Making a new profit out of your capitals can be stressful, especially if you want to do that by investing them in an online stock trading activity. And the fact that there are so many different brokers, financial firms and the likes on the net makes this task even more difficult because of the sea of (sometimes misleading) information to process.
So, what is the solution?
Well, first of all you should start by doing an in-depth research on those brokers which took your attention for some reason. To do so, you must have a reliable source of information. That information may come from many different tools, including trustworthy websites such as investingoal, and compare those firms between them in order to discover who suits your needs.
Investingoal is famous for its reviews aggregator tool and its many articles on financial subjects, so it may turn out to be extremely useful for guiding you in your choice and learning more on the online trading world.
With all that being said, we wanted to give you help by providing a list of principles to follow in order to choose a new broker.
Regulations & Regulators
Being careful about the regulation followed by the broker is an essential criteria to keep in mind when approaching a broker for the first time.
There are many brokerage firms out there offering incredible deals and discounts which cannot be trusted because of the fact that they’re not following any financial regulations. To approach those brokers is extremely dangerous for your finances, and you should only deal with regulated brokers.
To be considered a regulated broker, a firm must follow one or more regulations imposed by a regulator. Depending on the regions where they are offering their services, a financial regulator usually works for government entities or follows independent standards organisations in order to regulate every financial service of the industry, including markets, exchanges and (of course) firms.
Main regulators of the finance sectors today are:
- ASIC (Australia)
- SEC (United States Of America)
- FINRA (United States of America)
- FCA (United Kingdom)
- FSA (Seychelles)
- DFSA (Dubai)
As we already mentioned, approaching a non-regulated broker instead may lead to frauds, scams or (even worse) problems with the law.
When doing online trading, fees and commissions on trades may come at very high prices. That’s why you should always search for the lowest commission available and find them through the comparison of two or more brokers and their offer.
In this case it is important to remember that most of today’s broker firms chose to adopt a 0 commission policy on trades for retail traders in order to stimulate this activity. Which means that you’ll have to cover only the spread once you start trading with a broker.
Trading Platforms And Demo Accounts
To end our guide, we wanted to stress the importance of the trading platform offered by the broker in order to access financial markets.
Those platforms may change enormously between them, but they must have an user-friendly interface in order to result efficiently for newcomers and be technologically advanced to keep the pace with the market speed.
Finally, you should also check if the broker offers a demo account so that you’ll be able to see with your own eyes how to perform your operations without putting at risk your money.