Investing profitably in the stock markets relies heavily on the right selection of an online stockbroker. It’s particularly important if you are new to financial trading and looking for an intuitive platform that gives you a foothold in the markets and a chance to make your mark.
Although there’s no guarantee when it comes to buying and selling stocks and forex, selecting an online stockbroker that suits your needs best will put you in the right headspace to learn and grow as a trader.
Fortunately, we’ve narrowed it down to five key areas of consideration when selecting your first online stockbroker. If you keep this quintet of criteria in mind, you’ll be able to rapidly filter out the good brokers from the less reputable operators in the industry.
Broad spectrum of deposit and withdrawal methods
A major benefit for any newcomer to financial trading is choosing a broker that accepts a wide range of deposit and withdrawal options. The best brokers will now permit deposits and withdrawals via e-wallets that make it faster than ever to transfer profits from your trading account to your bank account. You should also double and triple check whether or not there are transaction fees attributed to your favoured payment methods. On the whole, most reputable stockbrokers will not charge you to deposit into your trading account.
Top-tier security and regulation
One of the most tried and trusted criteria for selecting leading online stockbrokers is levels of regulatory oversight. The most trustworthy brokerages are well-regulated by some of the most powerful authorities in financial services. This list of regulators includes the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
The SEC is arguably the most important of all the above regulators, particularly in the US. Brokers looking to offer online trading services in the US must be registered directly with the SEC, first and foremost. Any brokerage that’s not registered should be avoided at all costs.
Proprietary trading platforms – or compatibility with tried and trusted software
As a beginner to trading the financial markets, it might be beneficial to choose a broker that offers a proprietary, web-based trading platform. Many of which are available to download onto your Windows or macOS device free of charge. It’s possible to trial web-based trading platforms on occasion by signing up for a demo account with the broker of your choice.
Web-based proprietary trading software will be engaging to a point; at least until you consider yourself a more ‘advanced’ trader. At this point, you may wish to utilise more advanced third-party trading software, so look for a broker that is also compatible with industry-leading software like the latest MetaTrader 5.
Industry competitive broker fees
It’s always important to make sure you are getting the fairest possible deal in terms of broker fees too. You should compare the minimum commission charged on American and European stocks traded, as well as trading fees on bonds and mutual funds. As a relative newcomer to stock trading, you should also ensure that your chosen broker does not sting you with extortionate account inactivity fees. There are some brokers that won’t charge you a penny to place stock trades and even exchange-traded funds (ETFs).
Online guides and tools to hone your trading expertise
When you are just starting out on the road to becoming a profitable stock trader, it’s important to choose a broker that invests in your long-term success. After all, winning traders are profitable accounts for brokers too. That’s why we highly recommend choosing your first online stockbroker that offers a strong library of trading guides and information.
Some brokers operate their very own “trading academies” which contain educational material that can be digested at your own pace on desktop or mobile. These brokers tend to break up their educational content into three categories – beginner, intermediate and advanced. Beginner level content builds your understanding, while intermediate and advanced articles and guides will refine your trading strategies and overall execution in the markets.
Although the temptation can be all too great for many to sign up to the first online stockbroker they come across, successful financial trading requires a sound platform to help your bank grow. Whether it’s for a hobby, a full-time profession as a retail trader or a means to top up your pension, take some time to single out the best online stock brokerage based on the five features that matter above.