Trading on-line may seem daunting and intense, and in many ways it is. It can be fast-paced and making decisions on sudden market-moves may not necessarily be something everyone is capable of. However, if you feel it is for you and wish to make a foray into this rather romanticised world, the first thing you will need to consider is what broker to use.

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An on-line stock broker is your point of contact with the markets and the so-called middle-man through which you will action your trades. As such, choosing the right one is something you should pay careful attention to before putting your money on the line. Here are five key-points to bear in mind.

Regulation

While it may seem obvious, it is imperative that a broker be regulated by an appropriate authority. There are certain commissions that cater for this, but if at all possible, it is always better to go with one that is regulated by a financial authority. Better yet, a broker that is regulated by a national central bank should be reputable in all its dealings.

Spread and Transaction Fees

Your brokerage, whichever one you chose, will charge you in some way or other. This is to be expected. After all, they are offering a service. Many people seek a broker that simply offers the lowest spread, but with money on the line, it is important to consider other factors. For example, while offering a low spread, is the broker then applying higher transaction fees or quarterly charges on your balance? Some brokerages will charge per-trade, but will offer a flat monthly-fee for regular traders. Check all of this before signing up, so that you can find a fee-system that you feel will match your trading goals.

Charting Packages and Trade Processing

Most brokerages offer both free and fee-based charting packages. For those of you unfamiliar with charting packages, they graph price action and allow you to action trades. Meta-Trader 4 is among the most popular, as it is free, though other packages, such as Ninjatrader, offer free demo-accounts. The majority of other packages charge fees on live accounts, while some will even charge for their demo. MT4 is generally reliable and perfectly acceptable when starting out. It also allows you to programme trading software to action trades for you, based on certain market conditions being met. As you progress with your trading career, this feature may prove very useful.

Market Mover

A market mover holds both buy and sell options on an instrument. The instrument is held in inventory by the broker and when you elect to take a position on it, ie buy {go long on your position} or sell {short the position}, the market mover can action it almost immediately. The key is that the broker has direct access to the instrument in question, rather than needing to contact a third party provider. A brokers ability to action and close trades in a timely manner is important, and generally speaking, market-movers can achieve this. Ensure that the broker you choose is known for processing trades in this manner, so that you can enter your position as close to the desired point as possible.

Customer Service

It is important that you have a clear point of contact and a timely response in the event of any issue. As with all services delivered on-line, connection issues can arise and affect your trade. All good brokers have dedicated customer service teams and are contactable in the event you are uncertain of anything. To get an idea of a brokers reputation, it is a good idea to review posts on a few trading forums and look for any repeated issue.

Conclusion

These are five main points to bear in mind while deciding on a broker. Other considerations you may have are what brokers are available in your area, what variety of instruments are available to trade, what is the minimum deposit, what leverage is available, what it the time-frame and process for withdrawals etc. These details should be covered on the brokers webpage. If not, or if any information you feel is important to your decision is not readily available, you should contact them and enquire.

Disclaimer: Some of the links in this article may use affiliate links, meaning that we receive a commission if you setup an account with a broker after visiting them through our link. These commissions help to cover the costs of running this website, and do not add any extra cost to you (in some cases, it provides you with better rates), as our commission is covered by the broker.