How did Trading Brokers choose our best online brokers?
Now that you know our best online brokers for 2020, we will look at why we chose these online brokers and what factors are worth considering when looking for an online broker.
Best Online Brokers
What makes a good online broker?
A good online broker will be regulated by the most respected regulatory authorities such as the FCA, ASIC & CySEC. They should have been operating for a number of years with a proven track record of delivering online trading services to clients across the globe.
They should offer the best trading platforms, ideally a platform that you are already familiar with. The MetaTrader 4/5 trading platform should be sufficient enough for most online traders. MetaTrader has a quick and easy learning curve so is deemed suitable for all experience levels of trader.
You should make sure that the broker offers the markets and trading instruments that you wish to trade. If you plan to trade currency pairs (forex) now but could branch into CFDs in the future, then you should consider choosing an online broker who offers access to both markets. This will make the transition into other markets more convenient.
Trading costs at the broker should be low, the lower the spreads and commission the lower your overall trading fees will be. The online trading conditions should provide fast trade execution with minimal slippage. This helps to ensure that your trades get placed at the prices that you want them to.
The customer support provided by the broker should answer all client questions in a polite, prompt and sufficient manner. You can connect to the live chat on a brokers website to test how their customer service is. All traders should be treated equally, whilst you should be able to contact support via online chat, email and phone. Make sure that they offer a contact method that is suitable to you and available at least 24/5.
Some of the key points to consider when choosing an online broker are:
- Broker regulation
- Trading platforms
- Markets offered
- Trading instruments
- Trading fees (spreads / trade commission)
- Customer service
What is online trading?
Online trading is the buying and selling of assets using an online brokers trading platform. Many markets can be traded online including forex, CFDs, indices, commodities, energies, precious metals, stocks, bonds, ETFs, cryptocurrencies and more.
What is an online broker?
An online broker provides a brokerage account and online trading platform for investors to buy and sell trading instruments across multiple markets. Traditionally, investors would have had to have telephoned a brokerage to place trades and manage transactions for them. Trading online has made it much quicker and easier for anyone to have access to trading through an online broker.
What types of online brokers are there?
The main types of trading brokers are market makers and ECN/STP brokers. Market makers usually do not charge a commission to trade with them but will add a mark-up to the spread to cover operational costs and take the opposite side of client trades. ECN/STP brokers will usually provide spreads direct from liquidity providers (LP’s) but charge a small commission for each trade to cover their costs. Overall, a non-market maker broker is usually preferable to most online traders as the costs can work out cheaper in the long run without a potential conflict of interest.
Best Online Brokers: Trading Markets
What markets can I trade with an online broker?
The most commonly traded markets by retail traders through an online broker are forex (currencies) and CFDs. This is partly due to the leverage offered on these products that can allow a trader to place trades greater than they would without leverage. It is highly recommended to understand trading, leverage and the risks involved before opening a real trading account. Whilst leverage can increase profits, it can also increase losses. It is considered good to practice trading on a demo brokerage account to begin with.
How much money do I need to start investing online?
You can start trading online with as little as $1 depending on the minimum deposit required by the broker. As trading is risky by nature, never trade with more than you can afford to lose.
Can you make money trading online?
It is possible to make profit from online trading although statistics provided by the many online brokers that we have researched does show that a percentage of traders lose money. Trading successfully requires patience, discipline, practice and a good trading broker.
How to open an online trading account?
Simply choose an online broker, complete the quick sign-up process and you will be able to start trading online.