We are almost there! I sincerely hope that you are enjoying the lecture, as much as learning about them because preparing is the best we could do before we trade in the real market. And of course, among all the basics that we have learned together, there is one thing that you may be lacking at this point – having an online broker!
For day trading to happen, online trading platforms are created to cater to the needs of professionals as well as novices. As I have mentioned in the past lectures, each of you day traders has unique personalities, styles, risk levels, and strategies. And when it comes to choosing the online platform, it must match your trading personality as well. Since every one of us is different, our needs for the online platform would be different, too.
But either you are a beginner, or a professional day trader, these are the usual characteristics of the online stock broker you should consider before you open an account.
Assess Your Day Trading Needs
Before you jump on opening an account on the first online broker that you saw on some social media website, establish first your needs. As a beginner, you might want a broker that has low commission fees, has basic educational resources, easy access to customer support, and some charting tools. Your needs, of course, will differ as time goes by. When you become a professional, you may want more advanced charting tools, or high-level education and opinion-based resources, and a premium account from that brokerage offering more benefits than the regular account.
If you are still a novice, don’t pressure yourself in getting an account that has premium offers because they all come with a cost. You might find yourself paying the broker for the additional benefits, but see little to no impact on your profits. It is preferred that you should open an account with low commission fees, no maintaining cash balance, and those that offer free basic education on day trading.
Filter Your Options
Since you already have a set of criteria in mind on what your ideal broker should be like, this is the time that you research for brokers that has those criteria. You could go to Google, Youtube, and see if their user interface is easy to manage, or attractive to you.
On another note, these are the following that you should look for as well as you decide on your ideal online stockbroker.
1. Is it a member of Securities Investor Protection Corporation (SIPC) or FINRA? You should check if it is an official online broker because if it isn’t listed, it is most likely a scam. Do your due diligence and protect yourself from this kind of theft.
2. How secure are the accounts in that certain online stockbroker?
You can never be too sure when you are exposing your money in trading. Keep in mind that even money in banks could be stolen, so it is best that you should have additional security features that would protect you from hackers wiping out your capital. Consider if the brokerage offers two-factor authentication, facial recognition, or one-time-pin codes every time you log in. Does it notify as well if you withdraw or deposit funds? Keep this in mind if you will be opening an account because as much as we want to profit, we need to protect our account and our capital.
3. What are the reviews saying about the online trading platform?
It will never hurt to look at some reviews at some point. What better way to actually know what the brokerage is like is when you see the reviews from its customers. Are they satisfied with the service? Are their queries easily resolved? Remember that you will be part of that community, so take some time to decide which platform to use that will not make you mad when using it.
4. Know the Fees
Research on the fees the brokerage is making you pay on every trade you make. The more often you trade, the higher your fees will be. So look for brokerages that offer low fees in order to maximize your trading gains.
Also, know if there is a minimum deposit that you will have to maintain, or monthly maintenance fees that they cost you. There are brokerages out there that offer $0 minimum deposit and don’t have maintenance fees. These platforms are good for beginners because we need to minimize your costs first, before you go and use the advanced platforms as you become professional traders.
5. Navigate the Platform
Oftentimes, online brokers offer a demo account within a specific duration to allow you to see what they offer. Take advantage of this free demo account, and compare them with the others. This is completely free, and you will be able to look at all the tools and tabs you will definitely need.
Ease of Withdrawing and Depositing of Funds
Trading platforms have evolved ever since they moved their services online. They have upgraded their services, and among those are the ease of deposit and withdrawal of funds.
When you are considering a certain online broker, know what are its partners. It may be banks, remittance centers, or other merchants. Know if these are accessible to you and if it won’t be a bother when you try to deposit. Consider how long does it take for deposited funds to settle as well. It differs depending on what payment method you will use in depositing. There will be times that you may see an opportunity come up, and being able to deposit on the spot would be a great help in maximizing your profits.
When you will be withdrawing, you may be able to use your preferred partnered merchant, or bank to get your funds. But of course, the settlement of these withdrawals will differ on every broker. Check how long it will take to have it reflected on your banks, and know if it will be easy to withdraw in an instant in case there is an emergency.
If the broker you have in mind qualified on all the questions we formed while we are discussing what we should consider in choosing our online brokers, by all means, go and sign up for an account. I believe that you already did your due diligence so taking this step, is closer to the goal of being able to day trade.
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