What to Consider When Choosing an Online Trading Platform
If you’re looking for options on how to land a return on your investment, you need to ensure you’re using a trading platform that slots in with your goals. If you’re relatively new to the world of investing, ease of use is important. However, beginners will also benefit from choosing a platform that provides ample learning resources.
When it comes to investing, there is no such thing as an absolute guarantee. However, choosing a suitable platform makes all the difference between netting a potential income and constantly dealing with disappointment. Need some pointers? Read on for everything you need to know when selecting a trading platform.
What Kind of Investment Experience Do You Have?
Before you dive headfirst into trading or investing, take a step back and consider your individual needs. If you’re a complete novice, you’ll want a platform that’s tailored toward the beginner. This means selecting an online broker that offers expansive guidelines and investment glossaries. Ideally, you’ll also want a platform that allows you to carry out practice trades before you part with your own money.
The more experienced trader can be a little more targeted in the platforms they use. If you’ve been trading for some time, glossaries and how-to guides are going to be redundant. Instead, look for platforms that provide analyst insights and exhaustive data you can interpret yourself.
Consider Your Trading Style
Once you’ve underlined your trading experience, think about your trading style. If you’ve plenty of time to set aside for this activity, you’ll want a platform that allows day trading. If your ultimate goal is to leave your current career and focus solely on investing, an online broker that supports swing trading is the way to go. If you fall into this camp, you’re an active trader.
However, passive investment is on the rise. Passive investors keep it simple, focusing on a few steady assets that promise long-term returns. Although you’ll want to monitor the performance, passive investments tend to require little hands-on interaction but a solid initial amount of money invested.
What Trades Are You Interested In?
Looking to speculate on a leading share market index like the Germany 40 or the Nasdaq? What assets are you most interested in investing in? Once you’ve identified the type of trades you’re looking to make, you can pick a platform tailored to the task at hand.
Some platforms are incredibly focused, providing narrow trading options and streamlined interactions. Other platforms are designed for investors with broader appetites, alerting users to new investment opportunities.
Your investment goals may change, but it’s important to plan ahead. Eventually, you may need the option of automated trading. Furthermore, if you make the switch to full-time investing, extended trading hours are a must.
How Much Guidance Do You Need?
This is crucial for investors looking to make returns in the long term. Before trading, it’s important to familiarize yourself with the fundamentals. However, before it comes to executing your first trade, make sure you’re using a platform that works for you.
If you’re comfortable digesting in-depth financial data, you probably won’t need too much guidance. If you’re less confident with charts and hard data, make sure you’re trading on a platform with ample resources at your disposal.
Whatever your experience level, ensure you’re trading on a platform that provides ready access to support teams. For a novice trader, support teams serve as a vital lifeline. Furthermore, many platforms offer broker support if you need some assistance in executing trades. For experienced users, responsive customer service is a must if you want to minimize downtime.
Is the Platform Regulated?
When it comes to trading, peace of mind is priceless. To put your anxieties at ease, make sure you’re trading with a broker that’s regulated. Take the time to check whether a platform is a member of the financial regulator in the region before committing any time or money.
You’ll also want to explore whether any insurance cover is provided. This isn’t always a given when investing online, but some trading platforms provide limited cover for customers. Fraud protection is typically more commonplace. However, you’ll need to follow robust precautions yourself to ensure you’re eligible for any fraud claims in the future.
Before committing to a single trading platform, make sure you’ve done your homework. Cast the new wide when looking for customer reviews. Avoid simple aggregators that only provide a snapshot summary. Instead, actively search for any feedback regarding poor customer service or instances of fraud.
Trading Account Security
It may go without saying, but when you’re dealing in the expensive world of investments, online security is everything. A good online brokerage should offer two-factor authentication as a standard.
A reliable platform should also use sophisticated encryption to protect your information. Furthermore, read the fine print to ensure operators haven’t reserved the right to sell your information to third-party companies.
What Fees Are Involved?
Fees are often overlooked when it comes to investing. However, they can put a significant dent in your revenue stream if you’re investing considerable sums of money. If you’re choosing to trade with a broker that offers premium features and advanced support, higher fees are justifiable.
First, check to see what minimums are placed on deposits. Some brokers require you to deposit a certain amount before you can even begin trading. If you’re in it for the long haul, take the time to determine account maintenance fees. Sometimes these fees are charged monthly. In other instances, fees are applied annually.
In addition to fees, you’ll need to think about commissions. Not all brokerages operate the same way when it comes to commissions. Some take their cut based on how frequently you’re trading. Others will take their commission based on the amount of money you’ve invested. Having an investment roadmap in place can help you select a cost-effective trading partner.
Commission rates can also vary depending on the types of securities you’re trading. If you only plan on dealing with stocks, you’ll only need to determine a single commission rate. If you think you’ll be exploring bonds and futures, ensure you’ve established the varying commission rates attached to all securities.
Another thing to watch for is hidden fees. Just because there aren’t any transaction fees applied to buying and selling, doesn’t mean you won’t feel the pinch. Before you start trading, make sure you’re confident about any fees involved.
Finally, check the commission schedule. Some brokerage platforms will take a commission based on the number of trades you have executed. Others might overcharge you on FX fees which should be minimal.
Now all the due diligence has been taken care of, you can start testing the waters with platforms. Take advantage of free Demo accounts to experiment with different platforms. Admittedly, these welcome offers are restricted to basic platforms that are best suited to the beginner. If you’re an experienced trader looking to test advanced broker platforms, you’ll ultimately have to part with capital.
Once you start testing broker platforms, focus on a few key factors. Firstly, explore what kind of trades you can actually execute. In some cases, you may have to carry out some detective work to find certain securities. Next, assess how reliable price quotes are. Is data being displayed in real-time? Most brokers support real-time displays, but this information won’t automatically refresh. For maximum convenience, go for a platform that provides streaming data.
Whether you’re looking to experiment with trading or say goodbye to the 9-to-5, you’ll need the right tools and support at your disposal. Beginners will benefit from a user-friendly platform with first-rate customer support and plenty of reference material. The more advanced user might prefer a brokerage offering specific securities and extended-hours trading.
Wherever your interests lie, make sure you have a solid investment strategy ironed out before you put your capital at risk. If a platform isn’t aligning with your goals, it’s best to cut your losses early and seek out a more suitable alternative.
_*Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when spread betting and/or trading CFDs. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money._
_*Marketing for CFDs and spread betting is not intended for US citizens as prohibited under US regulation._