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Last update: Feb 07, 2024

Your Guide to the Best Online Brokers for Beginners

Choosing Wisely: Selecting the Right Broker for Your Investment

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Written by

Josep Garcia

Josep Garcia

Upskillwise Advisor

I'm Josep Garcia, originally from Barcelona. In 2016, I launched my own website, which required me to learn coding from scratch. Online learning platforms were a huge help. Nowadays, I specialize in personal finance content creation as an EFPA-certified financial advisor.

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Edited by

Catherine Cooke

Catherine Cooke

Upskillwise Advisor

I'm Catherine, originally from London, now living in Spain. My professional journey led me from being a certified teacher to a yoga instructor and then a freelancer designer. These changes were made possible by online learning platforms like Skillshare and Coursera. It wasn't always easy, but so worth it and inspired me to start Upskillwise.

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Upskillwise.com is fully supported by its readers. If you register or buy a course using our links, we may receive a commission. This does not affect our ratings, methodology or partners.

I still remember my first foray into the stock market; I was in my twenties, eager to buy shares but clueless about how to proceed. I went to a traditional bank, signed up for their online brokerage, and the outcome was less than ideal.

Hefty commissions were just the start; I inadvertently bought the wrong shares and neglected crucial factors like investment timing, risk assessment, and the importance of portfolio diversification.

The experience was a tough lesson. To help you sidestep such pitfalls, I’ve put together this beginner’s guide to the best online brokers, detailing their advantages, drawbacks, and fees.

Be prepared, as this guide is extensive. But if you’re short on time and just want to get straight to the recommendations, here’s a brief summary of the best brokers for different needs:

  • Best overall broker: eToro.
  • Best brokers for shares and ETFs: Trading 212 and Interactive Brokers.
  • Best brokers for beginners: eToro and Trading 212
  • Best brokers for fractional investment: eToro.
  • Best broker for experienced traders: Interactive Brokers-
  • Best CFD brokers: AvaTrade and IC Markets.

Let’s get down to business and help you find the broker that best suits your investment style.

The content provided herein is for educational purposes only it’s not financial advice. Investing carries risks, including the potential loss of capital. Past performance does not guarantee future results.

Overview of the Best Brokers for Beginners

Platform

Facts

Summary

32 million users

3,000 stocks

300 ETFs

eToro is renowned for its user-friendly platform, offering swift account setup and access to a diverse range of markets for fractional stocks and ETFs. Users can invest in cryptocurrencies too.

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

  • Wide Range of Markets and Asset Classes
  • EU, UK, and Australia regulated
  • Social Investing (Copy Traders)
  • Flexible Demo Account
  • Commission on Withdrawals
  • Account Only in US $
  • Minimum dDeposit $200 ($50 in the US)

DEGIRO

4.2

2 million users

50 + Exchanges

DEGIRO, regulated in the EU and UK, is noted for its user-friendly platform and vast offerings in ETFs and shares. Available in select European nations, it excludes US, Canada, and other investors. Be aware of the accumulating fees.

  • Regulated in The EU and UK
  • Many Assets Available
  • Accepted Account Currencies
  • User-Friendly Interface
  • No Demo Account
  • US Clients Not Accepted
  • Crypto Investments Not Available
  • Fees Can Add Up

800,000 + users

3,000 + stocks

150 + ETFs

 

XTB, hailing from Poland, allows fee-free trading in stocks and ETFs, with a wide asset selection and both full or fractional investing. Its drawbacks include a less intuitive interface and a restricted demo account, and it does not serve US clients.

  • Regulated in The EU and UK
  • Investment Plans
  • Trade Real Assets & Derivatives
  • USD, GBP and EUR Accounts
  • Limited Demo Account
  • Fixed Leverage
  • Inactivity Fees
  • US Customers Not Accepted

Interactive Brokers

4.1

2 million users

150 markets

Interactive Brokers is an investment platform available in dozens of countries that allows you to invest in multiple assets. Sadly, it’s not the easiest to use.

  • Derivative & Real Assets
  • Available Countries
  • Markets & Aseets
  • Ease-of-Use
  • Account Opening
  • Complicated Pricing Model

330,000 + users

2,800 + CFD

Plus500 stands out as a dedicated CFD broker, offering an extensive array of CFD options, which may not be ideally suited for beginners. Users should also be mindful of the platform’s inactivity fee.

