Investing in stocks has never been easier.
Yet there are some things you absolutely must consider before your first investment can be made.
One fundamental question to ask yourself is – which online stock broker are you going to use?
This is an important consideration, because the broker you choose can impact your investing success.
There are many options to consider and factors to weigh. So read on to discover the key things you need to look for when selecting an online broker to meet your trading needs.
The key is to find the broker that suits you, who ticks as many boxes as possible.
(If you don’t think you are quite ready, there are many quality online stock market courses to help you learn more).
Trading Costs and Fees
Yes, it’s all about the money!
You simply cannot invest and trade for free. Therefore, assessing the fees that brokers charge is a must as they can affect your overall returns when trading.
Be prepared to devote some time to this as there is a raft of different fee types and structures.
Stock brokers typically use a variety of fee structures for their services. These fee structures can include different types of charges based on:
- the type of trade
- the investment product
- account maintenance, and more
Here are some common fee structures you might encounter:
This is one of the traditional fee structures, where you pay a fee or commission for each trade you make. The commission can be a fixed amount or a percentage of the trade value.
Some brokers charge a flat fee for each trade, regardless of the trade size. This can be more cost-effective for larger trades.
In this structure, the broker charges a percentage of the trade value as a fee. This can be suitable for smaller trades.
This fee is commonly associated with forex and CFD trading. The spread is the difference between the buying and selling price of an asset. Brokers make money from this spread.
Inactivity or Maintenance Fees:
Some brokers may charge fees if your trading account is inactive for a certain period. Or if you don’t maintain a minimum account balance.
Some brokers charge fees for withdrawing funds from your trading account to your bank account.
These are fees charged by the stock exchanges themselves for executing trades. Brokers may pass these fees on to traders.
Some brokers charge fees for using their trading platforms. Especially if you require access to advanced features or premium tools.
Currency Conversion Fees:
You’re trading assets might be denominated in a currency different from your account’s base currency. If so you might be subject to currency conversion fees.
Annual Account Fees:
Some brokers charge an annual fee for maintaining your trading account, regardless of your trading activity.
While many brokers offer fee-free deposits, some might charge fees for certain deposit methods.
Research and Data Fees:
A broker might provide research reports, market data, or other premium resources. If so, they might charge additional fees for access to these services.
It’s essential to carefully read the fee schedules and terms of service of any broker you’re considering. The fee structure can significantly impact the overall cost of your trading.
Moreover, consider how the fee structure aligns with your trading style and investment goals.
Some traders might benefit more from commission-free trading. Others might prefer a lower spread or fixed fee structure, depending on their trading frequency and strategy.
To help find brokers with lower fees, try searching online for “discount brokers.”
To learn more about stock investing in general, check out the leading online investment courses.
Trading Tools and Research
Investing and trading yourself means you need to get involved. You can hire people to do it for you, but that means more expense.
And to be frank, you are not guaranteed success with a fund or investment manager.
So getting involved is another must.
You will find that some brokers offer trading platforms that you can actually see how the stock price of specific companies is doing.
Some are easier to sue than others. So one trick is to look for platforms that are intuitive and have robust tools.
Good brokers will also provide:
- research reports
- analyst recommendations
- risk management tools
Asset Classes and Investment Products
There are numerous investment asset classes available. These include:
Exchange Traded Funds (ETFs)
It’s also worth taking note of any specialty assets offered like Initial Public Offerings (IPOs) or foreign trading.
IPOs allow companies to issue stock to the general public. They have an initial set price and are a first opportunity for individuals to invest in the company.
So this can be a great way in at a low share price.
Customer Service and Account Support
When you are investing and trading you need to be able to react to market movements.
Therefore, you need the ability to respond quickly. That will require great customer support availability via phone, email, chat.
Check reviews and complaints online about broker customer service. This will help you gauge suitability of each broker you research.
Security and Protection
By now you should know how important it is to protect yourself when online. Dangers lurk everywhere and in many forms.
Do you use your mobile phone to pay for things? Or use online banking facilities? Then you are trusting your bank and mobile provider to keep your personal information private and secure.
You absolutely have to expect the same from your online stock broker.
Check for the following:
safeguards to protect your personal information and prevent fraud/hacking
two-factor authentication protection
level of encryption
Federal Deposit Insurance Corporation (FDIC) insurance on cash balances
Securities Investor Protection Corporation (SIPC) protection on securities
reimbursement for losses caused by fraud/hacking
make sure the company doesn’t sell customer information to third-parties
Ease of Use
Navigating platforms and websites isn’t always a smooth experience. Ease of use can be a very personal experience.
But you will want to ensure the broker site/platform you choose is easy for you to use.
For one thing, consider their account opening process and funding transfers.
Are there minimum notice periods if you want to close your account with them?
Are they Regulated?
Before you do anything when selecting a UK broker – you absolutely MUST make sure they are regulated by the Financial Conduct Authority (FCA).
It’s simple really, regulation provides assurance that the broker you are dealing with is fundamentally sound as a business.
Not regulated? Hmmm. probably best to stay clear.
So Which Broker Should I Choose?
We complete this guide now with our list of who we regard as the UK’s top brokers.
But, please note that the “best” stock broker for you will depend on a variety of factors such as your trading preferences, investment goals, and the features you prioritize.
So whoever you choose, it very much has to be a personal choice. The information we are providing is simply that, information gathered from our experience. It is not advice.
It’s important to do your own research and consider your individual needs before choosing a broker. This is something you can learn more about by going on investment courses.
UK’s 10 Best Stock Brokers
Known for its advanced trading platforms and competitive pricing. It’s suitable for active traders and investors who require access to a wide range of global markets.
A popular platform with a user-friendly interface and a variety of investment options. It’s suitable for both beginners and experienced investors.
AJ Bell Youinvest
Offers a range of investment options and a user-friendly platform. They are known for their competitive fees and good customer service.
Offers spread betting, CFDs, and traditional share trading. It’s known for its powerful trading platforms and educational resources.
Offers a broad range of investment options, including funds, stocks, and more. They are known for their research tools and educational content.
E*TRADE (part of Morgan Stanley)
Known for its user-friendly platform and extensive educational resources. It’s suitable for a wide range of investors.
Offers a comprehensive suite of investment products and access to global markets. It’s known for its advanced trading platforms.
Known for its low-cost trading and access to a variety of markets. It’s particularly popular among cost-conscious traders.
Offers commission-free trading with a user-friendly app. It’s suitable for beginners and those who want a simple trading experience.
Known for its commission-free trading and user-friendly app. It’s popular among beginners and casual investors.
In our experience, Interactive Brokers are by far the best advanced broker. Not necessarily very easy to use, but they have the lowest fees and you can actually connect it and trade through the TradingView platform for trading and investing.
Etoro is one of the easiest to use, with low fees for investing and trading. For international brokerage.
IG is one the best for SIPPs and ISA and Spreadbetting. Easy to use and one of the biggest ones, although the fees are a bit high.
Degiro.com is an easy to use online broker, with low fees. Very suitable for investing.
As you will have gathered, you can’t just stick a pin in a list of names and hope for the best when choosing an online broker.
You need to assess:
- the fees
- asset options
- customer service
It is essential to evaluate brokers based on your specific trading needs and priorities.
There are new players entering the broker service all the time, so always ensure to verify their current reputation. As well as their fees, features, and regulatory status.
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