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How to choose a broker in 2022

1 July 2022

Stock broker – how to choose the best one? Is the fee amount the only issue that should interest an investor when selecting an exchange broker? Or maybe there are some more critical factors for which an investor may even lose all their capital? Unfortunately, choosing a stock or daytrading broker is not an easy task. Investors are literally inundated with dozens of offers, promises to get rich quick, and investment tips to ensure success.

However, the investor or trader may not realize that the promised benefits and low commissions may be just marketing slogans that have nothing to do with reality.

Broker platforms and stock data

To multiply your money on the stock market, you need to make profitable trades or collect dividends. The entry of buy or sell orders for instruments is usually done online via the trading platform.
Each broker has its own platform offer. For stocks or futures, brokers usually provide their own platforms. For example, forex brokers often offer the MetaTrader 4 or 5 platform. The platforms may be available in many languages but also in English.

A good broker should provide individual platform training immediately after activating your account if you wish to expand your platform knowledge.
Delayed stock data is accessible, and you must pay extra for real-time data. If you invest in the long term, the delayed data will be enough for you. Real-time data is required during day trading.

The broker trades on the stock exchange or outside of it?

NASDAQ or NYSE. Even a man who has never invested has probably heard of these exchanges. Not every broker offers access to them. Brokers are divided into those with access to the stock exchanges and those over the counter. It depends on whether you are directly trading stocks or just CFDs (contracts for difference for short-term speculation).

Stock exchanges have one central market. One place where you can come and see how the trading is done. If you want to buy Apple stocks there, any broker with access to the market will offer you the same price.

Over-the-counter broker

As the name suggests, OTC markets do not have a specific headquarters or stock exchange. They are literally just a network of servers. Access for new brokers is effortless and not financially burdensome here. So, you can meet many OTC brokers focused on CFD trading who outdo each other in great offers, tempting new traders.

Is the broker reliable enough?

A credible broker should be willing to communicate actively, be transparent and be interested in you. If you have trouble finding the rules of procedure, contacting the hotline, or you cannot reach the hotline, increase vigilance.

The broker should always communicate with you kindly and on an equal footing. Don’t be intimidated. A support agent should be willing to listen to you and be of help. In case of any platform-related problems, for example, he should explain what happened. They should also inform you about the risks of investing, ensure you understand the products you want to trade, and possibly offer training or educational materials.

The best broker in Germany and elsewhere in the world must match this characteristic.

It is worth checking the broker before opening an account. Call the hotline, write an e-mail, and observe how the broker advertises and what they write about themselves. Be on your guard if they are tempting the prospect of getting rich quickly but don’t want to talk to you or explain how it works.

The capital necessary to open an account with a broker

Free account opening with no equity or, on the contrary, a minimum deposit of $ 5,000. Account opening requirements and minimum capital are different. Here it is worth thinking about your options and not starting to trade borrowed money. The broker may limit your trading possibilities if your capital drops below the minimum deposit value. It may also charge unexpected fees or close your positions.

Here, too, the rule of thumb is that you should first get acquainted with the rules of operation of the investment account. A broker who cares about transparency will explain everything on request to prevent unexpected situations in your account. If you are planning day trading, check that the broker you choose does not require you to have a minimum amount of cash in your account.

Meta description: choosing a stock or daytrading broker is not an easy task. Learn a few crucial things to know before choosing a broker.

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