What’s Important When Selecting an Online Broker?

Looking to open a new online brokerage account? When choosing an online broker, it’s easy to be tempted by low fees and commission-free trading. While these perks can certainly keep the bottom line looking healthy, the best online brokers go above and beyond when it comes to user-friendly features to enhance trading. From a diverse portfolio of investment products to AI-enabled tools like automated trading, online brokers have plenty of user-friendly features that can take your trading activity to the next level.

Associated Costs

Professional traders understand that there’s more to the cost of an investment than making a deposit. Additional costs and commissions are a staple of online brokers. If you want a clear idea of how much you stand to gain from a trade, you’ll need to factor in these additional expenses.

Pricing structures can vary considerably between brokers. Along with costs like commissions and spreads, unsuccessful trades also incur additional costs you’ll need to budget for. Fortunately, reputable brokers are upfront and transparent about payment and pricing options.

It’s probably the everyday costs that are of most concern. On any given day, you’ll likely be depositing and withdrawing from your account. While some brokers allow you to make deposits for free, you’ll need to consider your payment provider. Depending on the method you’re using to deposit funds to your brokerage account, you may have to accommodate additional fees.

Once again, fees can vary significantly between payment methods. As such, it’s worth considering other options. Is a credit card transfer going to cost a small fortune in fees? If a broker charges minimal fees for deposits made via eWallet, think about ditching the credit card and switching to something like M-Pesa instead.

Regulation and Safe Trading

When trading online, peace of mind is priceless. To ensure your trades are as secure as possible and your personal data remains out of the hands of nefarious third parties, you need to be confident that you’re trading with a regulated broker.

Security and fair trading are hallmarks of regulation, with any reputable broker adhering to procedures laid out by financial authorities. If a broker is playing by the rules, you can rest assured that your investment capital is protected and your data remains secure.

Not sure whether a broker is regulated or not? Any reputable broker worth their salt will want to promote the fact that they’re regulated. Website footers, company newsletters, and any paper mail you may have received from a broker should contain details about any held licences, along with any regulations that are being followed.

Diverse Investment Products

To secure a lucrative income stream from investing, you’ll first need to have a trading plan in place. Think about how much capital you’re prepared to part with, what you consider acceptable risk, and what kind of markets you’d like to speculate on. When first starting out, concentrating on a particular investment product can seem like a good idea, focusing your efforts and helping you overcome steep learning curves. However, it makes sense to diversity your portfolio as early as possible.

Having a diverse portfolio can protect you from significant losses down the line. Should the market for one investment product turn against you, you’ll be able to weather any losses thanks to less volatile products elsewhere. There are many different investment products to consider trading on, with everything from forex trading to exchange-traded funds (ETFs) offering opportunity. Volatility and liquidity varies considerably between products, as do any potential risks involved.

Reliable Support

The financial markets move at a rapid pace. When you’ve got a question about a pivotal trade, you want answers as soon as possible. Eyeing up a trading platform that only offers self-guided FAQs or email correspondence? Chances are, you’re not going to get the feedback you need in time to act.

Fortunately, many trading platforms offer a full suite of customer support options. Live chat functionality is also useful, even if you’re initially dealing with chatbots. However, it’s dedicated telephone support that you really want. Are you a 24/7 trader? Make sure you’re choosing a platform that provides round-the-clock customer support with an agent only a phone call away.

Advanced Tools for Smarter Trades

The tools you use to make trades can have a big impact on your bottom line. For the beginner, one-click trading tools can simplify the process and help the novice navigate the trickier aspects of online trading. For the advanced user, automated systems allow traders to capitalise on multiple markets simultaneously, turning a part-time passion into a round-the-clock operation.

Most online brokers will offer a similar slate of trading tools, with some being more important than others. Access to real-time market data and analysis tools are crucial if you want to make informed trading decisions, while economic calendars delve deeper, providing you insights into financial events and global news items.

Less common are social trading tools, which can allow inexperienced traders to parrot the trading activities of more seasoned professionals. What’s more, risk mitigation tools can vary considerably between brokers. At a minimum, look for risk management tools that support things like stop-loss orders to protect yourself from any significant losses.

Start Using an Online Broker Today

A good online brokerage needs to do far more than facilitate trades. If you’re looking to streamline your everyday trading activities, choose ones with automated features that allow you to engage with multiple markets across the globe. Want to learn from your mistakes and successes? Brokers that offer charting software as standard provide you with all the insights you’ll ever need to create exhaustive trading journals.

While there are some more obvious benefits to consider, such as low commissions or free trading options, they’re not always as appealing as you might think. A broker might offer free deposits and low commissions, but these savings will be factored out if more useful features such as reliable customer support and safe trading guarantees aren’t in place.

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