With a large international broker in stock market who has many opportunities for transactions, you can earn more than with a local company. But once you want to start, you’ll need to learn the conditions of such an intermediary and find out which one can become your partner.
If you plan to make transactions not only with local securities, but with CFDs on international stocks as well, it makes much sense to carefully choose the broker and trade with profits.
Your financial goals can affect the choice of broker. In order to choose the right broker, define what you’re going to achieve and outline the main conditions. Many brokers have a minimum deposit amount. If it is higher than the one you have, it means these organizations are not suitable for you even if they offer some kind of discount.
For example, Sharefounders has a minimum deposit of $ 250, which is currently the optimal amount to start trading. There is a category of cent brokers that allows you to start trading literally from $ 1, but there’s no point considering them as a potential partner, since with such a trade the risk of losing money is much higher than the possibility of profit.
How often will you carry out transactions? The broker receives a commission from each completed transaction, and many companies have a minimum monthly amount that must be credited to the account. If you trade rarely, you will be charged extra. Sharefounders has no additional fees.
Commissions and rates of brokers
Different brokers fees and tariffs may vary significantly. And for a novice investor with a small capital, this aspect plays a big role in choosing right intermediary.
Transaction fee
Some brokers like eToro receive a reward for each operation (0.05–1% of the transaction amount).
For example, if the commission of your broker is 0.1%, and you bought and then sold shares in the amount of $100.000, for two completed operations you should pay the broker 0.2% of this amount, which is $200.
Even a slight, at first glance, difference in the commission of two brokers for the year turns into a decent amount. Everything will depend on how often you trade and how much you manage. Or you can choose the broker with no such fees.
Minimum monthly fee
Many brokers like Admiral Markets have the monthly minimum amount of transaction fees set, starting from $10–30. If the volume of your transactions is small and the broker received less fees during the month, the missing amount will be removed from your account at the end of the month.
Some brokers have special offers for investors who make deals rarely. But the best option is to choose the broker who has no such fee.
Depositary payment
An additional item of expenditure is the depository fee (the server where the securities you bought are stored). Some brokers may have a symbolic amount ($2-5 per year), while others may have a fixed monthly payment of $10-20, which will amount to several hundreds per year. It is also up to you if you want to pay this fee.
Additional expenses
The cost of additional services for all brokers can differ. Additional services include:
- software (in addition to the computer platform, many brokers have developed a mobile application for a smartphone that allows you to make transactions at any time and from anywhere);
- information support (training courses for beginners, personal consultation of a specialist);
- the opportunity to open a demo account (a demo account that helps the client evaluate the broker service and try to trade with no real money added to the account).
Some additional services at some brokers may be provided free of charge.
When talking of additional fees, Sharefounders broker reviews show that this company provides its services with no additional fees or commissions, and that’s a rare example of no-hidden-transaction cost at the market – its main profits depends only on spreads.
Ease of interacting with a broker
The interaction of the client and the broker takes place in several stages:
- Registration and opening of a trading account. Usually, a new client needs to visit company office for registration in order to sign an agreement, but some brokers provide remote registration via the Internet. This feature is convenient for customers and beneficial to the broker.
- Deposit and withdrawal of funds. It is recommended to top up the account using bank transfers or plastic cards. All withdrawals are made only to the client himself and not to any third parties.
- Direct investment and trading activities. At this stage, the main interaction between the broker and the client occurs. There are three main types of brokerage services:
- Work on the phone: the client calls and informs the type and terms of the transaction that the broker must carry out. This type of service is offered by all companies, but it is suitable only for those who rarely make deals.
- Internet trading: trading using the program which is installed on the client’s computer. It allows him to see trades in real time and to carry out transactions himself. This option is suitable for those who want to understand the situation on the market and make many transactions.
- Consulting management: can be carried out in various ways (a personal broker who will develop a trading strategy; SMS messages about price changes with recommendations for further actions; installing a trading robot that, according to the given parameters, can carry out operations independently, etc.).
It is important that cooperation at all stages of the interaction between the client and the brokerage company take place in a mode of mutual understanding and respect for each other's interests.
Other selection criteria
When choosing a broker for long-term and successful cooperation, you need to pay attention to other criteria:
- Duration and scale of the company. In this case, the more the better.
- The reputation of the broker and the number of positive reviews from customers. For example, Sharefounders reviews show that the company has a long way of investment and reliable partnership with the traders.
- Broker should be honest with its clients in terms of promises. You should not be promised guaranteed income in a specific amount. Every specialist knows that in the securities market this cannot be ensured. A good broker does not make high-profile statements and fabulous promises, but at the same time he performs his services in a quality manner.
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