Although it has generally been considered a rather traditional industry that has been relatively slow to innovate, the last two decades have seen the financial services sector undergo some quite radical transformations. And whilst this has been proved true in every sub-sector, including mortgage brokers, money lenders, and banks, it has been proved particularly true in the trading and investment space.
Long gone are the days when you could only make investments in your financial future through traditional brokerages that charged high fees or through your workplace pension. Now, a new generation of investors are looking to take control of their financial future and can do so in a matter of seconds through a wide variety of low-cost, easy to use trading and investment platforms.
In recent years, online trading platforms have become a hot topic in the financial services world, as they make it easy for individual retail investors to trade a wide range of financial instruments in real-time. These online trading platforms and brokerages have massive userbases, into the millions, with the global online trading market now worth an estimated $8.28 billion.
These platforms have turned a highly traditional industry on its head and have introduced a new generation of investors.
With a seemingly endless stream of new platforms coming out all the time, choosing which platform to trust your funds with has never been more difficult. And, whilst in the past you might only have had a handful of realistic options to choose from, there are now quite literally hundreds of online brokers to try out.
With this issue in mind, this short article will hopefully help to make this decision a little bit easier for you by setting out some of the main criteria to keep in mind when you are choosing an online broker. And by keeping these criteria in mind, you will hopefully have less difficulty choosing the best trading platform!
Know your trading and investment style
Perhaps the most important factor to keep in mind when choosing an online broker, is knowing your own trading and investment style.
This will be based on a combination of your personal preferences, risk profile, and preferred investment strategies.
For example, if you want to stick to equities and bonds, you might choose a stocks focused online broker with share dealing accounts. In contrast, if you prefer to make a living by day trading the forex markets, a currency focused broker will better serve your needs.
With that said, before choosing a broker, think about what kind of investment you want to make and what kind of market selection you need available to achieve these aims.
Trading Costs
Another important factor to consider is what kind of costs you are willing to pay to execute your trading and investment strategy.
There is a wide range of cost structures out there. Some brokers will charge you flat fees on any trades you make, whilst others will give you access to commission free trading. However, commission free trading usually leads to less competitive pricing, which might not suit traders that will be processing larger and more frequent order volumes.
There are also other fees and costs that you need to keep in mind, such as miscellaneous account fees, lending fees, leverage fees, interest rates, and many more! Be sure to look at a full breakdown of what you will be charged for before signing up for an account!
Licensing and Regulation
It is also extremely important to make sure that you only ever trust your investments with a broker that is fully licensed to offer the kinds of financial services you will be using.
Licenses will usually be tied to the region or country you will be trading in, so it is best to choose an online broker that has been authorised to offer services in your own jurisdiction.
Licensing processes are in place to ensure that online brokers who provide financial services comply with the rules and laws that are in place to protect customers. As such, it is extremely important to only ever choose an online broker with a valid license. This will not only give your investment funds more protection, but it will also give you recourse if something goes wrong with your account.
Tools and Features
Another consideration worth keeping in mind is which tools and features you will need at your disposal to execute your preferred trading strategy.
This will vary considerably depending on the individual user. However, it is worth keeping in mind that online brokers offer a lot more than trading services these days! This includes everything from trading advice, robot or automated trading, social trading, and educational materials.
Choose an online broker that offers a suite of tools, services, and technology that best suits your own investment goals and strategies!
This content is a joint venture between our publication and our partner. We do not endorse any product or service in the article.
