What is the big deal in selecting broker, fairly simple Process, huh…!
Nope, it might seem simple or of less value but it can be exceedingly important than what it is in your mind, right now….
Let LeadBrains Guide you through various aspects on the selection process by answering series of questions that we hear rapidly.
What are all the important factors to consider before opting to choose a Broker for trading
Let’s first List & dig deeper with each & every factor
Technology & Systems
Leverage / Exposure
Charge to Market Maker
Regulations & Collateral
Let‘s do it,
1. Trading Platform
Note that the trading platform is the connection between a trader & Market Maker (broker) who links a trader to the market, viz…, through their trading terminal
Now that you have understood the significance of a trading terminal. It should be a feature rich piece of software that is,
Light to load in your PC
Chart trading is extremely important, as it reduces the ordering times & also improves the flexibility
Should have the data about the depth of market
The real-time quote streaming has to be faster
Contains all the adequate tools for trading
All important tools for Performing analysis in charts
Ultra-fast data connectivity through light algorithms
Should be free from Bugs
Should be updated Frequently
Now, as we know, there are extremely small set of brokers who takes all the above mentioned things in to consideration but believe us that all these things are important when you choose your broker for long run.
2. Technology & Systems
We cannot hover around the computer all day and this rises the need for alternate platforms such as,
Mobile trading platform
Web based trading platform
Trade over phone – useful when stuck up in remote areas
Speed is the result of the technology they implement in their end and we are not required to understand any of those technicals but the execution & accuracy are important things ahead of all other aspects, especially for intraday traders, who hunt for very small price movements.
Never settle for anything less than this, as they are Pre-requisites before you start your trading.
Continuing into the vitals of the Broking firm. The Broker should offer a wide range of opportunity to trade in various assets (say, it can be all in one trading accounts – some firms offer them). If you are not a Parasite on particular asset, then you have to choose wisely.
Even some firms offer a facility to trade in international markets.
Another important aspect to consider is the resources that are offered to client; may that be in the field of knowledge building or guide to best trades.
Some brokers even offer basic education to their clients (irrespective of their motive) and their coverage on the ongoing geo – political & economic issues. They can be added to your list of comparison which will guide you through the selection process.
Apart from these two services, they could even pitch you with the better trade for that day / week / month. Simply, a free Recommendation / a tip provision (the credibility of those are however uncertain).
5. Leverage / Exposure
Based on the Profile / style / expectations of a trader, they could be positional / swing / intraday trader and when it comes down the line, intraday trading requires a bit of financial assistance to maximize the Profits. For this part, you have to rely on our broker to assess the margin requirements / exposure offered to you while trading in particular assets.
Enquire those before opening an account and this influences the experiences with that broker in large scale.
This is important, as it deals with the money and personal information. Always make sure that whether the transactions that are carried through an encrypted path and moreover the Privacy is important (also make sure that the firm is not a spam, selling contact information to their peers).
Added to this, the security of the trading panel is also important – it should have a lockout timing to prevent unauthorized access and the overall security should be taken into account to prevent cyber-crimes.
Enquire with your broker whether they provide multi layered security such as PIN’s, passwords, questions or combination of few / all of the layers.
7. Customer Support
Everyone will stuck up on something and will definitely need support / assistance to get through it and make it sure whether your broker offers the support, up to your expectations. The support should be offered on varied modes such as Chats, e -mail, Priority Phone support and even video support is a great option.
Check whether their timings sync with that of yours.
Many traders would be satisfied with what is in the package (whether it might be the brokerage plan / priority / software usages). Personalisation or customization would be a factor to consider, if your needs are special, Before opting find out whether your broker offers the customizations that you are searching for…
9. Charge to the market maker
The market maker (Broker) charges you for the service he provides & for maintaining liquidity in the market and as a compensation for the risk he takes while making the market and the charge is collectively called as brokerage. A trader / an investor should be cautious while dealing with this phenomenon because frequent trading with high brokerage might eat up your profits to a considerable extent and nobody loves that.
Therefore, before signing forms, do enquire with your broker about the charges he levies on you for the services.
Having less charges will have a great significance on long run.
10. Regulations & Collateral
The Broker in India has to be under the regulations of SEBI (Securities Exchange Board of India) and should also be a follower of RBI rules & guidelines.
These regulations govern & protect the individual investors rights and any broker without transparency / proper authorization has to be avoided.
Recent update is that; few brokers accept the shares in your DP account as a collateral to trade, MAS (margin against shares) accepts your shares as margin to trade on any asset except few and if you are in need of features like this better deal with the broker who avails it.
11. On Boarding
The account opening process that involves signing in certain places and filling up of a KYC form and that should be simple. For those who find this process complicated; better seek a broker, who offers best support while getting things done. Some traders might be far away from the brokers jurisdiction and in that scenario, the same process have to be carried out through postal services (because computers will be of lesser use in this regard).
Some even open the account for free but this is not usual and in that case choose accordingly.
Check the broker's website speed for reliability.
Call their customer care with some question on your mind to test their service quality & the time taken for solving your queries (this definitely includes your waiting time over the phone).
Check for the reviews in any search engine and may / may not be those are biased but however there exists a higher probability to find the required info.
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