What to consider when comparing online brokers?
An online broker lets you trade stock in companies online without needing to go through a traditional stockbroker. All you need is a device connected to the internet, such as a computer or smartphone, and an online broker will give you the power to invest your money by buying and selling shares. But how do you find a suitable broker?
Why would you use an online broker?
Before you start comparing brokers, you need to know why you want to use an online broker. There are many advantages to using an online broker over a traditional stockbroker. These may include:
· Price: An online broker can be more cost effective than a traditional stockbroker. In fact, some services let you place a trade for less than $10.
· Transparency: When you place a trade using an online broker, you’ll see exactly what sellers are hoping to receive and what buyers are offering.
· Immediacy: When you trade online, you’ll receive quick confirmation of your purchase or sale, as well as a settlement notice – usually within 48 hours.
· Diversity: Many online brokers give you the opportunity to trade a wide range of shares and sometimes other assets.
· Neutrality: It’s up to you which shares you buy and sell, and you'll pay the same commission on each of them. But you might receive a discounted rate based on the volume of your trade.
While some online brokers offer a full service, including advice on the type of investments to make, you’ll usually need to carry out your own research about what to trade.
What should you consider when choosing an online broker?
If you’re comparing online brokers, there are a few key factors to consider. These include:
· Fees: Look carefully at how fees are calculated so you can choose the online broker whose fee structure matches your likely trading patterns.
· Range of investments: Some online brokers offer access to a range of global investments, and even to exchange-traded funds (ETFs), commodities, contracts for difference (CFDs) and other investments. Whether you need access to all of these depends on your personal investment goals and strategy.
· Convenience: If your bank offers online share trading, you may be able to trade shares from your existing online banking platform.
· Information, analysis and data: Different platforms offer different analysis and research tools.
· The fine print: Some brokers offer a low headline commission charge but will penalise you for trading too frequently or infrequently. So make sure you do your homework thoroughly before signing up.
Let InfoChoice help you find an online broker with the right skills, equipment and knowledge to implement a successful investment strategy.