How did we choose our best trading brokers?
The trading brokers research team have many years of experience testing, studying and analysing hundreds of online trading brokers. We have reviewed each broker and assigned them a rating according to our findings of what we consider to be amongst the most important factors when choosing the best brokers for trading online.
How to choose the best broker for trading online?
When choosing the best trading broker for your online trading needs, there are a number of things to consider. This ranges from the online trading services provided by the brokerage along with the regulations that they have in place which can help to offer investors protection and give them peace of mind. Here we will look at some of the key points to consider when looking for the best trading brokers.
Trading broker regulation
A reputable trading broker is likely to be regulated by an established and well-respected regulatory authority such as the FCA, ASIC or CySEC. Regulation can provide traders with additional protection they would not get from an unregulated broker. You can check if a trading broker’s regulation is valid and up to date by locating their license number on the brokerage website and looking the number up with the relevant regulatory authorities.
Trading broker platforms
Each trading broker will offer a choice of trading platforms for you to use to trade online with. Most brokers will offer the MetaTrader platform which is one of the most popular platforms for traders of all experience levels. It is considered amongst the best trading platforms due to its user-friendly interface and vast amount of built in trading tools. Trading platforms are available for desktop, web and mobile devices. Make sure that the trading broker you choose offers a platform that you are either familiar with or one that is user friendly. You should also ensure that the platform is compatible with the devices you plan to trade on. It would be a bonus if the broker offers trading platform tutorials to help you learn how to use the platforms.
Trading broker markets & instruments
Different trading brokers will offer a range of different markets and trading instruments. Many markets can be traded online including forex, stocks, indices, commodities, energies, precious metals, bonds, ETFs, cryptocurrencies and more. You should make sure that the trading broker you are considering offers the assets that you are interested in trading online and if you plan to expand your portfolio into other markets in the future, the more they have available, the more choice you will have.
Trading broker costs
When you trade online with a trading broker, you will need to consider the costs involved. The primary costs that most brokerages will charge are a trade commission, the bid/ask spread, overnight swap fee (rollover) and account funding fees. Make sure that you are fully aware of all of the costs that the broker charges and implement them within your money management and trading strategy. The best trading brokers in terms of cost will usually charge the lowest commission and have the tightest spreads.
Trading broker liquidity
Most trading brokers will utilise a combination of liquidity providers within their liquidity pool. These can range from global banks, financial institutions and other market makers. A liquidity provider by definition is a market broker or institution which behaves as a market maker in a chosen asset class. They quote both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. Usually the larger the brokers liquidity pool, the better the trade execution speeds and tighter the spreads. Some of the best trading brokers will have a vast array of liquidity providers thus supplying online traders with tight spreads and fast execution speeds.
Trading broker leverage
Online trading brokers will usually provide traders with the option to trade a leveraged position. This allows traders to enter a position size greater than they would without it but also greatly increases the risk. If for example you had an account balance of $10,000 and leverage of 1:30, you would be able to trade a position size of $300,000 ($10,000 x 30 = $300,000). It is imperative that traders understand leverage and the risks involved before trading with it.
Trading broker order types
When you trade online you can enter the markets with a variety of order types including instant execution, pending orders, stop orders, limit orders, etc. If your trading style involves a specific order type then you should ensure that the trading brokerage supports that order type.
Trading broker tools
Most traders will require a range of useful trading tools to help them analyse the charts and manage orders. This can range from technical indicators for identifying trends and ranges to fundamental indicators such as an economic calendar to see what financial releases are moving the markets. The more tools offered by a trading broker, the more options the trader will have to support them with their online trading. Whilst trading platforms provided will have a selection of trading tools built in, the best trading brokers tend to offer a range of standalone trading tools to supplement these.
Trading broker educational materials
You will usually find that most good trading brokers offer a range of educational materials to help support traders with their online trading skills and knowledge. These educational materials can range from video tutorials, trading guides, glossary of terms, webinars, seminars, quizzes and more. If you are new to trading online or wish to learn more, then you may want to consider a trading broker that provides suitable educational resources.
Trading broker deposit/withdrawal methods
You will need to make deposits and withdrawals to and from your online trading broker account. Most brokerages will offer bank wire transfer and debit/credit card payment options. If you would prefer to use another form of payment then you should check that this is offered by the brokerage. Alternative popular forms of funding trading accounts include online payment processors such as PayPal, Skrill, Neteller, etc.
Trading broker customer support
A trading broker should offer top quality support that is on hand as often as possible to answer all technical and general questions that traders may have. As brokers are located throughout the globe, you may wish to consider the time zone that their support team is available during and if that is convenient for you. You should also check if they offer a method of contacting them that you prefer. Most brokers will offer telephone, email and online chat support. It can be a good idea to test the support team before opening an online trading brokerage account.