Trading Online: How to Find the Best Broker

InvestorEducation / Learn to Trade Oct 24, 2018 - 04:43 PM GMT

Online trading is a burgeoning global industry. The comfort, convenience, and cost effectiveness of financial trading brokerages has put paid to the institutional systems that governed the industry. Prior to the advent of user-friendly online brokers, traders, investors, and speculators were limited to institutional brokers in their ivory towers.

The age-old model favored the broker and the range of financial instruments that he or she was peddling to traders. In the days of old, traders would call their brokers, requesting them to invest in stocks, commodities, indices, forex, or bonds accordingly. Alternatively, brokers would simply recommend ‘company’ funds which benefited the brokerage enterprise and the broker who was paid a hefty commission.

Beneath the Veneer of Window Dressing

Nowadays, a veritable glut of online brokerages pepper the scene. It is increasingly difficult to source reliable information on these brokers given the opaque nature of many online activities. For starters, it is difficult to discern fact from fiction when an online broker does its own publicity by generating its own positive reviews. Additionally, the window dressing that unsuspecting traders are privy to masquerades as authentic, licensed and legitimate – but this is not always the case.

For these and many other reasons, it's imperative to have access to a structured set of guidelines to determine whether a broker is legitimate, cost-effective, and geared towards meeting traders’ needs. The literature on legitimate brokers covers many important topics, notably licensing and regulation, bonuses and promotional offers, range of markets offered, responsiveness of customer support, privacy and security of personal information, and banking options.Here you can find a list of the best online brokers for UK clients that have been vetted regarding those KPIs.

FCA Licensing and Segregation of Funds

Foremost among the concerns that traders have when registering and trading online is licensing and regulation. There are several ranking authorities in Europe and the United Kingdom which are tasked with ensuring that financial services enterprises are legally permitted to offer trading and investing options to UK traders.

The FCA (Financial Conduct Authority) is the sole licensing body for ensuring that UK financial services businesses are allowed to provide CFDs, forex trading, futures, and government bonds options to clients. The best brokers should provide all the necessary trading services and options desired by clientele. These include CFDs (Contracts for Difference), forex trading services, social trading options with things like copy trading, et al.

The best online brokers stand out from the competition in several ways. For starters, they take pride in the user experience. User-friendly registrations, comprehensive account verification, validation, and confirmation, and clear KYC (know your customer) and privacy considerations are in place.

Beyond that, top-tier FCA-licensed online brokers also offer safeguards to clients in the form of funds protection in segregated accounts. This means that if a broker goes insolvent, or has liens or judgements against it, this will not adversely affect the trader since their funds are separated.

Value-Added Benefits Offered at Online Brokerages
One of the tell-tale signs of a top-notch online brokerage is educational resources. The world's finest brokers offer in-depth trading tutorials, guides, webinars, seminars, financial analysis (technical and fundamental analysis), market insights, and expert trading tips, tricks, and strategies. This type of information is invaluable to traders, and certainly warrants a berth on the ‘must have’ list of prerequisites.

This comprehensive strategy guide covers the most important elements. They have all been vetted for quality, safety, and reliability. These brokerages pass the litmus test for novice traders, intermediate-level traders, and professionals alike.

By Boris Dzhingarov

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© 2018 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their prsonal financial advisors.

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