The Internet has brought many options to pay less fees for our investments. Nowadays, any single investor can invest in international stocks, CFDs, and Forex at very reasonable prices.
However, the option to do it does not mean that you should. Keep in mind that with CFDs, for example, most brokers state that more than 80 percent of their clients lose money. If you do not have experience, leverage options such as currencies and other CFDs are not usually a good place to start.
Take your time to get experience with stocks. And once you are able to earn money with them consistently, you can try to broaden your options with other assets.
No matter what you are going to invest in, choosing a good online broker is essential to have good results. Here, we offer you some general tips to choose between online brokers:
1. Licenses are important.
The online world is wild. If you find a broker with incredibly low fees, but who does not have a license from the FCA, you might think that by using them you would be saving money in security measures.
Just avoid them. It is better to pay less, but have the chance to claim against your broker in case an issue arises.
2. Take a look at fees non-related to trading.
Sometimes the brokers offer very nice deals regarding the trading fees and then charge unreasonable fees for things like sending you a report about your account movements or withdrawing money.
Also, always check if there is a minimal amount that you can withdraw from your broker account because a high amount is a good sign that you might be dealing with a scammer.
3. They should not give you investment recommendations.
The broker usually makes money each time you make a trade. In some cases, with the CFDs, they even make money when you lose (they are Market Makers).
Thus, the broker should limit their activity to make you easy and cheap investments. They should not give you advice about where to invest because there is a clear conflict of interest.
4. They should not try to make you invest in new options by offering simple educational content.
It is a sad, common habit that some brokers offer some videos around 3 minutes long explaining a trading system or any other kind of tool, to make you feel confident to try a new way of investing.
We do not think there is any system available that you can learn in three minutes and that will make you earn money in the long-term.
Look for education outside your broker and keep your broker as serious as possible.
5. Leverage allowed
You may think that the more leverage they allow the better it is for you, but usually it is quite the opposite.
If you are not very experienced with leverage, you do not need a broker who offers more than 10:1. Do not focus much on this feature.
6. Availability of assets
The importance is not in the number of them, but in them having the one you usually invest in. A broker with thousands of assets from the Asian markets can be less interesting than a reliable broker with just some hundreds of assets from the European and American market.
You can be tempted to invest more than what is reasonable if you have too many options.