Looking for the right broker for your needs can be a never-ending process; many consider it to be time-consuming, and a fairly very boring process. This is why the need for specific guides has arisen over the past years. With that in mind, here are some of the most compelling and straightforward ways to make your search for the right broker as easy as possible.
Based On Your Investment Style
Looking for a broker based on your investment style can narrow your search and save time. First, figure out what kind of trading style suits you best. Are you even a trader or a buy-and-hold investor? The big distinction here is that traders don’t hold onto stocks for a very long time, but are instead interested in making quick gains.
If you envision yourself as a trader, you should look for a broker with very low fees. Another important thing to note is that active trading takes a lot of experience, and the combination of frequent trading and an inexperienced investor often results in negative returns. A detailed description of some of the most common trading styles can be found here as well as the means to determine which trading style best suits you.
On the other hand, buy-and-hold investors — often called passive investors — hold stocks for a longer time.
Then there are those investors whose investing style falls somewhere between the passive investor and the active trader; in this case, there are other factors in picking the most suitable broker that will be discussed later on.
Look At Their Track Record
When looking for a broker, one thing will become very clear: there is a sea of them out there. Some brokers have been around for decades, while others are quite new to the scene. If they’re handling trades for other people that means that they’ve been regulated by the Securities and Exchange Commission (SEC) and a self-regulatory body such as the Financial Industry Regulatory Authority (FIRA).
So while newcomer brokers are generally trustworthy, this doesn’t exclude the fact that they are unproven during various stock market scenarios. A good example of this distinction is the GameStop trading occurrence in early 2021. During this wild situation, many brokerages had restricted trading in some form, while other brokerages didn’t. An answer to our distinction lies exactly is the reason why this happened.
Even though the longer answer to this question is quite complicated, it all boils down to the fact that the largest and most established brokerages had enough cash on hand to guarantee that their clients’ trades would be seen through. This guarantee was required by the regulators. The brokerages that didn’t have enough cash to cover capital requirements had to impose trading restrictions on their clients. If any finds this concerning for their trading needs, they may wish to opt to invest with a large institution, but if a no-frills investment account is all that’s needed, this doesn’t make a big difference when choosing a broker.
Consider Online Brokers
The modern world has introduced the wonders of online trading. Online brokers handle everything from helping you buy and sell investments to tracking your financial portfolio. When online investors run into problems, the majority of them can go to their online brokerages to seek help, which makes online trading all the more beneficial, especially for new traders. Let’s review key things to look for the right online broker:
Brokers differ from one another in many different ways. As the team at Trusted Broker Reviews notes, the factors to consider in broker reviews are the commission, availability of advice, speed of execution, site reliability, customer service, and ease of use. In addition to this, more experienced traders should also check whether the online brokerage offers access to more advanced trading tools, as they can come in quite handy in an online trading journey.
Site reliability should be among the first aspects to be checked. Another deciding factor should be the broker’s commission; commissions have been steadily falling for the last 30 years, and most have taken an even bigger dive in the past decade. Last but not least, look user-friendliness in the online trading platform.
Know Your Needs
Before choosing a brokerage, take a moment to hone in on what’s most important to you in a trading platform. The answer will heavily depend on your investment goals and where you are in the investment learning curve. Traders who are just starting should prioritize the more basic features such as comprehensive glossaries, easy access to support staff, and the ability to practice trades before playing with real money.
However, traders who already have some investment experience under their belt and want to get serious should consider high-level education and opinion-based resources which are authored by professional analysts and investors.; they should also opt for brokerages that offer an ample selection of basic and technical data. As for very experienced traders, they should prioritize advanced charting capabilities, as well as the ability to trade mutual funds, commodities, derivatives, stocks, and fixed-income securities.
This is why a trader needs to be honest with themselves about where they are in the learning curve, and where they wish to go. Some of the common end-goals are establishing a retirement fund and focusing on passive investments that can generate tax-free income in either an IRA or 401(k). Depending on the path they wish to follow, there may be many more questions to be answered along the way as more experience is gained.
Additional Aspects To Consider
When looking for a broker, another very important aspect to consider is cost. Investors nowadays are in for a pleasant surprise to find out that it has never been cheaper and easier to get started. In other words, today’s low trading fees have made online brokerages more investor-friendly than ever. This means that even beginner traders won’t need a lot of money to get started on their investing journey.
Almost every major online brokerage will allow traders to get started with no account minimum. It’s not even important if a trader has either $5 or $5000 to start with. It’s also quite easy to find a broker that offers no-commissions trading of ETFs and stocks, so they won’t accumulate fees during the selling and buying process. No commission means that they can invest even the tiniest amounts and have it all go into their securities.
Even though cost is a huge factor, other traits that will improve your experiences such as research, education, trading simulators, and mobile apps should also be considered. Meanwhile, traders who are looking for a more convenient way to trade should consider mobile apps.
Looking for the right broker has many parts, but if the traders are guided towards the most important and deciding factors, this ordeal is made much easier. In addition to this, a great way to help traders easily look for the right broker for their needs is to guide them towards reviews from reputable professionals in the field. This way they can have the comparison of many brokers by the most important factors right in front of them to make an easy choice.
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