine the fees and commission beforehand to avoid any surprises.
Test the broker’s platform:
You should figure out the tools and resources the brokerage is using. Any decent brokerage will have multiple resources of high quality. Remember, your money is on the line here, so you cannot be careless about this information. If the broker lets you sign up for free, it is wise to access the trading platform before committing to anything.
A few brokers offer web-based platforms, whereas others let you access a free downloadable platform. Try to access the platform in whichever way possible to give it a test drive.
Obviously, you cannot access the pro tools with a free account, but checking out what they are offering free will give you an idea of the brokerage. If their standard platform itself does not seem promising, no point in wasting your precious time to check their advanced platform. You can always move on to explore a new brokerage.
The bottom line:
Choosing a broker is one of the make-or-break situations, which is why take your time until you are convinced. If you feel the broker is not meeting your expectations after a certain time period, you can always switch. Remember, the golden rule of trading is to keep your savings fund separate and set up a limit until you can lose money to know when to pull out from a trade timely.
Sources:
https://tradingguide.co.uk/awards/trading-platforms/
https://www.investopedia.com/
https://en.wikipedia.org/wiki/Day_trading
