How to choose the right broker
10.01.2024,
10:35
Having decided to start trading on the stock exchange, you will need to choose an intermediary, a professional market participant that meets the requirements of the legislation. Choosing an intermediary is a very important step
YEREVAN, January 10. /ARKA/. Having decided to start trading on the stock exchange, you will need to choose an intermediary, a professional market participant that meets the requirements of the legislation. They are brokerage and investment companies, as well as banks. Choosing an intermediary is a very important step, because with his/her help you will manage your financial instruments, buy and sell securities and trade currencies. There are a number of basic criteria by which you can evaluate a broker.
Regulatory status
Only a broker with an appropriate set of licenses has the right to provide its clients with the opportunity to trade on the exchange. A regulatory document ensures that the company operates in accordance with the regulatory framework of the jurisdiction that can hold it accountable for any offenses and resolve disputes fairly and impartially.
Usually, companies place their compliance with these criteria on their official websites. Your task is to review the documents carefully, make sure they are not expired and study the information about the regulator.
In Armenia, brokerage activities are regulated by the Central Bank. On its website you can always find an up-to-date full list of licensed brokers.
Reliability
A reliable intermediary means less risk that it will go bankrupt, lose their license or defraud investors. A broker is usually one of the most reliable partners in financial markets - not only because of strict regulation, but also because of the very nature of the business. Firstly, your assets are not kept with the broker, but with a special independent institution - depository. Accordingly, in case of broker's collapse, your assets remain safe. Secondly, the broker earns together with his/her client, so they are interested in your investments being successful and long-term.
Nevertheless, the risk of fraudulent actions remains, so when choosing a broker you should turn to experienced market participants who have been working in the market for a long time and have a good reputation. It is important to follow the ratings of companies, which are compiled by the largest national and international stock exchanges, trustworthy communities of investors specializing in finance. They assess various indicators, including the number of clients, trading turnover, and growth rates.
Fees
Evaluate the broker's commissions and fixed fees and match them to the amount of investment. Usually, for small investments it is not the low commission but the low subscription fee that is more important.
You can also look at European or American brokers - especially if they have offices in your country. They offer a wider selection of instruments, an advanced trading interface and the best commissions. In addition, foreign brokers are located in jurisdictions with more developed laws and regulatory practices.
Type of broker
Focus on the amount of money you intend to manage to understand which type of broker to turn to: discount or full-service. The first option includes companies that offer stock buying and selling services to the mass investor for a reduced commission. Entering the market through such an intermediary, you will get a limited range of opportunities - for example, lack of training and consulting support.
The amount required for initial investment through a discount broker is much less than in the case of large companies. Therefore, this option is optimal if you are going to start by investing a small amount and are ready to manage financial instruments on your own.
Full-service brokers offer the client a variety of support, including professional management of your account, formation of an investment portfolio or assistance of a personal consultant. These companies are reliable, but you will have to pay high commissions to work with them. Full-service brokers are suitable for investors with a large turnover of funds.
Range of instruments
The more diverse the types of transactions that the broker allows you to make, the more opportunities you have in the market: trading in shares of local and foreign companies, commodities, currency pairs on Forex, as well as indices.
Keep in mind that not all brokers provide access to foreign exchanges, so if this point is important to you, be sure to request additional information.
Access to exchange
Pay attention to the trading platforms provided by the broker. This is important because it is the main tool, namely the software with which the market is accessed. Modern brokers, as a rule, offer multifunctional platforms available both as an application and in a web version.
Through the software you will trade, manage your account, analyze trading results, receive up-to-date information on quotes. Success depends on the platform's features matching your goals, ease of use, and compatibility with your devices.
Client support
It is preferable to choose a broker that has a dedicated support team that responds promptly to queries through various channels (phone, website, app or email), solves problems and provides feedback. Contact the support team in several ways, ask the staff questions. You can also learn about the experience of interaction with companies on forums where practicing traders communicate.
Quality of service
It is important that the broker processes transactions smoothly and quickly and allows you to withdraw funds as soon as possible. When assessing the quality of service, you can also rely on ratings and feedback from current and former clients.
Training
On the best side, the broker is characterized by readiness to conduct training courses, maintain sections on the website and blogs to help traders understand the stock markets, organize seminars for clients and attract foreign specialists to them
Remember
Choosing a broker is not an easy process and should be taken seriously. Consider the following factors, prioritizing them according to your goals:
- If you are looking for a large and reliable broker, look for companies with high ratings; - research information about commissions and fixed fees;
- try to test services in advance: try to work with demo versions of applications and platforms, evaluating their functionality and interface, ask questions to employees in chat and by phone;
- remember that you can always change brokers or open accounts with several companies.
