How To Choose The Best Online Stockbroker For You

Jump to page contents

How To Choose The Best Online Stockbroker For You

One of the first steps in your investment journey is to understand the role and benefits of a stockbroker. Once you have those topics covered, its time to start comparing several different stockbrokers to choose the right one for you. The fastest option for you to start trading online is through an online broker. Apart from offering you the lowest fees, this type of broker normally offers the most extensive online tools, trading platform, and mobile applications.

A one-size-fits-all approach doesn’t work for most of life’s processes, and online trading is certainly one of these. This guide will identify the key features of online brokers which you should compare, and also offer some recommendations based on actual user feedback.

Identify Your Needs

Its no use comparing online brokers if you don’t first understand your trading preferences and needs. If you are new to the trading game, one of your needs can include getting access to educational information and other trading guides. You might also be looking for responsive and helpful customer care staff and the opportunity to use a demo or test account.

On the other hand, if you’re an experienced investor, you might be looking for an online broker who can offer you detailed resources provided by professionals in the field. You might also wish to have access to charting information which goes beyond the basics. Furthermore, you might also be looking for one platform that can accommodate trades in different markets, ranging from shares to securities and cryptocurrencies.

You must also consider how much time you wish to dedicate to trading, and what volume of daily or weekly trades you will place. If you are looking to primarily short sell or day trade, then you will need to have frequent access to your trading platform. On the other hand, if you are looking for longer-term investments you might only check into your account once a week.

Be Selective

Intense competition between online brokers has resulted in an increase in features and trading options. Using your trading goals, you can filter out platforms which do not offer the suite of features and services which you require. Here are just a few examples of how you can be selective:

  • Trust & Reputation  – Find out if the broker is licenced or regulated and what other users have to say about it. Does it require any KYC during registration or will it accept just about anyone? User reviews are a great way to distinguish between a reputable online broker and a possible scam.
  • Safety & Security  – With an increase in cyber attacks, the best online brokers are constantly implementing new safety features, including two-factor authentication. Another popular security mechanism is the use of encryption for data and payment transfer.
  • Tools & Markets  – Does the broker offer the trading options and automatic instructions, such as limits, that you require? If you are looking at margin trading, does the platform support this instrument? The top online brokers understand that traders are looking for diversity, and seek to offer an increasing amount of potential markets to invest in.

Understand the Fee Structure

Fees are, without a doubt, the most misunderstood element of an online stockbroker, and they are often the most significant factor. Once again, the effect which fees have on your decision is determined by your trading goals. If you are looking to open and close positions regularly, for example, fees can really add up and eat into your profit margin. Consider the following when comparing fees of different brokers:

  • Account Opening Fee – Most reputable online brokers do not charge an account opening fee, but if one which you are considering does, you need to factor this into your comparison.
  • Maintenance & Inactivity Fees – Consider periodic fees which you might need to pay if you do not trade often enough.
  • Commissions & Spreads – This is where most brokers make their money, but these fees are normally the ones which are competed on the most.
  • Financing & Overnight – If you are looking to trade on leverage or with margin you will need to consider the interest rates which apply.
  • Deposits & Withdrawals – Some brokers charge you when you place deposits and/or withdrawals. Sometimes the payment methods also affect the ultimate fee.

The brokers you are considering might charge different or additional fees, so it is important that you request all information regarding fees before you settle on the broker. In addition, several top brokers offer different fee structures based on which assets are being traded.

Give the Broker’s Platform a Trial Run

Virtually all reputable stockbrokers offer you the option to trade using a demo account, where your own money is not affected. The level of functionality of such accounts varies, but you would ideally have the opportunity to test all of the platform’s functions, including access to educational material and charts.

Plus500 offers one of the best demo trading platforms on the market. Available on both desktop and mobile, the test account is based upon real events, leading to the same results you would achieve had you used your own money. Plus500 is best suited for experienced traders looking to invest in CFDs across several markets.

76.4% of retail CFD accounts lose money

Does the Broker Inform the Potential Investor?

The best online brokers want to see the majority of their users succeed, as they understand that a successful trader is a returning trader. One of the key ways in which they aim to do this is to provide sufficient, detailed, and comprehensive educational resources. These resources need to be easy to access, verifiable, and easy to use. Educational support for beginners and experienced traders are different, so you need to ensure that the brokers you are considering provide knowledge and analysis based on your experience level.

Moving of Funds: Is it Straightforward?

Whether making deposits or withdrawals, it is very important that your online stockbroker offers multiple convenient payment methods and fast settling of funds. While deposits are generally more straightforward, making withdrawals can sometimes be complicated, or take longer than you would hope. Research all of the broker’s payment requirements, which may also include KYC procedures, before making a decision.

eToro is an online broker which is renowned for offering a comprehensive list of payment methods, ranging from debit and credit cards to bank transfers and eWallets. Furthermore, eToro also allows you to use PayPal and, in certain trades, even cryptocurrencies. Generally, withdrawals are processed within one business day, while deposits are often instantaneous and free.

