Lately, more and more individuals are investing in the stock market. An understandable investment choice because investing in the stock market is a relatively simple way to diversify investments. A seasoned trader armed with the fundamentals of savings in action or a beginner in the stock market, none of these investor profiles can envisage making their investments grow without the right stock broker.
The good broker VS bad broker debate is a key sticking point among traders. Indeed, if it is necessary to decide between the brokers available on the financial market through their trading options, the reliability of the trading platform, the amount of commissions following each order placed, this reflection is completely legitimate. To buy and sell shares on the stock exchange, it is advisable to trade on a reliable trading platform, and therefore, to opt for the broker who can respond to the investment strategy of the trader in question.
High-end wealth managers, robot-advisors, online brokers, stock brokers, brokers… these are all choices available to you when buying and selling financial assets on the stock exchange (ETFs, bonds, stocks, etc.). These brokerage companies, online banks and brokers are all brokers who can offer stock market investors several ways to boost the return on their savings in action via a trading platform. Here are the criteria you should think about when choosing your stockbroker.
Stock broker: regulation and compliance of the brokerage firm
To anyone and especially to traders that making money online presents several risks. Whatever the nature of the investment, the financial market is a double-edged sword, because the investor can boom his listed assets as he can also lose them.
Yet the biggest risk is investing on a broker’s trading platform, without knowing their track record first. The stock broker is the intermediary allowing the trader to position his assets on the stock and financial markets. In this sense, before any initiative to open an account, a wise trader must verify the authenticity of the broker, or the brokerage company. The trading platforms of fraudulent brokers make many victims of scams.
To do this, brief checks of the said broker’s registration with financial regulators and on the list of brokers allowed by the Autorité des Marchés Financiers or AMF can help you. Also take advantage of word of mouth to get an opinion on the stock broker of your choice or go to forums or sites to check the reliability of the broker.
Opt for a stock broker with an efficient after-sales service
If a broker advocates the simplification of procedures when opening the brokerage account from the trading platform, this is not enough. Simply put, a stockbroker’s trading platform should be able to support the trader in case something goes wrong.
Although the accessibility and execution of trading orders of a trading platform determine its performance, the right stockbroker also promises investors effective after-sales support for resolving possible technical problems. Whether they relate it to the trader’s account or their trade orders.
You can choose brokers such as eToro, Degiro, Trade Republic, BforBank, Boursorama, etc. eToro known for being the best trader for beginners in trading, Degiro as the general stock broker with the most complete offer, Bourse Direct the best French PEA broker, BforBank the bank with the best online banking offer for stock market investors, etc.… These stock brokers allow an investor to efficiently manage his portfolios of assets. Take the help of certain sites offering a comparative table on trading offers, financial products and the price of the commission for transaction orders or brokerage fees.
Choose a stock broker according to the type of brokerage account
Like the investment (bonds, shares, international stock exchanges, etc.) and the fees generated for the stock market account (custody fees, brokerage, inactivity fees, etc.), the type of desired brokerage (securities accounts, PEA, PEA-PME) also influences the choice of broker. The brokerage company’s trading platform must be able to offer investment offers suited to the trader’s strategy.
This criterion is essential because the broker requires the trader to pay a minimum balance upon opening and for the maintenance of the account, otherwise the trader cannot access the wide range of financial products on the stock market.
Indeed, some brokerage companies do not value accounts with low investments. In other cases, the trading platform’s stock offerings require a minimum deposit to enable leverage, otherwise it will be difficult for the trader to invest in profitable stocks.
The principle of these three types of accounts is simple:
A securities account is accessible to all traders, minors or adults, from which they can access multiple financial assets. A trader can hold several securities accounts for the purchase and sale of shares. He can thus diversify his investments. Securities accounts are not capped and include no restrictions. This portfolio of assets includes custody fees;
A trader for an equity savings plan. The PEA is only open to major traders it cap whose investment value at 150,000 euros. The PEA also presents some penalties relating to the stock market value;
The PEA-PME, a stock market account with the same characteristics as the PEA except for an investment ceiling reduced to 75,000 euros. The PEA-PME stands out in particular for the quality of the supports.
Choose a stock broker based on the value of commissions and fees.
Whether the trader invests in publicly traded assets through a brokerage firm, online bank, or brokerage, brokers will always charge a fee . Indeed, they can charge the investor for opening an account on the trading platform, management and maintenance fees, brokerage fees or commission fees for past transaction orders. The price of commissions and fees vary from one stockbroker to another. A broker’s commissions may be a fixed price , applied at a flat rate for all transaction orders or a price relating to the volume of transactions.
The trading platform offers free Euronext and ETF brokerage fees, however the financial products to which the trader has access are limited. This is the case for etoro, Degiro, xtb or even yomoni. The trader can opt for other brokers such as Fortuneo for brokerage fees ranging between 2.50 euros to 0.13% for orders from 0 to over 3000 euros, Burbank with commissions between 1.95 euros to 0 20% for investments from 0 to over 2,000 euros.
This means that you, as an investor, must pay close attention to the price of commissions received by the stock broker compatible with your investment strategy. You should know that a substantial commission affects your asset portfolio for each order you make.
Attention ! The lowest brokerage commissions can be signs showing the reliability of the trading platform. So don’t be blinded by stock brokers offering low transaction rates.
As mentioned above, some sites offer a comparative table of brokers with the most helpful offers and on which many traders invest and use for the management of their portfolios. It is an effective way to give you a concrete opinion on the trading platform to choose for investing.