In 2020, more and more individuals are becoming interested in casual financial investments. The internet has provided ways for regular citizens to get involved in buying, selling, and trading a range of securities, assets, and financial instruments. Brokerage platforms that facilitate the trading of different forms have sprung up everywhere, each proclaiming to be the best at what they do. But how do you know which one is right for you?
For budding investors, it can be quite difficult to choose the right brokerage platform, but through careful research, choices can be narrowed down. In this article, we will present some of the most important considerations to make before you sign up with any online broker.
What do you want to trade?
First things first, what do you want to trade/buy/sell? Are you curious about cryptocurrency? Or perhaps stocks and bonds are your things? Maybe it is the foreign exchange market that has piqued your interest. Either way, knowing what you want to invest in is the first decision you need to make. Deciding this will make choosing a broker a whole lot easier!
Decide your goals and limitations
What is the purpose of your trading venture? Do you just want to dip your toes into the markets and trade for fun? Or is this part of a long-term financial strategy? Knowing what the purpose of your investing activities will be is really important. Not only will it influence your choice of brokerage platform, but it will help you be successful in the long run. Every investor needs some kind of strategy, even if the purpose of trading is just for fun.
Know what you want to achieve, and be sure you know what your limits are before you sign up for anything.
Check out reviews
One of the best ways to get a feel of a broker is by reading reviews and checking out comparison sites. This will give you information on users’ real experiences as well as the pros and cons they discovered along the way. If you are looking for the best forex brokers check this site, for example, you can read reviews that evaluate factors such as customer service, leverage, bonuses, deposit methods, and trading instruments. Sites are also ranked with a point system based on user feedback, meaning you can filter out ones that have not performed well based on others’ experience.
Of course, everyone has different opinions and needs when it comes to using a brokerage site, but review pages will give you a range of insights from various different demographics. This should be an important stage of your decision-making process.
Figure out the fees
So, how much will it cost you? Brokerage sites need to make a profit, and they do this through charging fees for various aspects of their service.
Brokers in different markets charge differently for trading activities. There are also differences from platform to platform within the same industry. Work out the rates for leverage and margin trading, executing trades, using an algorithmic trading facility, withdrawals, deposits, exchanges and conversions, and customer service. Then figure out if that particular option is worth it to you. Some offer better deals than others, and it’s best to be prepared rather than get a nasty shock when it’s too late.
Test the platform
Most broker platforms will offer a test facility, meaning you can try out the software and execute test trades before parting with real money. This is important because not every platform is created equally. Some are suited to more seasoned investors, while others can be clunky and hard to navigate.
Having a trial run and figuring out how deposits, withdrawals, charts, and the execution of trades works is important in deciding which online broker to go with.
Look at fund deposits and withdrawals
It’s really important to understand how easy it is to move your money on and off the brokerage platform. You should ascertain what methods are provided for deposits. These often include bank transfer, wire transfer, debit card, cryptocurrency, or other payment providers. Be sure to check any fees on deposits and how long it takes to clear.
Likewise, with withdrawals, you need to be sure that getting your hands back on your money is simple and straightforward. Check how you can withdraw, how long it takes for the funds to reach your bank account, and how much the broker charges for each withdrawal. Ideally, pick a provider that allows you to withdraw to your debit card or directly to your bank account.
Check they are regulated
Before signing up with an online broker of any kind, you need to make sure they are certified and have the correct licensing required to operate. Anyone operating in the financial industry such as brokerage is required to be licensed by the country they are operating from. This licensing process means they have to ensure they meet minimum standards of compliance and legal requirements as well as undergoing a due diligence process. If you sign up with an unregulated platform, not only are you using an illegal service but if something goes wrong, you have no protection or recourse.
As a part of licensing requirements, the broker is obliged to state who they are licensed with and how to contact that authority should something go wrong. In cases where you cannot get issues resolved with customer service, you can escalate them to the license issuing authority.
A major red flag for any online platform is lackluster customer service, after all, customer service should be a priority. If you cannot see how to get in touch with the people behind the broker, proceed with caution. The usual best practice is that they display a contact number, email address, and social media buttons on their website. If a site offers live web chat customer service as well, this is an additional bonus.
If you are new to investing and have questions and queries, it’s essential you can chat with someone as and when you need it. Being able to contact tech or service staff when you need should be key in your decision-making process.
Make sure there are free-of-charge ways of contacting customer service, including live and automated services. Bonus points for those that are open 24/7, have a comprehensive FAQ section, and provide tech support as well as customer services.
Once you have considered these key points and really done your homework, you’re ready to get going. Remember, any kind of trading or financial investing should only be done once you are really sure you know what you’re doing. There are no guarantees in the fast-paced and volatile financial markets so being aware and informed are some of the best ways you can work towards success.