Experienced stock market investors all agree on this point. The essential step, before embarking on online brokerage, is to carefully select the platform with which clients will place their orders. In our ultimate guide, we'll go over the important criteria in determining which online broker to choose. Trading online requires making reasoned decisions that have a major impact on future results. The choice of your online broker is the source of success. Discover our ranking of online brokers.
Comparison of the best stock brokers
eToro: excellent online broker?
We cannot deny that eToro is a very popular online brokerage with traders. It is one of the best forex / CFD brokers with a wide range of services that covers all facets of stock market trading: CFD trading (forex, stocks, ETFs, crypto currencies, indices, materials), more classic brokerage in the stock market. 'shares without any commission, portfolio dedicated to the purchase, sale and exchange of crypto currencies (eg: Bitcoin).
Overall, eToro is very popular with traders thanks to its social trading platform which integrates the practice of automatic copy trading with referral traders, its very competitive prices and its wide range of financial products. But can we conclude that eToro is the best stock broker?
The answer cannot be so clear cut. It should be noted that the broker is above all a forex / CFD broker, and that its social trading platform is particularly suited to very volatile products. In addition, its share offering is limited to a few big names in powerful companies. While the zero commission policy is very attractive, it lacks some great classics to make it an online broker for the stock market, which stands up to market leaders (like DEGIRO ). Let us quote the PEA, which has very interesting tax advantages. eToro is relevant if an investor wants to centralise everything on a single client account, with an investment strategy where stocks are only a small part of their plan.
How to choose your online broker to invest in the stock market?
To establish a comparison of relevant online brokers, it is essential to analyse measurable elements. We focus on fees and commissions, the instruments available on the platform, compliance with regulations, the quality of customer service, the reliability of the mobile application, training materials, the presence of leverage (credit granted by the broker to increase investment capacity) and a demonstration account.
Online brokerage fees & commissions
This is perhaps the most important criterion since it directly impacts the profitability of a stock market portfolio. There are important differences between the different platforms accessible by retail investors. Fees and commissions can vary from simple to sometimes quintuple depending on the type of products traded and the markets involved. It is not essential to search for the cheapest online broker. It is above all a question of balance in the distribution of fees and commissions and the quality of the services included.
Assets available on the online broker
The greater the number of assets available from an online broker, the easier it is for an investor to diversify his portfolio on the same client account. The more opportunities there are, the more effective it is to apply one or more medium and long term investment strategies. Once again, from one online broker to the Exchange to another, the types of financial products (and their home markets) vary enormously. The presence of different tax envelopes also weighs in the decision. A stock broker with a PEA is a real plus for long-term investment plans (minimum 5 years to benefit from tax advantages).
Online brokerage regulations
In order to avoid losing their invested capital following fraudulent practices on the part of their online broker, stock market investors must pay particular attention to the level of reliability of the platform by referring to compliance with the regulations in force. in different countries. Even if it can vary from one geographic area, or even from one State to another, the regulatory authorities have a certain number of points in common which aim to protect individuals' funds as much as possible.
We obviously recommend opening an Ordinary Title Account or a PEA with a broker that offers the best level of security and reliability. We must at all costs avoid being tempted by too attractive prices, which sometimes hide scams, fraud, hidden costs, which risk at best negatively impacting the actual money gains, at worst to observe with desolation. the total loss of its capital following the sudden closure of the broker, or the inability to withdraw its profits.
Online Broker Customer Service
The quality of customer service is an important point to guarantee a successful stock market experience. We discuss here the means of contact (email, live chat, telephone), the availability of advisers and the languages spoken by them.
Customer service supports customers on a daily basis to place orders by phone or email (with transaction costs), answer technical questions or validate withdrawal requests. Efficient and professional customer service greatly facilitates the management of a portfolio of financial products.
Mobile application of the online broker
The technological revolution is invited into our daily lives. We have become used to being able to do everything with a few clicks (or finger presses) on our smartphones and tablets. It is therefore normal that investors expect their stock broker to offer them a great deal of autonomy of action wherever they are.
