Choosing a quality broker who is reliable is too often one of the aspects that is neglected by novice traders. And yet, the stakes are high, given that if you are unlucky enough to come across a fraudulent broker, you risk being faced with a company that may not give you your money back if you wish to withdraw it, or that may indulge in price manipulation in order to make you lose money, without you even realising it.
To avoid making the mistake of choosing a broker that is mon suited to your needs, here are some tips to consider.
Regulation is surely one of the most important criteria to take into consideration when you want to choose a broker, simply in order not to fall on a scam. Indeed, even if the regulators are more and more verifying and tracking fraudulent brokers, it is important to check that the broker is regulated by an official body such as :
- FDA : Financial Conduct Authority (UK)
- CySEC : Cyprus Securities and Exchange Commission (Cyprus)
- the AMF : Autorité des Marchés Financiers (France)
- ASIC : Australian Securities and Investment Commission (Australia), etc.
It is important to note that the more international a platform is, the more it is normally regulated by a number of independent bodies in each of the countries where it has a presence. The more international a broker is, the more serious it can be.
A broker that is not well known and that only has jurisdiction in an exotic country is more likely to be a scam than a broker that is also established internationally. It should be taken into consideration that the presence of exotic regulations, such as Cyprus, is not necessarily a sign that the broker is fraudulent, but quite often, it is explained by the fact that he is looking for tax advantages from this type of country.
Fees are another very important aspect when choosing your broker and the least we can say is that there can be very big differences from one broker to another in terms of fees, and this doesn’t matter what market you want to invest in (CFDs, cryptos, stocks, ETFs…).
Therefore, one of the first things to consider when choosing a stock broker is to check the competitiveness of the rates they offer.
Among the most important rates to check are the spreads, which can vary greatly depending on the markets, as our comparison of brokers has shown.
Also, we can issue a fairly exhaustive list of fees that it is imperative to check before opening -an account with a broker:
- inactivity fees
- account opening fees
- account closure fees
- account maintenance fees
- deposit fees
- withdrawal fees
- daily position keeping fees (swap)
As you will have understood, the list of fees that need to be checked is quite extensive, but it is above all the inactivity fees or the account maintenance fees that you must check to avoid any unpleasant surprises.
You should also take into account the fact that some brokers offer no commission on shares, for example. More often than not, a gift that is given to you on the one hand and taken back on the other, whether through the presence of inactivity fees or withdrawal fees that can sometimes be significant.
This is why it is all the more important to check the pricing policy of the broker you are interested in, to avoid any unpleasant surprises.
However, be careful not to let yourself be influenced solely by the pricing aspect in the choice of your broker, as there are a good number of other aspects to take into consideration, especially as a broker who would tend to put too much emphasis on a discount aspect could be suspicious, or else pass on this loss of earnings for him with an unequal quality of service.
The available markets
Logically enough, it is important to consider the number and variety of markets that are offered by the broker you are interested in. On the one hand, it would be a shame to make a deposit on a trading platform that does not offer the markets you are interested in, or that offers a number of assets that is not satisfactory for your needs.
Here again, not all brokers are equal in terms of the number of markets they offer, or in terms of the diversity of their products. So take the time to check these parameters before making your choice.
The seriousness and responsiveness of customer service
Customer service is another fundamental aspect when choosing a broker to trade with. On this aspect, we invite you to check the ratings left by customers on certified review platforms.
In order to make an initial assessment of the value of the broker in terms of customer service. It is becoming increasingly clear that many brokers only offer online customer service, i.e. by email, chat, ticket system and are increasingly abandoning the telephone.
This is not necessarily a great handicap, because in most cases, but it should be checked, answers are obtained quickly. A good customer service is a guarantee that you will get answers, especially if you have a problem, and this is far from being a luxury when you are faced with it. So be careful not to underestimate this criterion when deciding on a broker.
The training offered
More and more brokers are concretely investing in training for novice traders. If you are a beginner, relying solely on the resources your broker will offer you will often not be enough to train you properly. Most of the time, brokers offer mainly educational guides to mastering the fundamentals but rarely go further into the analysis of other deeper factors related to the financial markets.
It is worth mentioning that some brokers, such as eToro, have made a particularly strong effort to offer a whole learning process for beginner investors with videos, webinars, educational articles, a well-stocked YouTube channel, and live Q&A sessions with professional analysts. Brokers are competing more and more on this aspect, and we can see, compared to a few years ago, an effort that is made in this direction to attract beginners in trading.
The quality of the platform
The trading platform is one of the other very important criteria to take into account before choosing your broker. Here is a list of criteria that you can check, simply by opening a demo account with the broker you are interested in :
- The ergonomics of the platform
- the speed of the platform
- the presence of a desktop version
- the quality of the platform with the mobile
- the speed of execution
- the ease of placing orders
- the aesthetics
- ease of navigation, etc.
One of the most interesting platforms on the market is that of the broker eToro>> which is particularly well designed for beginners who might not be very comfortable with overly sophisticated tools, so we recommend it if you have little trading experience.
Choosing a good broker: using a comparison
As you can see, there are a huge number of criteria to consider in order to be sure of having a quality broker and not falling for a scam that could cost you dearly. If you don’t have enough time to carry out a thorough analysis of the brokers you are interested in, you should know that we have put together a complete comparison of the best brokers in order to help you choose the right broker according to your needs, the markets you wish to invest in and many other criteria.