How to Choose a Broker;
Know your Requirements

Before you start clicking on brokerage sites, take a moment to sink in on what’s most relevant to you in a trading platform. The answer will be somewhat different depending on your investment goals and where you are situated in the investment learning curve.

If you’re new to the investing game, you may prioritize features such as basic educational resources, comprehensive word lists, easy access to support staff, and the ability to place trades in practice before you start using real money.

If you have progressed with some investment experience already, but you’re seeking to get committed, you might want more high-level education and opinion-based resources authored by professional investors and analysts, as well as a decent selection of fundamental and technical data.

If you have progressed with some investment experience already, but you’re seeking to get committed, you might want more high-level education and opinion-based resources authored by 

professional investors and analysts, as well as a decent selection of fundamental and technical data.

Be truthful with yourself regarding where you are right now in your investing voyage and where you want to go. Are you planning to set up a retirement fund and focus on passive investments that will generate tax-free income? Do you want to try your hand at day-trading but not sure where to start? Do you like the idea of improving and customizing your portfolio, or are you willing to pay a professional to ensure it’s done properly?

Depending on which path you want to take, there may be many more questions you’ll need to answer along the journey as you gain experience and clarify your goals. For now, however, start with these four major considerations to help you decide which of the brokerage features we discuss below will be most relevant to you. To help get the analytical ball rolling, we’ve included a few sample questions under each wider topic:

Do you consider yourself an Active or Passive investor?

Do you want to be proactive and engage in a day or swing trades? Do you see yourself eventually leaving the 9-to-5 job and becoming a full-time investor? Or, instead, do you want to find a few solid investments to hold for the long haul with little or no day-to-day interaction?

What sort of trades do you wish to engage in? 

Will you be the investor that knows what they want to do and just seeks a platform that makes it easy and quick to execute trades, or do you want a broker with a wider range of resources to support you in identifying opportunities? What kind of securities are you focused on? Stocks, mutual funds, ETFs? If you are more advanced, do you also want to trade options, futures, and fixed-income securities? What about margin trading? Do you need access to conditional orders, extended-hours trading, and automated trading options?

What kind of Support Do You Want?

Do you prefer taking the DIY route, learning how to interpret charts and financial data to find and execute trades on your own, or would you rather hire a professional? If you wish to do it yourself, where are you on the learning curve? What sort of resources will you require to further your knowledge? Will you require easy access to help personnel, or are you able to learn what is needed to know via online educational resources? Are you content to execute trades online, or will you wish to call in to have a broker support you with the process?

What Are Your Investing Goals?

Why are you choosing to invest? Is there a specific event or expense you want to fund? Do you intend for this to eventually become your primary income source?  Are you trying to supplement your regular income to improve your current standard of living? Are you trying to build up retirement savings and, if so, do you already have a retirement account or will you want to open a new one with your chosen brokerage?

There are no wrong answers to these questions. Be honest with yourself about how much time, energy, and effort you’re willing and able to put into your investments. Your answers may change over time, and that’s ok. Don’t try to anticipate all your needs and goals for the rest of your life. Just start with where you are right now.