75% of retail CFD accounts lose money

Customer Service

Customer service is an often overlooked feature until it becomes necessary. Most of the best online stockbrokers split their customer service offerings into two parts. For those looking to get instant answers, platforms offer details Help and FAQ pages, where you can search for your query and get answers with relevant links. This section is normally always accessible round the clock and available both on the web and mobile platform.

In conjunction with these information pages, most brokers offer one or several options to get in touch with a customer care representative. The most popular tool is a 24/7 live chat, but some platforms may offer alternatives, such as an email, contact forms or a callback service.

Get the Ball Rolling

When deciding which stockbroker platform to use be careful not to be swayed by the one which best succeeds at its marketing efforts. Use the information provided in this guide to compare the substance of different brokers, as you will eventually be trusting your money with your broker of choice.

Before you commit to a broker, you should test at least two or three with a few demo trades. Once you do decide on a broker, make sure that you use all the tools and resources at your disposal to make successful trades. Trading is a skill which is acquired over time, so you must dedicate time for research and testing. This is especially true if you are looking to make trading a full-time career.

Concluding Thoughts

Online trading has made the stock markets and other financial institutions more accessible to individuals with no prior trading experience. This has led to an increased interest, which had also led to growth in trading volume and trading capital. You can join this growing trend and enjoy the potential benefits of trading one or more of the thousands of assets and instruments available at the best online trading platforms.

Choosing the right online broker for your needs is very important. An inefficient relationship with the online trading platform can lead you to unsuccessful trades and loss of money. On the flip side, choosing correctly could lead you to continually improve your strategy and register a successful number of profitable trades. Ultimately, you should always seek to invest what you can afford to lose so that you never allow emotions to trump your strategy.

Recently Similar Guides

casinoin-promotion etoro-promotion

Latest Guides

CFD Trading Platform,Plus500,Trading

Plus500 Fees Explained in Detail

Plus500 is one of the world’s best-known trading platforms for Contracts for Difference (CFDs). These are financial instruments which let you invest in a variety of assets without needing to purchase and store them. As a result, CFDs are more convenient and faster to trade, allowing investors to short sell assets and trade using leverage. […]

26 May, 2020
Cryptocurrency,Forex,Margin Trading,Trading

Sortino Ratio

In the world of mathematics and statistics, when one individual develops a theorem or formula, over time, it is usually revised and/or used to derive other formulae and theories in the industry. In the case of the Sortino Ratio, it is an offshoot of what Professor William F. Sharpe came up with when he introduced […]

21 May, 2020
Cryptocurrency,Forex,Trading

What is MetaTrader 4?

If you’re going to cross a big river, you need a boat or a bridge. If you are going to trade Forex online, you need specialized trading software. Once installed on your computer, the software becomes a bridge connecting you to the Forex market. MetaTrader4 Defined MetaTrader4 or MT4 is a common trading platform that […]

18 May, 2020
Bitcoin,Blockchain,Crypto Wallets,Cryptocurrency

What is Bitcoin?

So, What Exactly is Bitcoin? Bitcoin breaks down into two distinct components, a blockchain protocol and a cryptocurrency, the first usable examples of both, designed to facilitate transactions in a peer-to-peer, decentralized manner. The cryptocurrency Bitcoin is a portion of code that represents an immutable digital token, similar to a digital gold coin that could be instantly broken down and […]

12 May, 2020
Cryptocurrency,Forex,Margin Trading,Trading

Sharpe Ratio

Over the years, several methods have been devised by statisticians, economists and mathematicians to measure the performance of tradable assets such as equities, commodities, stocks and currencies. One such measure is the Sharpe Ratio that was introduced in 1966 by William F. Sharpe: Professor Emeritus of Finance at Stanford. The ratio has since proven to […]

6 May, 2020
Crypto Wallets,Gambling,Litecoin

How to Get Started with Litecoin Gambling

What is Litecoin Gambling?  Without wanting to state the obvious, Litecoin gambling is pretty much what it says on the tin: gambling with Litecoin. Litecoin is a form of cryptocurrency developed in 2011 by Charlie Lee, a former Google employee (hey, that rhymes!); moreover, it’s a fork of Bitcoin, meaning that it branched out from […]

5 May, 2020

Leverage Trading

Currency fluctuations depend on numerous factors including geopolitical events, economic indicator announcements and news. If you are a greenhorn, you could be wondering about leverage trading. Our article explores the subject; offers a detailed overview to leverage trading, its pros and cons and potential applications.    What is Leverage in Trading? Leverage is a tool in CFD trading […]

4 May, 2020
CFD Trading Platform,Margin Trading,Plus500

How To Make Money On Plus500

Plus500 is a global trading platform which specialises in offering Contracts for Difference (CFDs). These financial instruments allow traders to profit from asset price movements without needing to own and store the asset itself. Whilst there are dedicated guides to understanding CFDs, for this guide it is sufficient to know that by investing in such […]

24 April, 2020