I have used many brokers before, some good and some simply inadequate. One important lesson that I learnt was that it is very rare to find a broker that offers a useful platform for different trading instruments (futures, forex, cfd’s etc).
For me that realisation came when I tried to trade futures from my bank broker that did not have an efficient trading platform to deal with the fast pace of futures trading. So it’s important to choose wisely and to determine beforehand what trading instruments you would want to trade.
So here are a few pointers to look out for.
- Make sure that your broker is registered with a recognized regulating firm in your country. This is primarily to protect your capital if your broker decides to buy that island in Fiji with your money
- Also please make sure how bank transfers work to and from your account and what bank the broker uses if it’s not a bank itself. Usually the bank used would have to pay all the clients if anything would have to happen to the brokerage firm so take note of it.
- Find out if there are any monthly fees as they differ between brokers.
- Get the brokerage fees. They tend to differ between instruments (shares, futures etc) and also upon the quantity you trade.
- It’s vitally important to get the best deal here as high brokerage fees eat into your profits.
- The trading instrument you require should be offered.
- A live, reliable price feed is required for intraday or day trading; this in my regard is a must, even if you only trade once a month. Just also make sure that the live price feed is free or part of the monthly fee structure.
- The broker must have telephonic support that can place or close trades on your behalf. The support staff should also be able to help you with any queries related to the software at any time during the trading day.
- The trading platform must be efficient (quick) and simple to use especially in dynamic trading environments such as forex or futures. Sometimes the only way to fully find out is to set up a demo account and to view any videos or literature regarding the software.
- Explore their stop loss settings and how they work.
- Alerts for stop loss triggers, trades or even price levels.
- Market news
- Educational trading courses. Most brokers have lots of video content and a few of the good ones offer live webinars.
Lastly, test the broker and its software thoroughly before you start your active trading, you definitely don’t want to find out that your order was not filled or incorrect. You also wouldn’t want to lose money unnecessarily because you haven’t set your stop loss correctly.
Do not accept a below par broker, there are literally thousands of brokerage firms out there and if you not happy then find another, don’t compromise.
All the best if you currently looking for a broker.