  • Regulation Across UK, EU, NZ, and More
  • Well-Designed
  • Available Countries
  • Only CFD Trading
  • Fixed Leverage
  • Inactivity Fee

400,000 + users

1,500 + CFDs

AvaTrade, a broker tailored for CFD trading, offers fixed leverage across a select range of assets, which might challenge novice traders. Its platform is not the easiest to navigate, and while depositing is facilitated with various payment methods, the available assets are fairly limited.

  • Account Opening
  • Regulated in UK, EU, Australia, etc.
  • Multiple Deposit Payment Methods
  • Not Available in the US
  • Not Many Assets
  • Exclusive to CFD Trading
  • Interface Design Could Be Improved
  • Fixed Leverage

Users not disclosed

2,250 + CFDs

In our experience, IC Markets presented a steep learning curve, necessitating external platforms such as MetaTrader or cTrader for operation. It’s solely dedicated to CFD trading with fixed leverage. It allows algorithmic trading.

  • Connect External Trading Platforms
  • CySEC Regulated
  • Algo Trading
  • Doesn't Accept US Users
  • Outdated Interface
  • Only CFD Trading
  • Security Login Options

250+ assets

IQ Option, a derivatives-exclusive platform, boasts a well-designed interface and a generous demo account. While asset choices are limited and leverage is fixed, it excels in charting options.

  • Well-Designed Interface
  • Generous Demo Account
  • Comprehensive Charting Tools
  • EU & UK Regulated
  • Exclusive Derivative Trading Platform
  • Fixed Leverage
  • US (& Other) Clients Not Permitted
  • Limited Asset Selection

What Is A Broker?

A broker, whether an individual or an organization, serves as an independent intermediary, orchestrating transactions between buyers and sellers across various sectors. In the realm of finance, brokers play a pivotal role in facilitating the trading of financial assets, encompassing both buying and selling activities.

If you’re looking to buy (or sell) specific financial assets, like Apple shares, think of the broker as your matchmaker. They’ll connect you with someone ready to make that trade happen, whether it’s buying or selling those Apple shares. Sometimes, with brokers like XTB, you’ll even trade directly with the broker itself, and these are known as market makers.

Of course, brokers aren’t in it just for kicks, so they do charge a commission (or a spread) in one way or another. We’ll dive into more details about these commissions shortly.

Brokers and fees
Brokers and fees

Why Do I Need A Broker?

Good question!

To dive into trading, like on the stock exchange, you’ll need a financial asset trading platform—aka, a broker. Without one, it’s a no-go for buying or selling financial assets.

For instance, picture this: you receive a lucky $500 tax refund and decide to invest it in shares, say, in Intel.

But how do you actually invest that money in Intel?

Well, you could attempt to knock on doors in your neighbourhood, asking if anyone owns Intel shares and is up for selling them at a fair price.

But, let’s be real, that’s not really an option.

Instead, brokers step in to connect you with fellow investors who are ready to trade (buy or sell assets) with you. Sometimes, they even handle the trading themselves.

Just like how most of us don’t head to the farmer for potatoes, cabbages, eggs, or lettuce – imagine the shopping ordeal! That’s where brokers come in, much like a supermarket for your financial needs.

The Best Online Brokers For Beginners

Here’s a list of the TOP brokers right now, providing insight into the current market landscape and what they have to offer.

Keep in mind that brokers often specialize, so not all may be suitable for every investor profile. Typically, brokers excelling in derivative products like CFDs may differ from those best suited for trading non-derivative financial assets such as shares or ETFs.

eToro

Meet eToro, a well-known market maker born back in 2007 (originally known as RetailFX) in Israel. Today, they’ve expanded their reach with offices in the UK, US, Australia, and Cyprus. With a massive following, eToro ranks among the top broker choices, boasting an impressive 32 million registered users.

eToro is an alternative to DEGIRO
etoro Online Broker with Social Investing

They’ve got quite the marketing firepower too, having roped in celebrities like Kristian Nairn (the iconic Hodor from Game of Thrones) and Alec Baldwin. Not to mention their omnipresence in online ads, including YouTube, all while catering to millions of users.