The material was prepared within the framework of a joint project "The Year of Investing in Oneself " by ARKA, AMI Novosti-Armenia news agencies and Freedom Broker Armenia.
Regulatory status
Only a broker with an appropriate set of licenses has the right to provide its clients with the opportunity to trade on the exchange. A regulatory document ensures that the company operates in accordance with the regulatory framework of the jurisdiction that can hold it accountable for any offenses and resolve disputes fairly and impartially.
Usually, companies place their compliance with these criteria on their official websites. Your task is to review the documents carefully, make sure they are not expired and study the information about the regulator.
In Armenia, brokerage activities are regulated by the Central Bank. On its website you can always find an up-to-date full list of licensed brokers.
Reliability
A reliable intermediary means less risk that it will go bankrupt, lose their license or defraud investors. A broker is usually one of the most reliable partners in financial markets - not only because of strict regulation, but also because of the very nature of the business. Firstly, your assets are not kept with the broker, but with a special independent institution - depository. Accordingly, in case of broker's collapse, your assets remain safe. Secondly, the broker earns together with his/her client, so they are interested in your investments being successful and long-term.
Nevertheless, the risk of fraudulent actions remains, so when choosing a broker you should turn to experienced market participants who have been working in the market for a long time and have a good reputation. It is important to follow the ratings of companies, which are compiled by the largest national and international stock exchanges, trustworthy communities of investors specializing in finance. They assess various indicators, including the number of clients, trading turnover, and growth rates.
Fees
Evaluate the broker's commissions and fixed fees and match them to the amount of investment. Usually, for small investments it is not the low commission but the low subscription fee that is more important.
You can also look at European or American brokers - especially if they have offices in your country. They offer a wider selection of instruments, an advanced trading interface and the best commissions. In addition, foreign brokers are located in jurisdictions with more developed laws and regulatory practices.
Type of broker
Focus on the amount of money you intend to manage to understand which type of broker to turn to: discount or full-service. The first option includes companies that offer stock buying and selling services to the mass investor for a reduced commission. Entering the market through such an intermediary, you will get a limited range of opportunities - for example, lack of training and consulting support.
The amount required for initial investment through a discount broker is much less than in the case of large companies. Therefore, this option is optimal if you are going to start by investing a small amount and are ready to manage financial instruments on your own.
Full-service brokers offer the client a variety of support, including professional management of your account, formation of an investment portfolio or assistance of a personal consultant. These companies are reliable, but you will have to pay high commissions to work with them. Full-service brokers are suitable for investors with a large turnover of funds.
Range of instruments
The more diverse the types of transactions that the broker allows you to make, the more opportunities you have in the market: trading in shares of local and foreign companies, commodities, currency pairs on Forex, as well as indices.
Keep in mind that not all brokers provide access to foreign exchanges, so if this point is important to you, be sure to request additional information.
Access to exchange
Pay attention to the trading platforms provided by the broker. This is important because it is the main tool, namely the software with which the market is accessed. Modern brokers, as a rule, offer multifunctional platforms available both as an application and in a web version.
Through the software you will trade, manage your account, analyze trading results, receive up-to-date information on quotes. Success depends on the platform's features matching your goals, ease of use, and compatibility with your devices.
Client support
It is preferable to choose a broker that has a dedicated support team that responds promptly to queries through various channels (phone, website, app or email), solves problems and provides feedback. Contact the support team in several ways, ask the staff questions. You can also learn about the experience of interaction with companies on forums where practicing traders communicate.
Quality of service
It is important that the broker processes transactions smoothly and quickly and allows you to withdraw funds as soon as possible. When assessing the quality of service, you can also rely on ratings and feedback from current and former clients.
Training
On the best side, the broker is characterized by readiness to conduct training courses, maintain sections on the website and blogs to help traders understand the stock markets, organize seminars for clients and attract foreign specialists to them
Remember
Choosing a broker is not an easy process and should be taken seriously. Consider the following factors, prioritizing them according to your goals:
- If you are looking for a large and reliable broker, look for companies with high ratings; - research information about commissions and fixed fees;
- try to test services in advance: try to work with demo versions of applications and platforms, evaluating their functionality and interface, ask questions to employees in chat and by phone;
- remember that you can always change brokers or open accounts with several companies.
The material was prepared within the framework of a joint project "The Year of Investing in Oneself " by ARKA, AMI Novosti-Armenia news agencies and Freedom Broker Armenia.
