What You Must Know Before Choosing a Broker: Key Takeaways
- How to choose the right one for YOU…
- THIS is the one tool you can’t trade without — get tips for finding your best fit…
- What to do BEFORE you make your first trade…
I like to keep my trading simple. I stick to the penny stocks I know and I don’t use a lot of fancy indicators, for example. But one thing every trader needs is a broker. You literally can’t trade without it. So before you jump into opening an account with the most popular trading app, read on to learn how to find YOUR best broker…
Table of Contents
What’s a Broker?
Your broker is the single most important tool day traders use. It’s how all your stock buy and sell orders get filled.
But not all brokers are the same. Some have crappy executions and high fees. Others have restrictions on the stocks and strategies you can trade.
So what’s the best broker?
You have to find what works best for you and what fits your trading style. Take your time and do some research. You don’t have to choose just one, either. And if you’re not happy with the one you have, it’s never too late to switch it up.
Remember, they work for you.
What to Look For in a Broker
Here are some important points to consider when researching a broker…
As a trader, you want the best possible executions. So dig in to research how quickly a broker can execute your trade orders.
After all, you can’t trade if you can’t get a position.
If you plan to trade OTC stocks, consider trying different brokers out to test their executions.
How Much Are the Fees?
Most brokers offer commission-free trades. But that’s typically only for listed stocks.
If you plan to trade OTCs, you could still be subject to a flat fee on each buy and sell order. Or you might pay a fee based on your position size.
Can You Access the Right Stocks?
So if you plan to short or trade OTCs, make sure your broker allows it.
And if you use the trading platform offered by your broker, you have even more to consider…
What’s the Broker’s Trading Platform?
Your trading platform is where you look at charts, build watchlists, run scans, and place orders.
It’s the second most important tool for day traders, after your broker. You want to have the best tools at your disposal to make decisions quickly and with the best information.
Brokers usually offer a simple web-based platform for users. And for more active traders, they can offer a downloadable platform with more tools and indicators. Some brokers charge a fee for these ‘better’ platforms.
Customer Service Matters
Technology is great — when it works. There are no guarantees. And there will be days things go wrong. When the markets go crazy, brokers can struggle to keep up.
Sometimes tech crashes and there’s nothing you can do about it.
But when you have questions about how things work or why something’s not right, you’ll want to know you can contact someone who can answer your questions quickly.
Your broker works for you. Remember that. And it’s where you plan to put a lot of your money. So make sure they offer solid, reliable customer service.
What About Trading Apps?
Many brokers now offer trading apps. It makes it easy to trade right from your phone. But I don’t use them.
When I’m in a trade, I’m laser-focused on the chart. And I usually stay in positions for a few minutes. I want to be in and out of trades FAST. I don’t trust a phone app to do that for me.
If I’m away from my computer and miss a trade, that’s fine. You don’t have to catch every single trade. There will always be another opportunity.
You might get lucky for a while trading from your phone. But if you want to stay in the game long term, you need to use the right tools.
The Importance of Using the Right Tools
The most important part of choosing a broker is to make sure you choose the right one for YOU. That depends on your trading strategies, your account size, how often you trade, and whether you go long, short, or both.
A broker might have good executions but high fees. Prioritize what’s important to you.
They put in years of dedicated studying. You must learn what moves stocks, the patterns, and why they repeat. Trading isn’t easy. But having a mentor, the right tools, and education can greatly increase your learning curve. That’s what my Trading Challenge is all about.
What’s the most important broker feature for you? Let me know in the comments … I love to hear from you!