It is therefore strongly recommended to opt for an online broker who offers a powerful mobile application, which perfectly replicates the computer or browser version. The goal is to allow clients to be as responsive as possible, with the best level of security in the execution of orders (opening, closing) and financial transactions (minimum deposit of capital and withdrawal of profits).
Online broker training
It is natural to feel lost when we first start out in online brokerage. Financial markets are known to be risky investments, and rightly so. It is preferable not to place your first order without understanding at least the functioning of the Stock Exchange, the type of existing orders, the level of risk incurred and the tools to be used to best manage this level of risk. The goal is to secure your capital, consolidate it and make your money grow, while limiting losses as much as possible.
This is why, in our opinion, it is quite relevant to choose an online broker who integrates a training program into his service offer, especially for beginners. This can take several forms:
Webinars (live training in real conditions with a professional);
e-books for viewing or downloading;
Explanatory videos and tutorials;
Blog and general articles or on specific themes;
FAQ which groups together general questions on the functioning of the brokerage platform;
Program training step by step, with growth depending on skill level.
Once again, the quality of training varies greatly from one broker to another. It is essential to choose a formula that suits your expectations, needs and preferred methods of learning.
Leverage of the stock broker
Online brokers can include a number of products in their instrument catalog that can be traded with leverage. As a reminder, the leverage effect is a credit granted by the broker to increase the investment capacity without having to have a larger minimum capital. The leverage effect therefore makes it possible to earn greater profits, while exposing oneself to a proportional risk of losses in the event of losing positions to repay the credit granted by the broker.
The financial products affected by the leverage effect are CFDs selected for their volatility and liquidity. This is an additional option in order to broaden its strategy to short-term transactions for additional income. Like any credit, it must be repaid. Negative balance protections are now built into all trusted platforms.
Stockbroker demo account
The demo account, or demo account, is in our opinion a major element in choosing your stock broker. It is a perfect complement to the theoretical training that brokerage platforms can offer. Indeed, the demo account offers the possibility of testing the technical functions of the broker in real conditions, of training without risk, with fictitious capital, of placing orders and evaluating potential profits and of establishing or even refining certain investment strategies.
Let us take a nuance on the essential utility of a demo account with an online stock broker. The very dynamics of stock trading rely on medium to long term projections to show meaningful results. Do investors need to test an online stock exchange interface for free for many months and realise that they could have made a lot of money?
Demo accounts are the copy of real trading platforms - Source SafeNetTrading.com
Online broker or not to buy securities on the stock market?
Preferring an online broker, rather than a commercial bank or financial professional, has a number of advantages and limitations. We have compiled a list of illustrative elements of these 2 categories to help users weigh the pros and cons in full knowledge.
Access in all autonomy and in real time the different financial markets;
More affordable rates. No custody rights on titles or subscription;
Greater speed of execution of orders;
The great convenience of a platform accessible via the Internet , anytime and anywhere;
An available customer service, which aims only at the satisfaction of users of services on the stock market;
A centralised portfolio management without intervention or validation of a third party.
The majority of the drawbacks of online brokerage revolve around the topic of trader psychology. With its great portfolio management autonomy, an account with an online broker can have the following consequences:
A lack of perspective on the best practices to be maintained → temptation to play high rollers to make more profits;
A lack of control of emotions, especially negative ones, when an order does not give the expected results on securities, with the search to cover losses immediately, without taking the necessary precautions;
A possible lack of recourse in the event of problems with the broker. With a traditional bank, it is safer to know your interlocutor → increased risk of scam.
Best Online Broker: A Broker Must Be Adapted To Your Stock Market Strategy
We have covered this point previously. The choice of his broker is inseparable from the investment strategy that the trader intends to apply. It is therefore vital to open a client account with a stock broker who meets all financial ambitions and within the time limit set.
We therefore recommend choosing a forex CFD broker if the investment strategy aims to achieve faster gains, on a greater number of transactions, with a smaller minimum capital (thanks to the leverage effect) but with a level of higher risk. The day trading, the scalping or the swing trading are popular and totally adapted strategies to this style of trading. The returns can be quite maddening when technical analysis is well mastered. This requires a significant presence, and at the right times, in order to optimise its results.