What I Like About eToro:

  • Regulated by reputable authorities in countries like Cyprus and the United Kingdom
  • Boasts an intuitive platform, a user-friendly smartphone app, and a handy demo account for practice
  • Allows you to invest by mirroring other investors for inspiration – copy trading.
  • It’s possible to trade a huge number of asset classes (fractional shares (bits of shares), fractional ETFs and cryptos)
  • You can decide whether to invest without leverage, which some similar market makers don’t allow (e.g. XTB)

What They Should Improve:

  • A relatively high initial deposit is required; you won’t be able to deposit less than $200 ($50 in the US).
  • Withdrawal commissions may apply in certain cases.
  • It lacks a news feed to help you stay informed about your investments.
  • Spreads could be a bit lower.

Who Should Use eToro?

Buying fractional shares and ETFs can be a smart choice for long-term investors looking to own real assets affordably (with no trading fees). It’s worth exploring, though fractional shares have their unique aspects. Additionally, there’s the option to mirror other traders in real time, but please, take time to study and grasp the associated risks before diving into trading.

> Read review

Try eToro

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

DEGIRO

DEGIRO is undoubtedly an extremely popular broker in Europe, founded in 2013 and based in the Netherlands / Germany, it has been gaining popularity and currently serves well over 2 million clients in 18 different countries (mostly in Europe).

DEGIRO website
DEGIRO Comes with Many Assets & Markets

DEGIRO enables online trading in numerous markets, including the United States, United Kingdom, Germany, France, Spain, Australia, Japan, and more. You have the flexibility to trade with or without leverage. Additionally, they offer a promotion allowing commission-free trading of select ETFs once a month when you invest a minimum of $/£/€1,000.

What I Like About DEGIRO:

  • Opening an account with DEGIRO is effortless, and its platform is user-friendly.
  • DEGIRO is headquartered in the Netherlands (and Germany), an EU country, and operates under the regulation of the Netherlands Authority. Additionally, it is registered with the UK FCA.
  • DEGIRO offers a diverse range of tradable securities, including stocks, ETFs, bonds, options, and futures from markets in the US, major European countries, Asia (e.g., Hong Kong, Singapore, Tokyo), and Australia.

What They Should Improve:

  • It’s not possible to trade some assets such as CFDs, Forex or Cryptocurrencies.
  • There is no demo account for you to practice with, but opening a regular account is free of charge. Of course, you can’t practice as you would with virtual funds.
  • Unfortunately, DEGIRO is only available to clients in the United Kingdom and select European Union countries. If you’re located in the United States, Japan, Singapore, Australia, or similar regions, trading with DEGIRO is not an option.

Who Should Use DEGIRO?

DEGIRO seems to me to be a good platform for beginners and experienced traders, as it’s a simple platform, but at the same time it has several order types (e.g. stop loss) and research options that advanced users will appreciate. It also has a variety of markets and products. But sadly, it’s not the best alternative for trading derivatives.

Read review

Interactive Brokers

IBKR is a US-based group with over 40 years of experience in the financial sector, serving more than two million customers. They pledge low fees, user-friendly tools, and a wide range of assets and markets. But does it all hold true?

Interactive Brokers Homepage
Interactive Brokers Homepage

It has an official presence in many countries such as the United States, Luxembourg, the United Kingdom, Canada and Japan, and is therefore supervised by many institutional bodies in serious countries.

What I Like About Interactive Brokers:

  • Available in numerous countries, including the US, Canada, UK, Japan, Australia, Brazil, and many European countries.
  • Offers a wide range of products, including stocks, ETFs, mutual funds, bonds, currencies, and derivatives like CFDs and futures.
  • Provides access to 155 markets and countries with support for 26 different currencies on its platform.

What They Should Improve:

  • The application’s user-friendliness and account opening process could be simpler.
  • The commission system can be complex due to the wide range of features, assets, and markets.
  • Access to all platform features requires software download, and web/mobile versions may lack some desktop features, such as trading certain instruments like bonds, warrants, or futures.

Who Should Use Interactive Brokers?

