Over the past year, it seems like more people than ever have decided to dip their toes into the world of online trading.
Maybe you’re one of them. Between 2019 and 2020, the average search interest in share trading increased by a massive 121% — and it’s showing no signs of slowing down. Continue reading for our beginner’s guide to choosing a trading platform.
Whether this is your very first foray into trading or you’ve already been doing it for a little while, deciding which platform to sign up to and start using can feel confusing. At first, it can be tempting to just go with whichever platform has the lowest fees and get it over with — but this probably isn’t the best strategy, especially if you’re going to be investing lots of money. You may need a guide to choosing a trading platform.
Before you set your heart on a particular platform, take a look at our beginner’s guide to choosing a trading platform and some of these green flags that can help you make a decision when you’re trying to figure out which one to use. It doesn’t need to hit all of these criteria, but it should definitely meet most of them.
1. It has lots of positive reviews from actual users
By far, the most reliable indicator of a good trading platform is lots of positive reviews from actual users. Platforms like Investimonials provide reliable reviews written by real people who have used the platforms. If there are a few platforms you’ve been considering, it’s definitely worth looking them up to see what the consensus is. Of course, people post reviews for all kinds of reasons, so all online reviews should be taken with a pinch of salt — but if lots of reviews are saying similar things, you should probably pay attention.
2. It has guarantees of protection against fraud
Many companies have guarantees that will reimburse you if you lose money due to fraud. Each platform will have a different list of requirements that you must fulfil before you can be reimbursed, so make sure you check whether you’ll be required to provide any documentation when you sign up.
3. The website offers two-factor authentication (2FA)
Most good trading platforms will allow you to set up 2FA in addition to a password for an extra level of security. For example, this might require you to answer a personal security question, or enter a unique, time-sensitive code that has been sent to you via SMS or email.
4. You’ve given it a test run
Often, the best way to find out which trading platform is best for you is to give it a test run. Even if some of the more advanced features are off-limits to you in a trial run, you’ll probably be able to figure out pretty quickly whether it suits you or if you’d be better off trying out another platform. You should try out a few platforms before you settle on one, just to make sure you get a good feel for what’s out there.
5. The platform is owned and run by a reliable company
Before signing up, make sure you do some research into the company behind the platform. Are they reliable? Have they been involved in any scandals in the past? Is the platform secure, or have there recently been any data breaches that you should be aware of? Understandably, trading platforms are often huge targets for hackers. You want to make sure that if something does go wrong, your personal data is fully encrypted and it won’t be compromised.
6. The platform is reliable enough for your needs
How reliable a platform needs to be depends largely on your needs. If you’re new to trading and you plan to keep it as a hobby that you dabble in every now and then, the reliability of the platform is probably not at the top of your list. If you get to the point where you decide you want to become professional and invest a lot more time and money into trading, you will want to make sure you choose a platform that does not have a reputation for crashing and freezing when you need it most — such as during times of important global economic news.
7. It has a user-friendly interface
Learning to use a trading platform is actually far more complicated than it sounds, so don’t worry if you’ve taken a look at a few and you’re already feeling overwhelmed — that’s totally normal. If you’ve just started, there’s no need to get bogged down in learning about everything. Start with the basics, and then begin to explore the additional features as your confidence increases.
No matter which trading platform that you decide to use, don’t forget that the value of investments can fall as well as rise. Past performance never guarantees future results, and you may get back less than you invested.