By Adinah Brown
With so much marketing and information available on each broker, how is it possible to determine which is the best? Like finding a life partner, everyone has slightly different preferences. Luckily as the saying goes, there are plenty of fish in the sea, giving you plenty of choice.
What are you looking to trade? It’s obvious that the broker must offer the instruments that you want to trade. If not, they can still add those instruments, however, they generally need to build a business case. So unless you are trading like Warren Buffett, it may not happen too quickly.
Even if a brokerage has the instruments you are interested in, keep looking, as some other brokerages may have more options of your favorite instrument. For example, if you only want to trade gold, then you need to be with a brokerage that offers gold, obviously. But a broker that offers a gold ETF, shares in mining companies, and a variety of gold CFD’s, will give you more scope to trade your favorite yellow metal.
This is a really tricky one. To do this thoroughly, you need to know all the costs associated with trading, as well as what you are and aren’t allowed to do, how the platform holds up in volatility, the trading rules, trading limitations, etc. The good news is that reading the website should tell you all you need to know about costs and even the rules and conditions. The bad news is that it can’t anticipate every scenario. Here is what to expect – the terms are designed to protect the company, so they probably won’t seem that fair, but that is usually the sign of a reliable broker. If there is scant information on the website, be concerned.
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At minimum, you need to check the regulation information on the brokerage website and then follow up on the regulator’s website. A follow up call or email to the regulator is important to determine if the regulations are applicable. Try to find out on google if there was any infringement in the past by searching the brokerage with the words “penalized” or “fine”.
There are many different technological offerings, but the standards are web trading, mobile trading and regular (trading on a downloaded platform). Amongst these options there are a variety of different software offerings of varying quality. A demo account will allow you to get a sense of how effective the technology is for your needs.
Stability of a company / Reputation
The good regulations have stipulations in relation to risk management and funds under management, which means that the businesses under these regulations are also solid. Length of time in the industry is always a good sign of a strong business. The reputation is something that is challenging to ascertain. There is so much negative and positive noise on the internet from users that you don’t know what to believe, and in fact is mostly inaccurate, speculative or a deliberate smear. Unless you know someone who works at an actual brokerage, it is tough to know, and this is where regulations help. It is best to talk to a friend you trust who has experience trading for advice. As long as they don’t work in a referral capacity you should be getting their truthful opinion.
About the Author:
Adinah Brown is a professional writer who has worked in a wide range of industry settings, including corporate industry, government and non-government organizations. Within many of these positions, Adinah has provided skilled marketing and advertising services and is currently the Content Manager at Leverate.