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Top 10 Ways to Choose a Broker
Brokers today seem to be popping up like weeds. Especially on the internet we see a proliferation of financial brokerages, each one claiming to be the leader in the field. Websites compete with the most outstanding graphics, bright colors display constantly changing data while ticker tape numbers go flitting across the page bringing live stock prices to the viewer.
How is a trader to choose among the multitudes of brokers peddling their wares? There are definitely ways to pluck the roses from the thorns and here are the important things to keep in mind before opening an account and plunking down your money:
Speak to friends and family for referrals. Never go into contract without getting prior feedback from others.
Do your own research and due diligence. Compare brokers. Read reviews such as etoro review to see the differences between brokers.
Ensure that the broker is properly registered with a bona fide financial regulator.The major regulators are the National Futures Association (NFA) or Commodity Futures Trading Commission (CFTC) if they’re based in the US and the Financial Service Authority (FSA) if based in the UK.Many brokerages have been forced to close down because of fraud and you certainly don’t want to become a victim of a scam.
Once you have decided on a broker, go into the site and check the features offered by the firm. Decide which features are important to you.
Open a demo account. This gives you the opportunity to experiment with virtual money and allows you to practice trading without the fear of losing funds. It also gives you a feeling of how well the brokerage handles trades.
Try out the customer service. See how quickly they respond and how efficient they are.
If they don’t know the answer to your question, do they offer to get back to you with a response or to have someone more knowledgeable return your call? Customer service can be of vital importance to you somewhere down the road.
Don’t be afraid to ask questions. How much leverage are you allowed? What are the margin requirements? How wide are the spreads? Does it cost anything to open an account? What is the commission? Although the answers to these questions often appear on the site, they are not always obvious to the newbie trader.
Understand fully the platform used for trades. The trading platform is the investor’s gateway to the markets and traders should make sure the platform and all software is easy to use, visually pleasing, has a variety of technical and/or fundamental analysis tools.Tradesshould be entered and exited with ease.
Start out with the minimum amount of deposit required. You want to tread water a bit before plunging in.
Monitor your account carefully for several months before making a decision to stay with this broker. If you’re not happy, close the account and move on to another one.
