The role of the financial broker has changed dramatically with the advent of the internet. It essentially democratised financial trading, meaning that anyone can now get direct access to the world’s markets. Previously, only the very rich could afford a personal broker who would place orders on their behalf.Today, online brokers handle millions of clients 24/7, and because they are trading on behalf of so many individuals and companies, their commissions are much lower than in the old days.
Work out what you’re looking for
Which online broker is right for you will depend very much on your needs and requirements. Of course, you don’t want to have to pay excessive fees and commissions, but often you get what you pay for. A cheap, no-frills broker maybe the best choice for some, but others might find it worthwhile to pay more in order to access a more sophisticated platform with a better selection of tools,indicators and charting capabilities.
Seasoned investors recommend building up a varied portfolio, and most online brokers will offer a full range of trading options, including stocks, bonds, forex, mutual and exchange-traded funds and so on. Check that they allow you to trade in the market(s) that you are most interested in, and find out what their commission is on that particular investment type. Compare that to what other brokers are charging. This is more to get an idea of what the average rate is rather than to necessarily find the broker with the lowest commission. Those that charge unusually low commissions are likely to make up the money in other ways.
Look for hidden fees
In addition to the commission there may be other fees, generally associated with particular actions. It’s common for brokers to charge you a fee when you want to withdraw or transfer funds, for instance. There may also be an annual account fee, or an inactivity fee, as when you’re not trading then they’re not making any commission. These additional fees may not be announced upfront, so check the terms and conditions thoroughly.
If you have a clear idea of how you’re going to use your broker, you can find one that gives you what you need at the best price. For instance, if you’re new to financial trading then you may want to choose a broker that offers a good level of educational resources. These might include video tutorials, articles and webinars.You should also look for a broker that lets you open a free demo account so that you can practise trading without risking real money.
A more experienced trader might choose a broker that has a state-of-the-art platform with access to the best range of tools, analysis, charting capabilities and technical data. Some brokers have an “account minimum” which means you have to invest a certain amount or more in order to trade with them. Not all do, and there are many excellent brokers with no account minimum, so don’t feel that you have to invest more than you’re comfortable with.
Get a second opinion
Research what real customers and clients have to say about a broker, as well as checking reputable review sites. This hot forex review by Forex fraud.com is a good example that gives a clear and unbiased overview of what this specialist broker has to offer. Get a good cross-section of opinions: one disgruntled individual doesn’t mean that a particular broker offers a bad service, but poor reviews on several different sites should definitely make you wary.
While most online brokers are trustworthy businesses, some aren’t. You should always make sure a broker is properly regulated before opening an account with them,and see what they have to say about how your funds are protected. Are they a member of the Financial Conduct Authority (FCA), the Securities Investor Protection Corporation (SIPC) or the Financial Industry Regulatory Authority (FINRA)?
The immediate security of your account is also important. Look for two-factor authentication to access your account: for instance, requiring both a password and a security question. That may seem like more faff every time you sign in,but it shows that the broker takes your account security seriously, and it will deter hackers. In addition, your broker should never sell your confidential information on to third parties, and that information should be securely encrypted.Choosing a broker can seem like a difficult decision, but the problems you’ll face are greatly reduced if you work out in advance exactly what your needs and requirements are. With these in mind, it’s just a question of research and diligence to find the one that works best for you.