Interactive Brokers is a good choice both for experienced investors who want to trade (e.g. derivatives trading is possible) and for those who want to trade stocks, ETFs, funds or fixed income assets.

XTB

XTB is another of the most popular market makers where you can trade derivatives (such as CFDs). It has more than 15 years of experience, was founded in Poland in 2002, and operates in 13 countries (including the UK, Germany, France, Italy, France and Spain).

XTB broker for beginners
Trade Without Fees With XTB

With this market maker, it’s possible to trade CFDs on shares, ETFs, indices, Forex or even commodities. It also allows trading, in some countries, with real shares and ETFs. It has offices, among other countries, in the United Kingdom, Spain, Germany and France.

What I Like About XTB:

  • Registered with the UK FCA and other regulatory bodies in, among others, Spain, France, Germany and Portugal.
  • Opening an account is easy. There is also a demo account where you can test the platform with fictitious money.
  • With the Investment plans XTB enables you to build up to 9 ETF portfolios for your savings and investment goals. Automated contributions can be set up regularly. You can have up to 10 different plans, no fees if you have less than 100.000 € on each.
  • You can quickly add funds by credit and debit card, bank transfer, Skrill, PayPal and other e-wallets
  • Spreads seem to be among the tightest in CFD trading
  • Trade real assets and CFD: XTB allows its investors to trade real assets such as stocks or ETF, but also CFD (derivatives for trading). On top of that, you can choose to trade a fraction of a stock or ETF, or invest in the full asset.

What They Should Improve:

  • Minimum deposit of $/£/€250
  • It’s not possible to trade derivatives without leverage, but it’s possible to trade stocks and ETFs without it
  • Not suitable for clients outside Europe, UK and LatAm such as the US, Canada or Australia

Who Should Use XTB?

XTB is for serious traders working with derivatives, please note that you have to put in at least $/£/€250 to get started. Also, users looking to invest in Stocks and ETFs; not available for all countries.

> Read review

Try XTB

IG Broker

Founded in 1974, and with more than 170,000 clients worldwide, the IG broker is one of the most popular brokers in the world. It has offices in countries such as the United Kingdom, Germany, the United States, France, Japan, Singapore and Spain.

IG Broker for beginners
IG Broker

It’s a market maker focused on CFDs with more than 17,000 assets (CFDs) that you can trade. I have to say that there are others that have more products in their portfolio (e.g. XTB, or eToro).

What I Like About IG Broker:

  • Large broker (more than 200,000 users) with a long tradition in the financial world
  • IG doesn’t impose a minimum deposit when opening an account
  • Intuitive and with lots of charts and analysis that you can use
  • Comes with a demo account, so you can practice and test your brokerage
  • Available in many countries such as the USA, UK, Japan, Singapore, Spain, France, Germany, France, Holland or Italy

What They Should Improve:

  • Inactivity fee applies if you don’t trade for 2 years.
  • Designed for derivative traders, not ideal for stock trading.
  • Multiple account types with varying spread levels and features can be confusing.
  • Spreads may not be the most competitive at present.

Who Should Use IG Broker?

Definitely another broker for intraday traders who need advanced features (e.g. charting), and order types that suit what they are looking for (e.g. stop-loss). If you have no trading knowledge, I would suggest you look for another alternative with which to trade real assets such as stocks, ETFs, funds or bonds.

AvaTrade

AvaTrade is a derivatives broker that has been operating since 2006, and has managed to gain 300,000 clients who trust them to invest their money. With AvaTrade you can trade various types of CFDs such as stocks, currencies, ETFs, cryptocurrencies, indices and commodities. But it’s not possible to buy and sell underlying assets such as stocks, ETFs or fixed income.

AvaTrade broker
AvaTrade Is a CFD Broker

What I Like About AvaTrade:

  • Opening an account with AvaTrade is 100% online and fast
  • The spreads on their CFDs appear to be tight
  • They have a trading calculator that will help you understand how much you will pay in commissions on each trade
  • It’s a broker that is regulated in many serious countries such as the UK, Ireland, Australia, Japan and South Africa

What They Should Improve:

  • It doesn’t have the widest choice of markets and instruments for CFD trading
  • It’s not available for countries such as the United States or Canada
  • AvaTrade is only able to trade derivatives
  • Its charting system could be more comprehensive
  • AvaTrade charges a very high inactivity fee

Who Should Use AvaTrade?

