Written by Kim Dawkins
If you do an internet search for online brokers, the number of search results returned is staggering. Choosing the best broker from those many options can be a daunting task. In order to separate reputable brokers from those with shady dealings, and strong ones from the weak, we have a series of steps to follow. Read on to learn more.
What To Watch Out For
The first on the list of important considerations is cost. The bottom line is high fees and commissions can lead to decreased returns. Keep in mind that different online brokers charge different fees for trading options, bonds, CDs, mutual funds and other financial markets. When trading mutual funds and ETFs, take into account the expense ratio. And watch out for the possibility of account service fees, maintenance fees, inactivity fees and other similar costs.
2. Research and Education Tools
Beginner investors can benefit from research and education tools provided by online brokers. These resources comprise a wide range of tutorials, reports, and other information. They help to make informed decisions about online trading and investment. There are several online investment companies out there like CMC Markets that provide in-depth research and education tools.
3. Customer Service
What if you need assistance in placing trades? What happens if there is a problem with the trading platform after placing your order? What if you have other questions? Quality, timely customer service is important when you have issues you need addressed. Online brokers with good customer service can be important in your online trading endeavors.
How To Pick A Good Online Broker
Picking the right online broker comes down to your preferences and priorities. Some online investors are willing to pay higher fees and commissions for a state-of-the-art platform while other take cost as the determining factor. Here are some areas to consider when picking your online broker:
1. Pay attention to account minimums.
The amount you want to invest in various financial markets may slim down your choices. A good online broker allows you to open an account with an amount you are comfortable with. Don’t get pressured into investing more than you are able and willing to.
2. Choose brokers with lower fees.
You won’t be able to avoid account fees completely, but with some careful research you can minimize them. Many online brokers charge a fee for closing your account or transferring out funds. If you are transferring funds to another broker, you may consider companies that reimburse some transfer fees.
3. Consider your trading style and technology needs.
Choose online brokers that offer the investment opportunities you want at the most reasonable price. If you are a beginner online trader, you may not plan to trade frequently. If this is the case, choose online brokers that don’t charge inactivity fees. Consider companies that offer technological tools to help make your online trading endeavors easier.
4. Look at ratings and customer service.
Take a close look at the ratings and customer service if you want to pick a good online broker. There are several review sites that offer comprehensive broker ratings that are objective and based on factors that matter most to consumers. These factors include, but are not limited to customer service, commissions, account minimums and fees.
Online Trading Scams
1. Hacking into your trading accounts
There are scammers out there with knowledge and technology to hack into your trading accounts by stealing your username and password. Once they have control of your account, they pretend to be you, able to make trades without your knowledge and generate huge profit for themselves. Secure password selection and management is something we all need to adopt as a part of doing business on line.
2. Email hacking
Some scammers may steal your email passwords which they use to access your email. Once they have access to your compromised email account, they might communicate with your broker to create a fake story to show why you need funds released.
How To Avoid Being Scammed
• Ensure your anti-spyware and anti-virus software are up-to-date.
• Use secure passwords that are difficult to guess, ones comprised of a mix of characters, numbers and symbols..
• Avoid using public computers or public Wi-Fi to log in to your accounts.
• Avoid public domain email address when you want to communicate trading instructions.
• Never save log-in details online or disclose them to anyone including your broker.
• Always monitor your online brokerage account.
• Regularly check trade confirmations provided by your online brokerage firm.