There are several issues you should address when you are in search of a capital markets broker that will allow you conduct online share trading. This includes finding a broker that has a good reputation and is regulated by a financial authority. You want your broker to allow you to test drive their platform with a demonstration account as well as have an excellent educational portal. In addition, you want to be able to trade several different stocks, which will provide you with the ability to trade directionally or use a market neutral strategy. Lastly, if you like to trade when you are away from your home or office, make sure the broker you choose provides a mobile trading application.
Finding a Reputable Capital Markets Broker
Before you deposit your capital with an online broker, make sure that you perform some research to determine if there are any red flag. You want to make sure that your broker is regulated by a financial authority. This is important as if something occurs that is out of the ordinary, you want to make sure you have some entity that will listen to your complaint. A regulatory authority will make sure your broker is above board. Additionally, you should do your own due diligence. This includes looking at online forums to see if there are any complaints about the broker you plan to use. Complaints such as having a difficult time withdrawing capital, or not responding to issues, should draw your attention. Use you better judgement to determine if the complaints have merit.
Education Portal
You also want to make sure that your broker provides a robust educational portal that helps with the different nuances of trading the capital markets. Start with the trading products and see if they describe them in detail. For example, if your broker offers contracts for differences (CFDs), a great way to learn about these products is through the educational portal. There should be dozens of articles and videos that describe the different ways to trade these products. You also want to make sure that there is information that describe the types of analysis that you can use to trade the markets. There should be several in depth articles that describe different technical analysis techniques that can be used to determine the future prices of the assets that are available to trade.
Tradable Assets
You should look through your brokers trading platform to become familiar with the types of assets that are available to trade. If you are looking to trade shares online, you should become familiar with the types of stocks that are offered. Many online brokers offer contracts for differences on specific shares. These financial instruments track the movements of individual stocks, but don’t require that you own the shares. The benefit is that you don’t need to post all the capital needed to own individual shares.
Demonstration Accounts
A demonstration account is an account that provides you with all the functionality of a live account, without risking real capital. This allows you to test drive a trading platform and make trades using demonstration funds. You can develop new strategies and see if they work, by trading them in real-time. In addition, you can see how a transaction works from start to finish. You will become familiar with the way trades are quoted, and how they look once they show up on your position report. You will also become familiar with the risk management process, and how to view the capital that you have at risk. Importantly, you will also become familiar with leverage.
Leverage
When you trade CFDs and your brokers trading platform, you can take advantage of the leverage. The leverage on that is offered can range from 2 to 1 to 100 to 1. This means that your broker will lend you capital to trade specific assets. Using leverage helps you enhance you returns. For example, if you post $100 and control $1,000, a 5% gain would generate $50 which would be a 50% return on your capital of $100. Using leverage with your demonstration account can provide you with an accurate gauge of how leverage effects your portfolio.
The Trading Platform
You want to make sure that you are comfortable trading using your brokers trading platform. You should be able to different assets using charts and technical analysis tools. This allows you to use trend line to gauge the markets support and resistance, as well as, analyze studies to evaluate the future direction of a security.
It’s helpful if you online trading broker provides both a browser-based platform as well as a mobile application. Both trading platforms allow you to access your account wherever you have access to the internet. The mobile trading platform that allow you to execute trades while you are on the go. The browser-based platform should work in conjunction with the mobile platform, keeping track of you positions, balances, as well as your margin levels.
