Choosing a Online Broker

All traders use a online broker to handle their transactions. Trader makes a decision on which transaction to make, then places an order with a online broker who then executes the order for them and earns money by charging a commission or a fee called "the spread" for their services.

Indices brokers are associated with large financial institutions such as banks in order to provide the funds and liquidity necessary for margin trading. The banks are referred to as liquidity providers. Banks are also the ones that provide the inter bank exchange rate to the online brokers. Indices trading is traded through a network of banks known as "interbank network". Stock Online Brokers get access to the inter bank network through banks, and then provide this access to retail stock traders.

A good broker should be signed up with a well known regulatory authority such as CFTC, NFA, CYSEC, FCA, ASIC & FSP these authorities serve as protection measure against fraud & abusive trade practices.

Before you begin you need to set up an account. You may feel overwhelmed by the number of firms that offer these services online.

Deciding on a good company requires a bit of research on your part, but the time spent researching will give you insight into the services provided and fees charged.

The best recommendation is word-of-mouth advice, & this is just as valid in indices as it is for any other type of business.

You also want to find a broker who executes orders quickly with minimum slippage and should offer automatic/instant execution and have clear policies regarding slippage.

Next you want to find out the fees involved i.e. Spread. If spread charged is fixed or variable. Are there other charges like commissions per lot transacted?

Margin trading is what Indices is about, so be sure you understand the margin terms requirements before setting up a trading account. You need to know the margin requirements & how the margin is calculated.

Does the margin change according to the lot size traded? Is it the same each day of the week or does it vary? Some brokers might also offer different margin requirements for mini & standard trading accounts. Some might also change their margin requirements during the weekends. Do not choose those that changes their margin requirement during the weekends as this might mean your open position are likely to be closed over the weekend because of the changing margin requirement during the weekend. Always choose the one that has fixed margin requirement at all times.

The software also is very important to a stock index trader. You can get a feel of the platform options which are available by trying out demos from a couple of firms online. Above all, you are looking for reliability and the ability to execute transactions in fast-moving markets.

To make sure that you get fast execution from your broker make sure that you trade with big Indices companies that have enough liquidity required to execute orders quickly. The big companies have multiple liquidity providers and these multiple liquidity providers ensure that the company that you choose can execute as many trades as possible at any given time in a very fast and efficient manner, that way your orders do not get re-quoted.

What to Consider When Comparing

Before comparing brokers we recommend that you do not open a trading account with a USA based company, regulation by the CFTC and NFA imposes excessive & over-bearing regulations that have been imposed on USA based firms. These include reduced leverage levels, no hedging rule & the FIFO (first-in-first-out) rule which affects the way you trade. The FIFO rule states that the first trade transaction you open must be the first one you close, & keeping track of your orders especially if you open many of them may be difficult for you.

The following are the factors you should consider:

Regulation

Regulation is an important factor to consider when comparing, regulation is carried out by financial regulatory authorities like FSA, NFA, CySEC and others. You should always open an choose a company that is regulated.

Deposit and Withdrawal

In depositing & withdrawing money from your trading account, you should consider the following:

What's the minimum deposit required?

How long does it take to withdraw money?

Is there any deposit or withdraw fee?

It is also crucial that you find out what payment or money transfer methods are available for use with for example Wire Transfer, Credit Card, Debit Card, Pay Pal and others that are suitable for you.

Minimum Deposit Requirements

How much money do you need to deposit so as to open a trading account? - The minimum for most is $100 but for some its less. This is important to consider when comparing two or more.

Platform Software

The platform provided can be used for comparison & one-can choose the best type of software. Most popular software is the MetaTrader 4.

MT4 is the best platform with powerful technical tools and charts that is why most if not all brokers offer the MetaTrader 4. If you're a newbie select one that offers you MT4 that way if you decide to move to another one you'll still find the MetaTrader 4 software that way you do not have to re-learn a new software every time you decide to try a new one.

Charting is very important & you need a powerful charting software with good charts & indicators so that to make the right decisions. The best choice is a one that offers good quality charting software such as the MetaTrader 4.

Order Execution

Consider if execution, is instant, is it that of an STP. Best model is STP model, with high liquidity to guarantee order execution.

Indices Leverage & margin

Should give you the option to choose trading leverage 1:50, 1:100 1:200 or 1:500 for the risk takers. However anything above 1:200 is too high 1:100 is the optimum leverage.

Account Types

Should offer micro, mini and standard trading accounts for a indices trader to choose the one which they want.

Customer Support

Should provide customer and technical support during the trading market hours, either via E-Mail, phone or online chat.

Before choosing a company to open an account with you might want to check the customer support and professionalism & compare this between different one.

What to Consider for Comparison

The fact is that genuine & regulated firms come with a guarantee of being genuine.

The company you select should be suitable for all trader types whether it is scalping, day, swing or position trading. Most will not accept scalping: these aren't recommended even for non-scalpers. Those that don't allow scalping might be because they don't have enough financial liquidity to guarantee trade execution of your orders. This is bad even for others traders because your orders might not be filled at the correct point and you might get re-quotes.

A good broker will be suitable for the traders of all levels of expertise. Beginner Traders should find the trading conditions to be quite flexible and the platform easy to use, while professional traders should benefit from high liquidity & instant execution of orders.

The factors below should be used when comparing, visit their website look at the info provided & use your judgment to make a choice if they are is best for you.

MT4 platform
Up to 1:200 trading leverage
Funding through WebMoney, Liberty Reserve, PayPal, Money Online Brokers, bank wire, credit card, debit card & other payment options
Minimum deposit $100 dollars
Bonuses on deposits
In addition to indices, other trading instruments such oil, indices and silver and stock indices
Instant execution of orders, no re quotes
STP
Professional customer support
Well regulated by a financial authority

Recommended broker is one that will ensure you trade better by offering you the best tools & support for trading analysis.

Indices trading means the exchanging of one financial instrument for another in the market. Stock market is one of the biggest market in the world. With main objective to earn substantial profits, new investors are jumping into the trading market everyday.

Investors, who take time to know the basic knowledge and information, definitely earn high returns on their investment than those who don’t.

However there are times, when investors fail to do anything right in the trading market because of lack of enough information and awareness regarding indices trading. Thus, it is recommended to select one before investing in the trading market. A good broker can improve an traders result by providing the best execution of transactions, there are many companies out there that one-can choose from but not all are good. One thing to look out for is to select one that's regulated.

While choosing, make sure that they are the best for you. It isn't a tiresome task to find a online broker having a long list of customers. But it is not enough for you. You should look for a one that is regulated. Also look at their terms and conditions this will help you know about their workings.

Learn More Tutorials & Courses:

Trade Stock Indices