Which broker should I choose?
There are many brokers out there offerring attractive packages. Most important is, which broker should we choose? At the end of the day, we need to ensure that our money is safe with the broker.
These are some important notes that you should take into consideration before settling with any broker -
Regulation and business maturity
Ensure that the broker is licensed and regulated by a recognized governing body in its respective countries. Eg. ASIC- Australia, FINRA- US, SAS- Singapore, Securities Commission and BNM - Malaysia.
Profile of the brokers can be verified via these links (not limited to):
Most brokers share similar advancement in its electronic trading platform so finding a suitable platform is not a hard task. It is more crucial to pick a broker that has been in the market for ages and has established its name throughout the world in order to safeguard yourself from possible fraud and principal loss.
Then again, you should always perform a background check on these companies/institutions to ensure legitimacy of their business.
Execution and technology
Execution of orders plays an important role in determining a winning and a losing trade.
No matter how good your trading strategy are, a slippage can eat away into your profits and over a period of time, the slippage amount can be huge. Besides execution, traders should also ensure that the the broker offers you flexibilities in terms of placing and modifying orders.
Other factors that can be clubbed into execution and technology can also involve (1) spreads, (2) the ability to fill your orders as accurately as possible and (3) value added services such as access to the order book. Some brokers offer an inbuilt charting and trading platform. This feature can make a world of difference for investors/traders.
Type of product offering
Ensure that the broker you select offers a wide range of products that you can trade today or in the future. Go for a broker that offers variety of markets to trade, vast trading options or contracts such as Equities, Forex, Commodities, Derivatives, ETFs and Futures.
This is because switching between brokers after having trading with them over a long period of time can be cumbersome and difficult.
Therefore, when choosing a broker, ensure that the broker offers you a wide choice of market and products so that whenever you are ready to explore new market, you don’t have to look too far.
Margin, leverage and fees
Last but not least, remember the saying "you get what you paid for"?
Don't open an account with a broker simply because it offers the lowest commission cost.
There may be fine print in the ad specifying which services the advertised rate will actually entitle you to. In most cases, there will be higher fees for limit orders, options and those trades over the phone with your broker.
Nonetheless, a good margin, leverage and fees is important to ensure your trades is profitable. You don't want to pay accessively on fees and charges. These charges may wipe your profit.