5 Tips to Know Before Using an Online Brokerage

3 mn read

Investment has been made easier, cheaper, and faster, thanks to the wide range of brokers offering impeccable services. However, there is no direct communication with the brokers, and online trading is solely your responsibility. That is why you need to choose the best online brokerage that matches your needs and investment goals. 

An online brokerage plays a crucial role in investment and can either make or break your investment. Now, whether you wish to invest locally or
trade in international stocks, you want to choose wisely to set yourself up for success. Hence, we put together these tips to help you in choosing the right one.

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Reasons for Using an Online Brokerage

Online brokers serve as an intermediary between buyers and sellers helping to facilitate transactions. These brokers allow investors to buy and sell stocks, bonds, mutual funds, ETFs, options, or any other financial instruments on their own or with some guidance.

These online brokers are going beyond the brick-and-mortar stores to bring trading online. It is convenient, their commissions are typically lower, and you can track your investment in real-time without any middlemen intervention. 

5 Tips to Know Before Selecting a Good Online Brokerage Firm

Here are things to look out for before using an online brokerage:

1.Understand Your Needs

Before diving into the world of online trading, you need to first analyse your needs. This includes your investment objectives, and how much you are willing to put into it. 

If you are in for a full-time investing, you might need a full-time broker who will be available 24/7 for your investment needs. if you are just looking into an investment for another stream of income or side hustle, then, a discount broker will do.

A newcomer in online trading will prioritise platforms which provide educational resources for starters, support, and easy accessibility. Moreover, a new investor might also look into platforms that provide a means to practise before entering the real battleground of trading. 

Someone with experience, on the other hand, is ready for the technically advanced platform, resources, tools and charting capabilities. 

2.Conduct a Background Check on the Brokerage Firm

This is an online platform where you want to invest your hard-earned money. Hence, you want to dig deeper into their backgrounds before making any decision. That is why we recommend checking the background of any online brokerage firm to know if they are reputable, trustworthy and one you can work with.

For one, the brokerage firm together with the financial team should be licensed to offer the products and services it offers. This should be disclosed on the site’s homepage or you can look them up on these regulatory body’s website. 

Since the transaction is via the internet, the platform should be highly secured to safeguard your sensitive information. For this, find out the type of encryption being used and if they offer dual authentication.  

Not to forget, check out reviews and testimonials to see what other investors have got to say about the brokerage. 

3.Look into the Services Offered

The next thing to do is to check out their sites to see the services and tools offered to investors. Go through the details to see if it is user-friendly and how easy it is to navigate. If you want to go beyond local to international, see if they offer international trading. 

Your best bet to having access to the tools is to sign up for a free trial. This will give a hands-on experience of the quality of their offerings without financial commitment.

4.Consider the Brokerage Fees

Brokerage charges are not uniform and often vary from one broker to broker. Therefore, it is important to compare their prices to ensure you are not giving away your return to fees and commissions. 

Are they charging for commissions per trade or a monthly or annual fee? Is there any incentive available for investors? How much do you need to
open a demat and trading account and what is the deposit minimal? Ensure you review the pricing before making any decision. 

5.Check the Customer Service

Customer support is very important, especially for beginners. In case you are having any technical, financial or investment challenges, how ready are they to hop in and help out. 

Consider giving them a call to measure their responses and willingness to help.


Now, you are ready to kickstart online trading. With these tips and some homework, you should be able to make the right decision when choosing an online brokerage.  


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