How To Choose A Broker For Buying Stocks

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Stock trading has recently become more and more popular, and many wonder how to go about buying stocks. Here below are the initial steps of a future stock market expert.

To purchase stocks, one needs an agent because stock market trading is not available to private traders. Agent licences are granted to banks, investment companies, mutual funds, and brokers. In this article, we're focusing on brokers.

A broker is a legal entity that has access to the stock market and is licensed to act as an agent between the exchange market and the trader in the process of trading stocks. Brokers charge commission fees for each trading operation.

How to conduct trading through a broker

To buy shares, a client needs to first open a trading account. Thereafter, the client clicks on a button in the trading terminal and sends an order to the broker to execute a trading operation in the market i.e. buy or sell the selected asset. Next, the trader orders the broker to close the position at a certain price. Additional services include reporting on the history of operations and cash turnover, calculation, and paying taxes on the profit made by the trader.

What is important to know about the broker you choose

• Licence: the broker must be licensed to conduct broker acts as a legal entity in your country or region. Having no licence might be a sign of fraud
• Years of operation: the longer the broker has worked in the market, the more they are trustworthy. Exceptions are rare
• Support services: ideally, client and technical support services should be operating 24 hours a day to provide customer support whenever needed
• Communication: it is vital for the client to be able to contact their broker not only through their Personal Member Area, but also via e-mail, phone, or instant messaging

Reputation

It is by far as important as the licence. To obtain more information about the broker, read comments and reviews available on various resources, including independent ones. Then analyze the information and make your conclusions. You might encounter compromising information on the websites of competing companies, but you can always double-check this. In addition, you could inquire about a certain broker with people you know who are already using their services for trading.

Trading conditions

To trade stocks comfortably, study the trading conditions that the broker is providing:

• Fund depositing and withdrawal: the more solutions the broker provides, the better
• Commission fees: beware of commission fees that are charged for opening and closing trades
• Trading terminals and conditions of their use: some brokers charge for subscriptions on their terminals. Analytics and special functions are made available on the terminal at an additional cost
• Leverage and conditions of its use: in certain cases, using the leverage intraday is free of charge, while a fee is charged for bringing it to the next day
• Spreads: whether they are fixed or floating - find out under what conditions they change
• Minimum deposit and size of opening positions: the smaller your deposit, the more money you will have to borrow
• Minimum sum of margin call, which is forcefully closing out positions because there are not enough funds to cover the required margin to hold an existing position.
• Trading instruments and the conditions under which they are available to traders. The more services are provided, the easier it is to find the ones you need. Ideally, instruments should include not just stocks but also futures, metals, ETFs, and commodities
• Trading platforms: their desktop and mobile versions
• Global stock markets: which markets the broker gives access to and for how long

Closing thoughts

Choosing a broker for trading stocks is vital for a trader. This requires gathering information and comparing competitors. However, the investigation will result into making the right choice of a broker who will be providing comfortable trading with minimum money spent and less stress.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.

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