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Many people nowadays are interested in exploring other ways to make money to supplement their income. One of the most common methods that have become very popular over the last few years is online trading. However, trading financial instruments online should not be taken lightly. The risk of losing money on account of ignorance or due to cases of fraud is very high so you have to tread with caution. One good way to trade safely if you want to give it a try is to find a trusted online broker to work with.
The web is flooded with hundreds of online brokers, each claiming to have an unmatched experience in the financial markets and a premium platform. However, to help you tell the good from the bad, below are some effective tips that you need to know to choose the ideal online broker.
Tips To Choose The Ideal Online Broker
Identify Your Investments Goals
Getting into the world of investments, you have to first understand your current situation and identify your investment goals. If you’re looking for a one-time investment before you commit long-term, it won’t be cost-effective to commit to one of the heavyweight online brokers. Your investment goals go far beyond your desire to ‘make some money, you have to take into account your financial capabilities and the amount of risk you are willing to take. Furthermore, you should also think about whether or not you have the time to pursue a long-term investment opportunity regardless of how high of a yield it’s offering.
Think about all of those factors together and consult an expert to best identify your investment needs and accordingly be able to find the ideal online broker.
Consider The Safety And Security Of Your Funds
This should be your first concern when trying to find the right online broker. Your first clue is to check for the necessary licenses for trading and operating in your country. Many shady brokers refuse to share such information with their potential clients. If you ever find yourself in this situation where you don’t get to review proofs of regulation and authenticity, you should beware and never trust this platform with your hard-earned money. Reputable online brokers will always share regulation information front and center on their website where their potential customers can see it before they choose whether or not to trade.
Learn About The Cost Per Trade
This is one of the most important figures that you should refer back to when looking for your ideal broker. Experts recommend looking beyond the figure a broker charges you in commission per trade. The reason this might be an insufficient or misleading figure is that you could be investing in binary options or mutual funds where commissions are usually negligible. You can find a lot of information on Binary platforms to have a clearer idea about the real costs of trading in binary options. Besides, when calculating the actual cost per trade, you have to factor in the account fees that differ from one online broker to the next.
Most common account fees include account opening, cash transferring, data and research as well as account closing fees. After consolidating the costs mentioned above, you’d be able to identify the real cost per trade and consequently, favor between different online brokers to find the ideal one.
Understand Their Commission Structure
Online brokers make their profits from the commissions they earn from every transaction or trade done through their platform. Your ideal broker should be charging a reasonable commission on your preferred investment options. Usually, individual stocks are traded commission-free, however, some brokers choose to charge their clients an amount either per every trade they make or per every share they buy/sell.
The same goes for Exchange Traded Fund (ETF), most online brokers offer a range of commission-free ETFs, however, you can still come across others that charge a struck-trade commission since ETFs are traded per share price. With some research, you’d be able to find out the commission structure of different online brokers so you can compare them against one another and find the one that best serves your needs.
Consider The Required Minimum Initial Investment
While many legitimate online brokers don’t require a minimum initial investment, many others still do and for considerable amounts of money. While you’d want to be able to trade with the best online brokers, there’s a good chance you won’t afford to do so. Even if you manage to afford the hefty minimum initial investment required, you’d be left without any funds to actually trade which defies the purpose of the entire process. Try to look for online brokers that either don’t require a minimum initial investment, or, better look for ones that require a reasonable amount that you can comfortably afford.
Study The Available Features
Your ideal online broker should be your go-to source for everything that has to do with investment, especially if you’re a beginner with limited experience. You need the broker platform to be user-friendly, one that offers abundant resources and many features that can help you make sound investment decisions. Besides, for an online broker platform to be considered ideal, their customer service support has to be top-notch. If you’re ready to compromise on the helpful webinars, and the video tutorials, don’t compromise on the quality of customer support.
As a beginner, you should expect to have hundreds of questions on how to utilize the features of the platform or where to find a certain piece of information. Given the magnitude of the associated risk, you’ll want an accurate answer, and you’ll want it fast. An online broker platform that can offer you impeccable 24/7 support with all the latest features and analysis tools would most probably make for an ideal one. However, always try to keep in mind your current investment needs so you don’t end up paying a fortune in fees for tools and features that you’re never going to make use of, at least now.
Choosing the ideal broker is a big challenge. There are many factors that you have to keep in mind and many costs that you need to track to make sure you’re not starting your investment journey on the wrong foot. The above tips will help you find what you’re looking for and will make the search process much less challenging.