Well, it’s a good option for those looking for a broker to trade CFDs, but it must be said that they don’t have the widest range of markets and instruments – e.g. eToro and XTB offer more.

Read review

IC Markets

IC Markets is an online forex and CFD broker based in Sydney, it was founded in 2007. This CFD-based broker offers over 2200 CFD assets, including stocks, currency pairs, indices, commodities, and cryptocurrencies. You’ll need to use MetaTrader or cTrader to use it, as IC Markets doesn’t have its own trading platform.

IC markets homepage
IC Markets is a CFD Broker

What I like About IC Markets:

  • IC Markets is a widely available broker, serving clients from many countries within and outside the European Union, including the United Kingdom, Australia, Germany, France, LatAm, and others
  • IC Markets is regulated by various countries including the United Kingdom, Australia, and the European Union and others
  • IC Markets makes it easy to open a demo account, they are also flebible
  • Trading options include social trading via Zulu Trade and algorithmic trading using programming
  • This broker supports multiple currencies, including USD, EUR, AUD, JPY, and GBP

What They Should Improve:

  • Since users can only invest in CFD, it won’t cut it for those looking to invest in real stocks, ETFs, bonds and so on
  • Its interface, including MetaTrader 4 5 and cTrader, is extremely outdated, surely won’t be getting any design award
  • This trading platform offers a limited range of instruments compared to other platforms
  • Security options for accounts could be a bit more rounded. For instance, it doesn’t come with a 2-factor authentication, and passwords and usernames for the trading accounts are sent to your email

Who Should Use IC Markets?

IC Markets may be better suited for experienced traders rather than beginners. It’s also not a broker for long-term investors, as it’s a CFD broker. It also comes with a steep learning curve.

> Read review

IQ Option

IQ Option is undeniably among the prominent players in the online brokerage industry, boasting over 7 million registered users and an average daily trading volume exceeding 20,000 trades. It maintains a presence in 31 countries, including the UK, Germany, France, Italy, Portugal, and Spain.

Is IQ Option a good broker for beginners?
IQ Option To Trade Derivatives

IQ Option is headquartered in Cyprus, and its operations are regulated by the Cyprus Securities and Exchange Commission (CySEC). Additionally, the broker is registered with reputable regulatory authorities, including the British FCA, the Spanish CNMV, the Italian Consob, and the French Regafi, among others.

What I like about IQ Options:

  • Professional platform with many options for charting and analysis
  • It’s possible to invest economically (using derivative products) in many financial markets (e.g. stock exchange, Forex, cryptocurrencies, etc.)
  • Regulated by many countries

What They Should Improve:

  • IQ Option will not allow you to trade without leverage
  • It’s only possible to trade derivatives (with CFDs), this isn’t ideal for beginners or investors than don’t understand its risks
  • Too few markets and assets compared to other trading platforms
  • Its web platform is a bit slow
  • Not available for US, Australian or Israeli clients

Who Should Use IQ Option?

It’s a platform suitable for experienced short-term investors looking for a quick and cheap way to invest (in derivatives). Similar to IC Markets.

> Read review

Types Of Brokers

Many classifications can be made between the different brokers, but traditionally, we can classify them all into 2 categories to simplify things.

Market Makers

They create their own market where clients (investors) trade, and as a result, trades do not reach interbank markets. Orders are executed within their system, and prices are determined based on client supply and demand.

The market maker (broker) is your trading counterpart. When you place an order, they take the opposite position. If you buy, they sell, and if you sell, they buy.

Market makers (typically) do not impose trading commissions. Instead, they profit from the spread, the difference between the bid and ask prices they establish.

Plus500 spread examples
Plus500 spread examples

Example: Suppose you wish to purchase Apple shares through the fictional broker MarketMaker Inc. The broker provides a bid price (for the client) of $117.66 and an ask price (for the client) of $117.70. The $0.04 difference represents the spread, from which the broker generates revenue, in addition to fees for various services.

