Which Factors Make The Best Trading Brokers, Platforms, Or Apps?
An investor is only as good as the opportunity they’ve chosen to invest in. Therefore, if you want t to work with trading brokers, you need to find a reliable brokerage service that aligns with your educational needs, investment goals, and learning style.
However, finding such a broker is easier said than done because it can be challenging to select the best online stock broker that serves your needs.
Your choice of trading broker can either turn your investment into an exciting new income stream or a frustrating disappointment. So, it would help if you chose wisely.
While there’s no guaranteed way to get returns on your investment, understanding how to choose the best online brokerage can take you a long way. If you have been looking for an ideal brokerage, this guide will break down every aspect of the best trading brokers, platforms, or apps to help you make a choice.
What Is A Stock Broker?
A firm that buys and sells shares on behalf of clients is a stockbroker. These firms also hold shares in investment accounts for their clients.
Shares represent ownership of an individual in the company.
Buying a share means you have a partial holding of that company. So, whatever loss or profit the company sustains, you will be part of it. Hence, shares are treated as investments that are traded on stock exchanges.
You might have heard about several stock exchanges, for instance, the New York Stock Exchange, the London Stock Exchange, and the Nasdaq Stock Exchange.
The role of stockbrokers is essentially to be the bridge between investors and the world’s stock exchanges. You can hardly buy and sell stocks without a stockbroker – the options get really thin. But, on the other hand, stockbrokers can make the buying and selling of any share approachable.
What Does A Stock Broker Do?
The primary role of a stockbroker is to carry out share transactions on behalf of the client. However, some stockbrokers offer extra services and go beyond the traditional trade execution. For instance, a trade broker might advise you about the stocks you should buy and sell at a particular time or long-term investments. Moreover, they also teach you how to build an investment portfolio.
You will essentially find three types of stockbrokers:
These stockbrokers only provide the primary buying and selling services without additional services or investment advice
As the name suggests, these stockbrokers advise the investors on which share to buy and sell besides the trade execution services.
Discretionary stockbrokers make trades on your behalf while also managing your money for you. Trade execution services depend on commissions and annual custody fees for taking care of and managing your investment
How To Find A Good Stock Broker
With the changing times, stockbroking has advanced too. In the last few decades, every process has crossed paths with technology. So, just like any other service, today, stockbrokers are operating online. But that hasn’t drawn much change on the buying and selling process of the shares. Instead, it is almost the same as it was in the past.
The process is straightforward – you place a trade with your broker, who then executes the transaction of shares for you. So, the process is majorly dependent on you finding a broker who can do that for you. Once you have one, you can conveniently buy and share as many shares as you want.
But to find a good stockbroker, you need to analyze your own investing style and needs first.
When choosing a stockbroker, there are several things that you need to keep in mind.
Find a stockbroker that matches your investment style and charges only for the services you intend to use
Run a comparison of all the costs of buying, selling, and holding stocks. Also, compare the security of your investment with the firm. Finally, compare the prices of margin interest, too.
Factors That Make The Best Trading Brokers
The right way to choose the best stock broker is by assessing your circumstances and requirements.
For instance, anyone who is a new investor will need guidance through the process. So, it would help if you chose a stockbroker that offers good customer support and primary educational resources.
On the other hand, a more advanced investor may require a broker that allows access to various markets and advanced trading and investment tools.
Here are a few factors that you need to consider before finally choosing a stockbroker.
Commission-free The feature that most people look for in stock trading apps is to do transactions of ETFs and stocks with no commissions. That is why an increasing number of commission-free trading platforms have launched in recent years.
No commission may be an attractive prospect for investors who trade frequently. It allows the traders to deal during times of volatility without holding back through these commission-free trading platforms.
The number of newly registered users and trades during the market turbulence period is accelerating faster over the commission-free platforms compared to the traditional ones.
Market Access Another critical factor that investors should consider is how much market access they get from a particular broker. For example, what is the range of shares that the broker is offering you?
This is more important for investors who plan to buy international shares because some brokers may only provide you access to a limited range of global shares markets.
Account Types Each stockbroker offers different types of accounts. For example, some brokers provide access to various accounts, such as Stocks & Shares ISAs, general investment accounts, Self-Invested Personal Pension (SIPP) accounts, and Lifetime ISAs.
Some other stockbrokers might only provide general online share dealing. However, tax-efficient accounts such as SIPPs and ISAs can help you decrease your tax liabilities. So you can make your choice wisely according to your needs and priorities.
Research & Added Value Stockbrokers have their own investment tools and research. However, some brokers might offer more features than others. So, it would help if you determined which features can assist you in making better investment decisions.
A few of them may include fundamental data sets, stock screeners, and charts. However, if you don’t need the tools, others might even offer you essential trading services.
Usability Some online broker platforms have a more user-friendly interface than others. This makes it easier for individuals to execute their trades using the app. Users usually prefer well-designed platforms that are easy to use and can be accessed via an app. So, you can conveniently monitor your account through the app and place trades on the go.
Customer Service & Reviews If you are new to trading, this factor will be more important to you. This is because the stockbrokers’ customer service and support system can help you place trades and make investments. However, not all brokers are particularly good at providing customer support. So, if you are looking for this factor in your brokers, do your research before associating yourself with them.
Reliability The most important factor of a broker is their reliability. You cannot overlook reliability in a broker because it can become frustrating when the platform goes down and you can’t access your account when you need to. If a platform doesn’t seem reliable to you, particularly during periods of market volatility, then you should part your ways with it.
Costs & Fees Cost and fees depend on every individual’s personal priority. Every stockbroker offers a different fee structure that you need to consider carefully. You can cross off the services you don’t require before subscribing to the service so that you don’t pay extra fees on your overall investment.
Besides the service charges, some other charges may vary from broker to broker. These charges may include entry fees, annual custody charges, and exit fees. Again, you can evaluate these charges to see if you’re getting a good return on investment.
However, always remember that the cheap option isn’t the best. So, compare the costs and fees with other brokers and then choose the one that seems like the most suitable option for you.
Trustworthiness Before associating yourself with a broker, make sure that the stockbroker is trustworthy. The best place to judge that is whether the FCA regulates them or not.
Online Security and Account Protection The most vulnerable part about making online transactions is the risk of security. So your platform needs to offer you more protection than just a password. See if they have options like sending unique codes and time-sensitive codes via email or text, answering security questions, or using a fingerprint scanner. You must also find out whether the broker offers encryption and cookies.
Moreover, ensure that the broker doesn’t sell your information to a third party.
Brokers play a huge role in helping you increase your return on investment. However, there’s no way to declare one broker as the best for all. Instead, you need to evaluate your own requirements to meet the goal you have set. So, go through the factors mentioned earlier and make the right decision today!
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Alpesh Patel OBE
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