If you choose the right broker, you can bring your own trading closer to the most comfortable indicators. For each person, their own nuances are preferable. However, there are important terms of cooperation that equally strongly affect the results of transactions and the psychological state of the trader at the time of financial transactions.
Find out in advance how to choose the most suitable broker
In fact, when choosing an intermediary who will bring your transactions to the financial markets, every nuance is important. We can only talk about the degree of importance.
- In the first place is the availability of
a license from the regulator
. Preferably a reputable one – such as the FCA (UK); BaFin (Germany); CySEC (Cyprus). What does it give? You will know that the intermediary meets the requirements that the supervisory authority puts forward. This means that the company is solvent, and in case of disputes, you can always turn to an authoritative body. In some cases, you can count on financial compensation for losses if the regulator finds that the intermediary was wrong in the situation with the client. - Reputation is something that can be checked by the reviews of real customers. But it is important not to get confused here: reviews can be custom-made. Their varieties are white and black PR. It is quite difficult to recognize the truth, but if you read negative information, it is better to play it safe: practice trading on a demo account with virtual money. Not all intermediaries provide it, so try to choose a broker that provides such a service. When switching to a live account, choose a cent account so that losses are minimal.
- Training opportunities are a service that will definitely be useful for novice traders. It is good if the information is structured and presented in several formats.
To protect your own finances or securities in the event of a hypothetical bankruptcy of an intermediary, you must first choose an honest broker. It should be a company that places client money separately from its own – in segregated accounts. As for securities, it’s a slightly different story. By default, the intermediary can use them for his own needs, but is obliged to return them to the client upon request. If you do not want your assets to be used, inform the service company in an official form.
Saving on trade costs
One of the ways to increase profits is to minimize payments for servicing transactions. You should choose a broker 2020 with minimum spreads and commissions – these are the two main types of earnings for the servicing organization. Keep in mind that the spread can be fixed (hypothetically unchanged) and floating (depends on volatility and increases with it). However, the fixed spread can widen to a new constant value during peak demand for the asset.
Many intermediaries now have no minimum first deposit requirements or are symbolic – for example, $1, $5 or $10. There are companies that focus on a higher entry threshold: $200, $400. For comfortable work, you will still need an amount of 1 thousand US dollars or more. If you are going to choose a Forex broker from among large well-known companies, count on increased requirements for the initial deposit. For example, these can be amounts of $2 thousand or $10 thousand.
High leverage is an advantage for those who know how to make competent forecasts, take optimal risks, and are able to respond to the situation in a timely and adequate manner. Advice on how to choose a broker for a beginner is to take a minimum risk. Among the types of accounts, pay attention to micro/mini accounts (they are suitable for beginners and practicing new strategies in real market conditions) and
General recommendations
Your goal is to choose a broker for stock trading, so that it is present on the market for a long time, has a large client base, good reviews (and, accordingly, reputation).
Or do you want to communicate directly with the tax authorities? If you are inclined towards the second solution, then you need to think about how to choose a foreign broker. He may not act as a tax agent.
You can save money by opening an IIA. Such a step gives the right to receive a tax deduction. But the IIA must exist for at least 3 years, and you need a “white” income above a certain amount. Test the efficiency and qualifications of support specialists. If these parameters do not suit you, you can refuse to cooperate. Otherwise, when a difficult situation arises, you will lose huge resources expressed in personal time and money. Another important criterion for selecting a suitable company is a wide range of financial instruments for trading.