You are probably familiar with IG Broker IQ Option, XTB or eToro, surely these are the most popular market makers right now.

Advantages of market makers:

  • They provide liquidity, allowing you to buy or sell at any time
  • Market makers’ trading platforms are typically user-friendly and cost-free, though they may have inactivity fees
  • They generally do not require substantial capital to begin investing
  • Costs are lower, and trades are faster compared to non-market maker brokers, making them suitable for derivatives traders

Disadvantages of market makers:

  • Conflicts of interest may arise, as they can profit when their users incur losses since they act as the counterparty to your trades
  • They primarily offer derivative products, which are riskier and more complex than equities, making them less suitable for inexperienced investors
  • They set the bid and ask prices to profit from the spread. In rare cases (when few brokers offer certain products), wide spreads can reduce profitability
  • Many market makers require trading with leverage, which involves borrowing funds from the broker for trading purposes

Some users believe that all market makers work against traders and manipulate their platforms. While there may be instances of such behavior, most investors incur losses due to their own actions, not due to market maker manipulation.

Many well-known and reputable brokers operate as market makers. If they engaged in fraudulent practices, they would not have a large user base. It is advisable to choose brokers regulated by trustworthy countries, such as EU members, Japan, the United States, or other countries of your confidence.

STPs and ECNs (No Money Desk)

These types of brokers connect buyers and sellers, so that financial assets can be bought and sold.

You will not buy (or sell) the asset from them directly, these brokers only put you in contact with other investors (or liquidity providers such as investment banks). In other words, they are not your trading counterpart, they only enable two individuals to meet and trade an asset.

Advantages:

  • They provide direct access to the market, allowing asset prices to closely reflect the real market prices
  •  Unlike market makers, there is no potential conflict of interest since you do not trade with them, but they facilitate the trades
  • This type of broker often offers the opportunity to trade real assets rather than derivatives
  • Generally, you can trade without being compelled to use leverage
  • You should be able to transfer assets from one broker account to another one

Disadvantages:

  • They may charge slightly higher commissions as this is their primary source of income
  • They may impose minimum capital requirements to access their platform
  • Liquidity may not always be high as they rely on matching buyers and sellers

Things To Consider When Choosing A Broker

Before you decide on a trading platform, it’s essential to understand the key factors to consider.

Commissions

When choosing a broker, it’s crucial to take into account commissions and fees, which can significantly impact your overall returns. Here are the main types of commissions you may encounter:

  • Annual commissions: Some brokers charge an annual fee for account maintenance, although this is relatively uncommon.
  • Inactivity commissions:Inactivity fees are assessed by some brokers if you don’t make any trades during a specific period, such as a quarter.
  • Trading commissions:When you trade securities like stocks (buying or selling shares), the broker typically charges a commission. It’s important to note that some brokers, particularly market makers, don’t charge a separate trading commission; instead, they make money from the spread between the bid and ask prices.
  • Foreign exchange commissions: If you trade in currencies other than the base currency in your broker account (e.g. buying shares quoted in Japanese yen), you may incur foreign exchange commissions.
  • Funding commissions: If you ask for money to trade or don’t add funds when your account is negative, the broker will charge you a commission for lending you that money. Beware that they are daily and can add up to quite a lot.

Leverage

Leverage is a tool used by some investors, like day traders, to amplify their trading positions beyond the funds they deposit with the broker.

For instance, let’s say you invest $10,000 in the Forex market, but you’re only required to have $1,000 as margin (the funds you deposit) at the broker. Importantly, this doesn’t mean that your risk is limited to $1,000; instead, your exposure and potential losses are based on the full $10,000 investment, even though you only need $1,000 as margin to open the position.

Leverage and its fees
Leverage impacts your eranings and losses

Be aware that this is a dangerous thing to do if you don’t understand it, and if the market moves against you, you will have to put more money in to compensate for the margin. If you don’t add the funds on time you will have commissions for financing (it’s as if the broker lends you money, and they charge you interest for it).

Ease of Use

The usability of a trading platform is a critical factor in your overall trading experience. It should be user-friendly and align with your specific trading needs.

A good option is always to take a look at the demo account, if they have one. This is a version where you can trade with fictitious money, not so exciting, but a good way to learn without risking your capital.

