A stockbroker aka broker is the intermediary that enables you to trade in the share market. Choosing a good online stock broker is challenging if you are a beginner because there are so many options available.
You need a good trading platform that provides you detailed market analysis, low brokerage, good margin leverage and real time price updation.
You can go through this article to understand what parameters you should keep in mind when choosing an online broker.
Factors to Consider While Choosing Online Broker
#1. Registered and Reputed Broker
You should make sure the broker you choose is registered with a legitimate regulator such as SEBI in India, UK’s Financial Conduct Authority or any other country’s regulatory authority.
You can usually find such information at the bottom of the broker’s website along with the registration number.
You can also go to the regulator’s website to check out the broker’s record to verify the registration details to confirm that the broker is legitimate.
Another thing that you can check out how old the stockbroker is and its active customer base from the regulator’s website to ensure that broker has good reputation.
#2. Low Trading Fees
Some brokers offer research and advisory services with superior quality trading platforms , but they charge high commissions and spreads. Ultimately, this increases the trading cost, and eats into your profits.
You can find online brokers that not only offer low commission fees, but also fast trading platforms. You can check out the brokerage fees either on the broker’s website or by opening a demo account with a global online broker.
#3. Efficient Trading Platform
A highly reputed broker provides a fast performing trading platform. You can check out different types of technical indicators and charts like candlesticks or bollinger bands to understand market trends.
Some platforms like easyTrade by easyMarkets, which provides limited risk, unlimited reward, and more control over your trades. Most platforms allow you for trading currency pairs as well as other assets like stocks or commodities.
You can ensure that the broker offers mobile and tablet apps along with a web trading platform to trade on the go.
You can also check out the reviews in Google playstore for android app or Apple’s app store for iPhone app, to understand how they perform in real world scenarios.
#4. Margin Leverage
If you are more keen to trading, you must check how much leverage you are getting in your brokerage account.
Leverage is the amount of money your broker provides you as a loan to trade bigger volumes than the funds available in your brokerage account. You have to return the borrowed money by settling the orders placed or adding more funds to the trading account.
The high leverage allows you to borrow more money from brokers for trading bigger volumes.
#5. Good Customer Service and Support
Your broker should ideally offer advanced customer service which is prompt and efficient.
They should have a defined process with a limited time ticket window to get your issue resolved in said timeframe. Some brokers offer a 48 hours ticket window to resolve the issue.
#6. Fund Transfer
You should check the online fund transfer options that the broker is providing and how much time they take while withdrawing the money.
The more fund transfer options will provide you more flexibility to add or withdraw money from your brokerage account to savings account.
#7. Advisory and Research Facilities
If you are a newcomer you might want some hand holding in investing or trading before you can do your own research.
Some brokers offer advisory services but they may charge higher fees as compared to those who don’t provide such services.
You can also learn the stuff yourself and avoid the high brokerage fees if the broker offers an educational platform that we’ll discuss in the next point.
#8. Educational Tools
Many stock brokers provide educational platforms to enable their clients to learn about different market concepts like stock trading, currency derivatives, options trading.
You can get articles or videos to understand complex investment or trading topics.
Choosing a good broker can take time, but it is worth the effort. A bad broker will cause you headaches like high commission fees will consumer your profits, or you might not able to place the order at the right time due to a sluggish trading platform that may cause you monetary loss because
- You either couldn’t buy at the low price you want or
- You couldn’t sell at the higher price you decided
In both scenarios, you will incur losses.
I hope if you take care of the factors discussed above, you can find an efficient online broker and start your investment journey.