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What makes a good stock broker?

Kirk Miller
21 April 2022 |
Updated: 21 April 2022

Every investor wants to feel that the brokerage they choose is reliable, trustworthy, and cost-effective, given the type of investing they are interested in. It can, however, be confusing for new investors. There is a lot to consider, and precisely what makes a good stockbroker for you will depend on your specific needs and requirements.

How to find a stockbroker

Many people like to choose a stockbroker based on a personal recommendation from someone they trust. This is generally a good idea but remember that different investors have different needs. Some brokers cater to long-term investors, and others are day traders. Some are specialists, and some are multi-asset brokers. Many brokers do offer an excellent all-round service for different types of investors. Still, before investing with a particular broker based on a personal recommendation, it’s good to ask exactly why that person likes that broker. What’s important to them may not be what’s important to you.

The same goes for checking out online reviews of brokers. This is a good way to get a feel for a broker but remember to look at exactly what the review says about specific aspects of the broker that matter to you, whether that’s trading fees, the platforms available, the tradable assets offered or the customer service. To work out what you need, think about the following questions.

What’s your level of experience?

Suppose a very experienced investor recommends a particular broker. In that case, it’s tempting to assume that’s a great endorsement, but if you’re a brand-new trader just starting out, you might be looking for very different things. If you’re a new trader you might want to choose a broker with a good demo account, so you can practice trading risk-free with virtual money before you open a real money account.

Newer traders might also want to consider a broker that supports copy trading, so they can easily follow and copy the trades of more experienced and successful investors. A broker with great educational resources, an intuitive trading platform, and easily accessible, highly responsive customer support can also be very important for a new trader.

How much do you want to invest?

When someone recommends a broker, consider how their circumstances might impact their experience. They might have a large amount of money on deposit, giving them access to a premium account with extra features. Suppose you only have a modest amount to invest; in that case, you’ll want to look at brokers with a low minimum deposit requirement, and you’ll want to check out the spreads, tools, and other features offered to standard account holders with similar deposit amounts.

What do you want to trade?

Some brokers specialise in forex, or stocks or cryptocurrency. Some offer a wide range of commodities and indices, some only a few. Some offer leverage to trade contracts for difference (CFDs), and those who do may offer a lot of instruments as CFDs or just a small selection. It’s important to have an idea of what you want to trade before you start. However, you may also want to branch out, so it can be good to consider multi-asset brokers, even if you know, for example, that you’re starting with forex.

Will you invest long or short term?

Are you going to be actively day trading or swing trading, or investing for the long-term? The various features at different brokerages may mean that some are better for active traders and some for long-term passive investors. If you’re just dabbling and may lose interest soon, keep an eye on inactivity fees, which some brokers charge if you go a certain amount of time without placing a trade. If you’re making lots of trades, check out commissions and other transaction fees to see how high your trading costs will be. If you’re going to need to make regular withdrawals from your trading account, you probably want a broker with no withdrawal fees and fast withdrawal processing times.

How much support do you need?

Many brokerages simply provide you with a platform to trade on, and you execute all trades yourself. Others might provide you with a personal account manager for support. Every reputable broker will offer a customer support portal, but you will want to make sure this operates in a way that suits you. Can you talk to someone 24/7? What are the customer support channels? Can you live chat with support staff? Are phone calls and emails answered quickly? Can you request a callback? 

Do you want to trade on the go?

Most brokers offer mobile trading, either through a trading app or via a mobile-friendly website. If you are going to be trading from a mobile device most or all of the time, evaluate how well the app or mobile site functions, what security is like, and if all the main platform features are accessible via mobile.

How easy is the platform to use?

Some websites and apps are more intuitive than others. This is where a broker with a demo account can be a really good idea. Opening a demo account will allow you to find your way around the platform, practice opening and closing positions and see how everything works. Trading with a demo account isn’t exactly the same as trading with real money, but it’s very close. It can help you decide if you are happy with that brokerage’s general user experience.

How safe and trustworthy is the broker?

There are no guarantees with trading. You may make either profits or losses on any given day. However, you will want to ensure that your deposit is protected. Confirm that any broker you consider is licenced and regulated in your jurisdiction. Find out whether they have an investor compensation fund and negative balance protection. Check the site security too. Most brokers offer two-factor authentication, data encryption across the site and secure data privacy policies. Ensure you’re working with a trusted broker who follows best practices before you deposit your money.

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