Just be careful when selecting a brokerage for the first time. The best day trading platform, for example, might be woefully inadequate for someone just starting out, offering up a range of services you don’t need or want while failing to offer the ones you do.
Here’s a look at the sort of factors you should consider when first picking out a brokerage.
How to Spot the Best Stock Trading Platform for Beginners
The best online brokerage for one beginner might not be the best for another. Therefore, understanding yourself and what sort of trading you’re interested in is the first step to selecting the right brokerage.
With that said, there are two factors that any beginner should be careful to compare before making a decision:
- Fees: Brokerage fees are almost impossible to avoid, but the cost structure can ultimately have a major impact on the returns from your stock trades. No matter how shrewd you might be at picking stocks, if you’re paying too much in fees, your hard-won returns might ultimately erode away.
- Account Minimums: And for beginners, a low account minimum is pretty important. Without a clear expertise for trading, beginners would be well-advised to start small and slowly build the size of your portfolio over time. If the account minimum is already high enough to mean you’re putting more money at risk than you’re comfortable with, you should consider a different platform.
Look for a Broker With the Best Tools and Customer Service
Of course, when considering what you want in a stock trading platform, you also have to consider that you’re going to be doing a lot of your own stock analysis. You can save a lot of money by doing your own research, but with that comes the need to be able to access the tools and resources necessary to make informed decisions.
The most important things a beginner should look for when choosing a broker are:
- Educational Resources and Tools: Fortunately, the best online brokerage for a beginner will offer a range of educational resources and tools for comparing stocks and other investments. Plenty of trading platforms are geared specifically towards day traders or other more knowledgeable investors, putting tools to help you understand investing basics in the backseat. You should be sure that the brokerage you ultimately select is one that will give you access to the materials you need to make your investment decisions.
- Quality Customer Service: It’s also important to have quality customer service representatives that can respond to any questions you might have. As a beginner, you can expect to have questions about the basic functionality of your platform, so be sure that you’re picking a brokerage with readily available customer service reps that can help you out.
- Range of Investment Options: Finally, the best trading platform for you is going to be one that will actually let you trade the types of securities that you want. Some brokerages won’t let you trade mutual funds or ETFs associated with competing companies, or they might place other limits on the sort of stocks you can trade or won’t trade things like options contracts.
So, be sure that you know which platforms have limitations on the sort of securities you want to trade before you make a decision. Likewise, you might be able to find a brokerage firm that lets you make fee-free trades for ETFs or mutual funds that they manage. If you feel as though you have a strong preference for a certain financial company’s products, see if there are options that allow you to avoid fees on the types of trades you intend to make the most.
Check Out: Stock Trading: A Beginners Guide
Don’t Overlook the Benefits of Perks and Rewards
Finally, the competition between the best online brokerage firms to attract new customers is fierce, and the value of their introductory terms and perks can be considerable. You might be able to get free trading for the first three months — which could be especially valuable if you plan on being a buy-and-hold investor — or even offer a cash bonus if you deposit enough.
It can be difficult to know what sort of trading behavior you will fall into before you actually start, but it’s worth trying to anticipate to get a clearer sense of which rewards package is ultimately going to be worth the most to you.
However, don’t let the quality of the perks play too large a role in your choice. Ideally, you’ll be investing for years, long after you’ve blown through your introductory period when you trade for free. Don’t accept a lifetime of higher fees just because you like the sign-up bonuses for a particular brokerage.
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