ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for alerts Register for real-time alerts, custom portfolio, and market movers

6 Things to Consider When Choosing an Online Broker

Share On Facebook
share on Linkedin
Print

If you want to buy shares, you need to use a broker, and the easiest way is carry out your buying and selling online.

©

So how do you choose the right online broker? Well, it’s a matter of deciding what you want from a broker, and then researching the available options.

(There is a list of brokers on our Broker Listing page.)

Here are some of the things you should take into consideration.

 

1. Are you a Trader or an Investor?

A trader is somebody who buys shares then sells them fast to make a quick financial gain. An investor is somebody who buys stocks for the long-term, holding them in the hope the price will increase, and sometimes collecting dividends in the meantime.

Some brokers will suit you better if you’re doing a lot of short-term trades; others will be better if you go for long-term investing.

 

2. Do you want advice on which shares to buy?

A full-service broker offers you one-to-one investment advice and can advise you on what shares to buy depending on your needs. But you pay more for that service.

A non-advisory broker may publish research reports, or send out emails recommending stocks, but they won’t be tailored to your requirements – so you are on your own when it comes to deciding which stocks to buy. They are often called “discount brokers” because their charges will be lower than full-service brokers.

If you’re just starting out as an investor, you may find it easier to use a full-service broker, at least until you find your feet. But you don’t have to pay for a full-service broker; there are plenty of books that will teach you how to select stocks (such as 101 Ways to Pick Stock Market Winners) and services on ADVFN to help you make the decisions.

 

3. Check out the fees the brokers charge

Brokers make money by charging you fees. Sometimes it is a commission on every trade, sometimes a flat monthly fee, sometimes both.

Check the broker’s fee structure carefully, to make sure you understand what you will be charged for – there’s no point paying for services you are not going to need! And look out for hidden fees, such as charges for inactivity.

High fees and commissions can soon make it hard to make a profit on your investments, because they wipe out your return. On the other hand, you get what you pay for – a broker who only charges a low fee won’t spend much time giving you advice.

You also need to look out for the minimum amount you can have in your investment account. Some brokers have high account minimums, and that makes it hard to get started if you only have a small amount to invest.

It’s also worth looking at what interest (if any) the broker offers on uninvested funds.

 

4. Variety of investment options

What do you want to trade? Stocks, bonds, mutual funds, ETFs… there’s a lot of different things you can invest or trade in. Check whether the broker you are considering will let you invest in what you want.

Even if for now you are only interested in one thing, you may want to expand your options later, and it will be easier if you can do everything through one broker. So think about what you might want to do in the future.

 

5. Reviews, references and regulation

Before you select a broker, do some research into the companies’ reputation. Look for online reviews – particularly those that appear in reputable publications. Also search out negative feedback about the service they offer. Those are less likely to be faked than glowing testimonials on the broker’s own website!

It’s essential that a broker is regulated by the appropriate authority. In the UK the regulatory body is the Financial Conduct Authority (FCA); in the US it’s the Financial Industry Regulatory Authority (FINRA).

 

6. Check out the customer service options

If something goes wrong or you have a problem, you’ll want to get it resolved fast, so you need a broker that offers different options for getting hold of customer service. You’ll also want to try contacting them to see how fast their response is, and whether it’s satisfactory.

Send an email with some questions about services the broker offers, and see how long you have to wait for a reply. Phone up the helpline and see how long you are left on hold. If there’s an option for an online chat, try it and see if the responses to your questions make sense.

 

You can compare respected brokers on our Broker Listing page.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com