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Stock trading first began over 500 years ago when the first stock market opened in The Netherlands. It has always been considered a ‘serious’ occupation and indeed, still is. When you trade stocks you are buying a part of the business you have chosen to invest in and enter into a legal contract.

An individual cannot buy or sell shares on a stock exchange directly; this can only be done through a suitably licensed stockbroker. A broker will act as the middleman when you either buy or sell stock and ensure that any necessary legal obligations relating to the transaction are fulfilled.

If you intend to run a stock trading account online, your choice of broker is paramount. As you are likely to have a substantial sum invested, perhaps for a lengthy period, you must have absolute faith in the broker that is handling your portfolio. To get a better idea of the factors that make a great broker, read some of our in-depth reviews created by our panel of experts.

In this article, you will learn:

  • The importance of selecting the right broker
  • An idea of the assets that are accessible to you
  • All the benefits of using a stock trading app

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

What Makes a Great Broker

Stock Trading

The answer to that question is another list of questions that you need to ask yourself first. How much do I know about the stock market? What is the maximum amount I can afford to invest? What kind of assets would I like to invest in? There are of course many more, but let’s start with four things you may not have thought of, but are very important.

Diversity of Markets

This is the part where you hope to look at a broker and find that there are plenty of different assets for you to select from. As with most things, it is never wise to put ‘all of your eggs in one basket’, it is always better to diversify your portfolio. Ideally, you will have a range of company shares from global markets, bonds, mutual funds and ETFs to work through. Always bear in mind that each different asset may also have a different fee structure.

Mobile Trading

There are two schools of thought where mobile stock trading is concerned, those who swear by it and those who never use it. We should point out two things here: of those two groups, the former is a minority hovering around the 10%-12% mark, the latter group use mobile apps, but rarely, if ever, make a trade from their device, they just use it as a way to monitor. Undoubtedly, the ability to do this is especially useful during volatile economic times.

Licensing And Regulation

For stockbrokers, regulation and licensing are defined by individual countries. For example, the UK is under the auspices of and licensed by the Financial Conduct Authority (FCA). Also, London Stock Exchange firms are bound by the ‘Rules of the London Stock Exchange’ known colloquially as just ‘the rules’. Applicable regulations include compliance with the European MiFID Directive. All of this regulation is in place to protect you as a trader and is of prime importance.

Good Customer Service

An often overlooked part of the average trader’s search for a broker, simply because you do not anticipate things going wrong, but unfortunately it can happen. Customer support is one of the aspects of a brokerage we always look at closely (and test out) during our reviews. We like to see a free telephone number, or a ‘real’ person live chat available during the hours and days that the worldwide stock exchanges are open as well as an e-mail address or webform for slightly less urgent or detailed enquiries.

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How do Stocks Work

At various stock exchanges around the world, shares in companies are made available for purchase. A price per share is set and during the trading period, it could rise or fall. As a trader, you are trying to achieve purchasing the asset at the lowest price possible and then potentially selling at a higher price, perhaps with a fairly quick turnaround. As an investor, you would buy stocks that you intend to ‘keep’ for a much longer period.

Once you have chosen your broker and opened an account it is time to set your platform up and to start monitoring the specific stocks you are interested in. Some traders even operate a ‘paper portfolio’ for a while to help them make decisions and to determine their trading strategies. It is quite important to do your homework in advance, as some brokers charge Inactive Account fees monthly, which can soon eat into your profit margin.

If you intend to do all of the decision-making yourself then you will opt for a discount or self-service brokerage, where fees are slightly lower. The alternative is a Full-Service broker, where all you have to do is make the decisions and someone does all the trading on your behalf, at a cost of course. Stockbrokers are not cheap to work with, you will be charged commission fees for every trade, custodial fees for keeping your investment portfolio secure and miscellaneous fees for things like depositing and withdrawing funds or currency exchange.

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Broker Bonuses And Offers

As you will see for yourself, a stockbroker is not the type of operation that is all bells, whistles and pop-ups offering big bonuses to “Trade Now”. It is a much more subtle set up and it is highly unlikely you will come across any that even mention an incentive as a ‘bonus’. That said, there are rewards available to consistent traders, including:

  • Reduced fees
  • Free trades
  • Account upgrade
  • Service upgrade
  • Free software
  • Early notification of IPOs

As fees can be quite high in this particular market, your intended level of trading is a big factor. Some of the top brokers offer fee reductions after as few as three trades in a calendar month, while others require as many as twenty before there are any concessions. You may also find that if you select stocks from certain markets that they are offered on a zero commission basis, this aspect varies between brokers, but if you are trying to keep costs down, it is worthy of a bit of extra research time.

Other offers may include access to an experienced Account Manager, who can help you organise your portfolio, an upgrade to an account with a lower fee structure or free analytic software to assist with your trading strategies. One particular benefit worthy of your attention is early IPO alerts. Standing for ‘Initial Public Offering’ these are shares made available by successful private corporations when they first ‘go public’ and can represent a very exciting and lucrative prospect.

The in-depth broker reviews our experienced team carry out are designed to help people like you make an informed choice.

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As you can see from just this brief glimpse into the world of stock trading, there is a lot to take on board. It is important to be honest with yourself about your current level of knowledge and finding the right broker is just one of the many things you have to think about before you can begin trading. The in-depth broker reviews our experienced team carry out are designed to help people like you make an informed choice.

Licensing and adherence to regulations are high on our list of priorities, as is the security of the broker’s website, trading platform and mobile apps. Generally speaking, stockbrokers have bespoke trading platforms, which we test thoroughly for ease of use and functionality, particularly in terms of response times for orders and the ability to monitor your investments in real-time, without undue latency.

Because it is so important to have a full understanding of how this type of trading works, one of the things we look at closely in our reviews is customer support. In this context, it is not just the availability of someone available to deal with a problem, we look for all-round client assistance including transparency of trading terms and educational support for those of you who are still learning. You can rest assured that any broker that makes it onto our recommended list will bring you the best trading experience possible.

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

Frequently Asked Questions

FAQ

Is stock trading regulated and safe?

Yes, provided you select a broker that is regulated by a reputable licensing authority such as the FCA, ASICS or FINRA your money is safe and insured.

Can I trade without downloading software?

This varies, while some brokers have a web-based platform option, others will require you to download software to either your PC or mobile device. In either case, you will have to open an account with a broker first.

Do I need to start trading with real money?

Yes, generally speaking, stockbrokers do not have simulation or demo accounts available. An alternative is to run a demo account with a broker who offers CFDs to get a feel for the market.

How can I make deposits and withdrawals?

Due to the higher amounts involved for stock trading, the expected method for funding your trading account is by bank transfer. Both deposits and withdrawals usually attract fees.

What is a stock broker welcome bonus?

This is not a type of trading where investors are attracted by brokers offering bonuses. Incentives are generally given for loyalty or trading volume.

Meet The Author
Sundar Kapadia
Sundar Kapadia
Risk Manager

Sundar never ceases to impress us; being an Actuary makes him an expert in assessing risks and dealing with uncertainty. He’s been contributing to the site as an author for around 4 years, and we know our readers love his various insights and predictions.

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