Making investments can be a way to earn money – or make the money working for you. That way, you will completely enjoy the fruits of your investment in the future. Today, if you want to trade on some of the stock markets – you have to find a good broker first. As we all know, a broker is an intermediary who executes transactions on the market at our request. Since there are hundreds of brokers in the world, it is necessary to take the time to research what different brokers offer us so that we can opt for the one that suits us best. Here is what you should know before you open a brokerage account.
Choice Of Broker Account
When it comes to opening a brokerage account, it sometimes looks like a too demanding task. Still, it doesn’t have to be that way. When you choose the kind of account that is good for you and make a comparison between brokerage houses – you will know what type of account will suit your current needs. You will first determine the type of account according to the investment you have planned.
What Do You Need To Know Before You Open A Brokerage Account?
Of course, before you embark on a trading adventure and open a brokerage account – you must know some more things. Here are 7 things to look out for before opening a brokerage account.
1. The Right Way To Choose A Broker
How do brokers differ and can these differences affect trading? First of all, they differ in trading conditions – which will certainly affect the trading results. However, don’t think that a broker can make you profit if your trading strategy is bad or vice versa. It can improve or spoil trading results – or it can be more or less suitable for a certain way of trading.
2. Regularity of broker business
One of the important things you need to check is whether the broker is regular. Regulation is important because it proves that the broker meets all the necessary business standards – prescribed by the officials in the country where the broker is registered. Under no circumstances should you trade through an unregulated broker. For example, it may happen that the broker doesn’t execute the order as you requested – or doesn’t act as committed in your cooperation agreement.
If such a case occurs, you can send the complaint to the regulatory body – and it will resolve the case. If there is no regulation you will be left at the mercy of the broker. It is also important where the broker is regulated – that is, which agency provides the regulation. The stricter it is, the more brokers must meet the standards of doing business and treating clients.
3. Broker type
Given the method of calculating the brokerage fee, there are two types of brokers. These are market makers and ECN brokers. Market makers calculate the fee through the spread, while ECN brokers do it separately. Forming relative price spreads takes a fraction of the time, and might be inappropriate if you plan to trade in the short term. Therefore, market makers are more suitable for beginners – while more experienced traders or those who trade in the short term will be more suitable for ECN brokers. According to financebrokerage.com, some brokers offer both ways of trading. That way you can choose whatever suits you best.
4. Trading platforms
Each broker will offer you one or more trading platforms. The most widespread and most used platform on Forex is MetaTrader 4. It provides a professional environment and is rich in functionality. It is suitable for both beginners and more experienced traders. MetaTrader 5 is another, the newer platform from the same manufacturer that has slightly more advanced functionality, but also a far smaller number of available add-ons. cTrader is another frequently used platform that is specially tailored for beginners. Many brokers also have their own trading platforms. If you do not know which platform to choose – you can try several of them with the help of a demo account and thus choose the one that suits you best.
5. Deposit payment
Brokers will offer you different ways to pay the deposit. These are a bank transaction, a credit card payment, and an online payment system. Some brokers also accept cryptocurrency payments. There are also different currencies with which you can make a deposit. These are most often the US dollar and the euro, but also others.
6. You need to check if the broker provides customer support
Customer support may be available 24 hours a day or only a certain part of the day. It is certainly better to have support available all the time while it is possible to trade. The most common channels you can use to communicate with support are chat, phone, mail, or Skype. Also, make sure that this support is available in the language you speak or that you are good enough to report a problem.
7. Try trading on a demo account
Before you decide to open a live account – it is advisable to try trading on a demo account. The demo account is offered by almost all brokers and is a real-time trading simulation with virtual funds. It is useful for two reasons. First, you can test the broker on his platform – and get acquainted with his trading conditions. Another equally important reason is to try out the trading strategy you plan to use on your real account – and see if you can use it to trade profitably.
How To Open An Account?
You can open a trading account very quickly. Depending on the broker, you need to fill out the form for opening an account – which you will find on the broker’s website. The complete process can be done over the Internet. Some brokers will require you to deliver the documents to them by mail. Once you have submitted the documents, if everything is in order – a trading account will be opened for you.
The Bottom Line
We hope that our guidelines will help you when it comes to opening a brokerage account and choosing a broker. Choosing a broker is very important as you will entrust your money to him. Of course, before you open an account – you should try trading through a demo account with several brokers that you like. However, don’t think if you have opened a trading account with one broker – that you cannot open another with someone else. It is possible to trade using the accounts of several brokers at the same time.