Choosing a Online Broker

With hundreds of brokers to select from traders may not know which broker to choose. A trader might not know which factors to look for when selecting their online broker, this tutorial will explain to traders more about brokers and what factors traders should consider before deciding which broker to open a trading account with.

In trading there's no central market where trades are settled, instead trades are carried out in an Over The Counter market. Because there is no central stock market place trades will be settled in the online interbank market. This online interbank market is composed of a network of big banks. For traders to gain access to this market they must trade through a trading broker. The broker will place trades in online inter-bank market on behalf of the traders.

Traders cannot trade directly on the inter bank market because they do not have the capital to setup the technology for doing this neither do they have the required minimum capital that is required by the big banks to allow them to trade directly in the trading market. For this reason retail online brokers exist so as to connect retail investors to the online inter bank market. Retail brokers will allow traders who don't have a lot of capital to trade in the trading market.

Indices brokers also provide trading leverage so as to help traders to open trades with borrowed funds. Because lots are traded in units and most retail investors can't afford this, the brokers provide this trading leverage so that traders with little capital to invest can also be able to trade the trading market on borrowed fund. The borrowed funds are borrowed from the online broker, a online broker providing leverage of 100:1 means that traders can borrow up to 100 times their capital, therefore a trader with only $1,000 can borrow upto 100 times which means $1,000 multiplied by 100 is $100,000 dollars, this $100,000 will be the capital that is available to the trader after using trading leverage & henceforth the retail trader who only has $1,000 dollars capital can now trade standard lots.

Factors To Consider When Choosing Your Broker

The following factors should be used to figure out which broker you will choose to trade with.

Regulation - The first thing to consider is online broker regulation license. You should only open an account with a online broker that's regulated. In trading the most reliable & most transparent brokers are the ones that are regulated. This is why this is the first thing that most traders will look for before they even begin considering whether to open a trading account with a particular broker or not.

Withdraw Policy - Try to find out the withdraw policy of a broker before opening a trading account with them. Best withdraw policy is one where you can withdraw your money any time you as the trader want without any questions asked. This policy should also provide that the withdraw should be instant if you are using a credit card to withdraw or should take 1 business day if you withdraw using bank wire method

Execution Policy - the best execution policy is a no requotes execution policy where orders are executed within one second or less. This means that as a trader you can open and close trades quickly & your trade positions should be requoted. A requote means that you'll have to place a trade transaction again once the trade is requoted. A requote will happen if the execution of your broker is not fast enough which means that the quote will change before you have completed putting your trade and thence you have to make another trade.

Indices Quotes - traders should choose a broker that provides a wide range of trading instruments that they can choose to trade. In addition to indices, traders might select to select broker that offer other trading instruments for trading such as commodities, CFDs, Futures, Metals such as silver & indices and stock indices.

Indices Platform - choose a broker that uses MT4 software. Almost every broker uses this platform. As a trader make sure that the trading platform of the broker you select allows automated trading especially for those traders that trade with automated stock bots.

A trader might also use other factors to decide what broker to open a trading account with based on the preference. On this web site traders can also find a listing of the top 100 online brokers on the online broker ranking section of this web site & traders may use this listing to find the broker of their choice.

Study More Topics & Courses:

Trade Stock Indices

Choosing a Online Broker

Factors To Consider When Choosing Your Broker