By cons, investors who have longer-term financial targets (several months or even years), have every reason to choose a broker Exchange. The main ambition is to take maximum advantage of the constant growth of the equity markets, while reducing risks by diversifying their investments into different securities. It is important to understand how the stock market works to guard against beginner mistakes, but it is less necessary to be present in the markets every day. The starting capital may need to be higher than under CFD brokers to see significant gains.
Can an online broker trade cryptocurrencies?
The issue of crypto currencies is debating within the trading community. Indeed, cryptocurrencies are the new El Dorado with really insane potential returns on investment (ROI). Especially on blue chip stocks like Bitcoin, Ethereum and Litecoin. However, this type of asset is not listed on the stock market, as can the Apple company for example. Precisely cryptocurrencies are an alternative to the current economic system.
Few or few online stock brokers integrate crypto trading on their platform. Their highly speculative dimension has difficulty in gaining credibility with more traditional stock brokers. There may possibly be an exchange platform annexed to the main broker that allows you to buy, sell and trade cryptos.
It may be relevant to open an account with a forex / CFD broker that offers trading either of cryptocurrency derivatives by speculating on the rise or fall of the price according to an identified trend, or live when this is possible. eToro or XTB integrates this practice into their platforms.
Finally, surely the most reasonable choice in our opinion, going through a platform dedicated to this particular market in order to take advantage of the best tools and the largest choice of opportunities. Let us quote for example Coinbase or Binance, which are references on the market.
Prefer a dedicated platform for cryptocurrency. Its tools will be much more suitable - Source Binance.com
Best Stock Broker: Which is the cheapest broker?
It is difficult to give a definite answer to this question. We have mentioned it throughout our guide. There are a number of criteria to consider in determining whether an intermediary is the best and cheapest stock broker.
Admittedly, the prices charged are measurable but they must be contextualised with the services which are attached to them. Network banks are often more expensive, but they offer some additional guarantees. Particularly in terms of execution security. Online brokers have many other advantages to highlight, especially in the simplicity and flexibility of portfolio management (CTO, PEA, stocks, ETFs, bonds, etc.). A cheaper broker may have fewer financial products available or more limited access to global markets (Euronext for Europe, NYSE for the United States), which may justify more competitive fees.
Despite everything, at present, DEGIRO stands out strongly from other online brokers with very competitive rates and a very complete range of services. Binck and Trade Republic are also particularly attractive and balanced players.
Does a free online broker exist?
In absolute terms, the answer is no. By the very essence of its activity, a free online broker cannot exist, since it is remunerated on the orders placed by investors. Like any other service provider, clients can buy shares (or bonds, ETFs, warrants, etc.) on the stock exchange using the technological tools provided by the broker. The fees and commissions are thus justified. Whether it is a bank or an independent broker, commercial tariffs are applied to remunerate the employees of the companies.
However, it is quite possible to train on completely free brokerage platforms, which give access to quotes in real time, with fictitious capital. It is not a question of making money, but of evaluating whether stock trading is a satisfactory investment strategy. For example, ProRealTime or MetaTrader can be downloaded free of charge for such tests. Demo accounts offered by online brokers are also a way of doing stock brokerage for free, while waiting to invest your own capital.
Online brokerage: opportunity or scam?
As long as an online broker or trading site meets all the requirements of French regulations (via the ACPR), there is no reason to fear a scam. This regulation notably includes a clause which prohibits brokers from speculating with the securities of their clients. In fact, the shares in question are not stored with them, but with a depositary institution (or custodian).
However, this statement does not necessarily apply to all intermediaries which are authorized by the Cypriot authorities (for the European market). The rules for obtaining are not as demanding, and therefore do not guarantee against a possible scam.
Choosing the right broker comes down to determining whether all the regulatory conditions in your country are met to avoid losing your money because of fraudulent practices.