Security and Accounts

Broker security is a somewhat controversial subject, and it’s very difficult to know whether a broker is secure or not. I usually look at a couple of things:

Brokers' risk
The risk that the broker collapses
  • Are they based/regulated by a serious country? For example, are they a broker based in a distant country with little regulation, or are they in a state with financial legislation and control (e.g. USA, EU, Japan, Australia, etc.)?
  • Are they a listed company? This isn’t a 100% guarantee of anything, but if a broker is listed in a stock exchange, they will have to make their accounts public and will have to pass an audit; this should give some extra reassurance to users.

Graphics and Analysis Tools

Many advanced users, including traders, want a tool that allows them to draw charts, make chart projections and apply calculations. Take a look at the platform you are considering to make sure it has everything you are looking for in a broker.

Compare instruments with Plus500
Broker charting tools example

Another important aspect is whether they have good tutorials on their platform, having a broker that can do a lot of things without guides to explain how isn’t very useful.

Order Executions

Brokers have several options for investors when it comes to executing orders, so you don’t have to keep an eye on the stock market at all times to see when you enter and when you exit.

The most typical orders are:

  • Market: This is the quickest way to tell the broker to buy or sell an asset.
  • Limit: These are orders where the investor determines the price he is willing to pay. If the broker finds a bid at that price, the order will be executed.
  • Stop Loss and Stop Profit: This is the minimum price (Stop Loss) and maximum price (Stop Profit) at which an order is processed to protect against market fluctuations. For example, if you have a Stop Loss order of $99 on Apple shares, your broker would automatically sell your Apple shares if the price dropped to that level – Stop Profit works in a similar way.
  • Dynamic Stop: The sell level of your order is moved if the market goes in your favour. In other words, the price of your stop loss is calculated by considering the evolution of the asset’s price.
Please note that order prices are often not guaranteed. For example, in periods of high volatility the broker may be unable to fill your order at the price you have set, and will fill it at the next available price.

Deposits And Withdrawals

Finally, you will need to be clear about which methods your chosen broker allows you to add funds to your account and withdraw them.

It’s usual to withdraw funds using the same payment method (e.g. bank transfer) that you used to add the funds – for security reasons, I guess.

The most typical methods are: charge your card, bank transfer, or electronic payment methods such as PayPal or Skrill.

On the other hand, you need to consider how quickly these funds are added. For example, if you are in the red at your broker you will be charged commissions, to avoid this you should use the fastest method of depositing money – adding funds by PayPal or card is usually faster than by bank transfer.

Available Markets

It’s essential that the broker you choose operates in the markets you want to invest in. For example, if you are going to focus on buying US stocks and the broker you choose doesn’t operate in this market, or has little asset selection, it’ll be a poor choice.

In general, most brokers will allow you to buy the major assets of the most important markets. For example, stocks from the S&P 500, European or Asian markets.

Available financial markets in your broker
Available financial markets in your broker

If you’re eyeing investments in niche ETFs or less-known company shares, you’ll need to dig around for a broker that aligns with your unique needs.

You can think of a financial market as any forum where buyers and sellers trade assets. As we will see below, there are dozens of asset classes (e.g. stocks, bonds, currencies or derivatives).

An example of this:

In my city, Barcelona, card enthusiasts gather every weekend to buy, sell, and trade cards. Collectors have diverse preferences, with some focusing on Pokemon cards, others on football cards, and some on Harry Potter cards.

Of course, Barcelona isn’t the only place in the world where these transactions occur. For instance, if you reside in Manhattan, London, Rome, Berlin, or Paris, you can certainly discover local venues for trading stickers.

A financial market is something similar.

