. . . Do I need to try several and get familiar?
Hi Brett,
In answer to the question above - yes!
There's a few threads about Plus 500 - so I suggest you do a search and read those first before depositing funds with them. Here's one to start you off:
Does anyone actually use PLUS500? Besides that, here's some general advice about finding a broker . . .
New brokers spring up daily (or so it seems), and long standing ones continually update their products and services in a bid to remain competitive. Consequently, it's hard to offer advice about who to use and who to avoid. As a very rough guide, you’ll need to consider the following seven points when choosing a broker . . .
I. Regulation & Security
First and foremost, you need to avoid the riffraff and unregulated firms. Don’t be seduced by glitzy looking websites, laden with attractive offers and low spreads etc. Apply common sense and gut instinct and, above all, conduct due diligence. Specific advice explaining how you go about doing the above can be found in this thread:
Is my broker / money safe - basic due diligence
II. Tradable Instruments
If, for example, you wish to trade U.S. stocks, you’ll want a broker that offers the largest universe of instruments (i.e. companies) and whose spreads are narrow and whose commissions are low - compared to other brokers.
III. Financial Vehicle
Most brokers only offer one or two financial vehicles with which to trade. For example, a bespoke futures broker will only enable you to trade futures contracts and not shares, options and CFDs etc. At the time of writing, Interactive Brokers (IB) is one of the few firms that allow you to trade a variety of markets and instruments from a single universal account. (Please note: T2W is not affiliated in any way with IB and this is not a recommendation to open an account with them.)
IV. Account Size
If you only have limited capital with which to fund your account, you are likely to be restricted not only in your choice of broker, but in your choice of financial vehicle and markets as well. For example, you are not going to be able to open a ‘Patten Day Trader’ (PDT) account with a direct market access broker to trade U.S. equities, as there is a legal requirement to have a minimum of U.S. $25,000 in your account.
V. Trading Platform
This is the mechanism you use to enter trades, set stop losses and exit trades etc. There are many different platforms with different features; most traders like some more than others. The one you choose must offer the features you require and you must be comfortable using it. Most brokers offer a demo account so you can get used to their platform without any obligation to fund an account with them.
VI. Customer Service
This is very important, so much so that some members would argue that it’s better to pay a little extra in spreads and/or commissions and get the level of customer service you want, than it is to go ‘cheap and cheerful’ which won’t include much in the way of client help and support. Check out the
Broker Reviews on T2W to see how the broker you propose to use fairs.
VII. Experience
Experienced traders usually advise novices to steer clear of sophisticated derivative products such as options. So, skip options brokers for the time being at least! If you’re unsure what type of broker is suitable for you - just start a thread in the First Steps forum.
In addition to the above, there is a this FAQ:
Can You Recommend a Data Feed, Charting Software & Broker?
Lastly, one bit of advice often imparted to new traders is to open a margin account rather than a credit account. The reason being that you should only trade with money you can afford to lose. That means money you won’t miss if it’s not there, as opposed to your housekeeping pot, mortgage funds or savings earmarked for a holiday or a school trip for your children etc. Credit accounts encourage a gambling mentality, as your broker can continue to lend you money to cover your losses. Margin accounts simply stop operating once your capital falls below a certain level. It’s then up to you to add more funds if you want to. With a margin account, you are in control - not your broker.
Tim.