Main Financial Markets

There are many types of financial markets, depending on the type of asset being traded. But the most important are:

  • Money market: Where money and other short-term assets are exchanged. It’s a wholesale market where institutions and investors with a lot of capital trade. It’s characterised by very high liquidity.
  • Capital markets: The objective of these is to raise money for companies by issuing shares and debt (medium and long term), the risk is higher. Within this, we can find fixed income (e.g. shares) and equities (e.g. bonds).
  • Foreign exchange market (Forex):This is the foreign exchange market where participants trade currencies. For example, if you have euros and want to buy dollars, you can do so in this market.
  • Government bond markets:This is the marketplace where governments and other public entities turn to secure financing. In this market, investors can acquire public debt, typically in the form of fixed income securities. They lend money to a government, which will repay it at a specified time with agreed-upon interest or conditions.
  • Financial derivatives market: These are markets where complex financial products (derivatives) are traded. These products don’t have a value in themselves, but depend on other assets. For example, we can have a derivative product (CFD) on Tesla shares, the price of this CFD will depend on the price of Tesla shares, but it’s not Tesla shares – more about these products in a few paragraphs.
Bear in mind that the more regulated a market is, the safer it should be and the fewer problems (illegalities or amoralities) small investors who participate in it’ll have to face. But be careful, these risks don’t entirely disappear no matter how regulated the market is.

For example, the cryptocurrency market is currently unregulated. That is why there seems to be a riskier market.

Available Financial Products

There are various financial products available for investment, categorized into fixed income and equity products.

Fixed Income

Fixed income assets pay a known interest over their lifespan, making them a lower-risk choice, suitable for security-seeking investors.
Despite being (theoretically) lower risk, fixed income assets are not risk-free and can involve default, liquidity, or interest rate risks. Fixed income products can be public (e.g., government bonds) or private. Investing in foreign currency fixed income products carries exchange rate risk.

Equities

Equity investments have an unknown return, and the risk is higher compared to fixed income investments. Popular equity assets include shares, Forex, cryptocurrencies, and derivatives.

  • Shares: Investors buy shares to become partial owners of a company. Returns can come from dividends or the difference between the purchase and selling price of shares.
  • Forex: Forex involves trading currencies and speculating on their price fluctuations. Typically involves leverage and short-term trading.
  • Mutual Funds: Mutual funds pool money from multiple investors to invest in various assets. They can invest in both equities and fixed income products, providing diversification.
  • Cryptocurrencies: Digital currencies like Bitcoin can be invested in, but they are highly volatile and less regulated. High risk.
  • Derivatives: Derivatives are complex products dependent on underlying assets. Examples include futures, options, swaps, and contracts for difference (CFDs). High risk.

What Types Of Assets Should I Invest In?

Vanguard investment funds
Vanguard investment indexed funds

Consider investing in index products, which are assets that track financial indices. Index products often outperform managed funds in the long term, have lower operating costs, and offer high diversification. You can invest in index products through brokers like XTB or eToro, or even use a roboadvisor for a simpler approach.

Final Thoughts On The Best Brokers

All right, I hope this guide has helped you decide what type of broker you need and assess the different alternatives available in the market.

Before I finish, I would like to remind you of a couple of basics when it comes to choosing your option:

  • If you are a short-term investor (e.g., a day trader), a market maker that trades derivatives (e.g., CFDs) is probably the best fit for you. It will save you commissions, and transactions will be faster. Take a look at brokers such as eToro or XTB. Keep in mind that this type of investment is even riskier than trading more classical assets such as stocks and mutual funds.
  • If you are more focused on the medium and long term, I would definitely say that derivatives (e.g., CFDs) will not be your best tool as they are too complex. I wouldn’t invest with a market maker either. I would first take a look at options such as DEGIRO, XTB or Interactive Brokers.

I say goodbye by reminding you that investing always involves risks, and by giving you a basic piece of advice. Don’t invest your money in things you don’t understand. And if you have any questions, feel free to leave a comment below; I’ll try to help.

FAQ

A trader can be understood as the person who invests in the financial markets (i.e. an investor), while the broker is just the agent (or platform) that brings investors together to facilitate the trading of assets.

Basically, no. It’s true that with market makers (e.g. eToro, XTB and similar brokers), as the investment platform has to play the other role in your investment (if you buy they sell and if you sell they buy), they may make more profit if you lose money.

But if they manipulated the accounts or played against you, investors would stop using them. That said, the conflict of interest could exist.

If you want to invest in the stock market and choose the assets you want to invest in, yes; you will need a platform (broker) that allows you to make those investments.

If all this seems too complicated for you, you can take a look at other types of investment platforms that are easier to use, such as roboadvisors.