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A Complete Guide to Choose the Best Online Trading Platform

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Written By Adeyemi Adetilewa

To be a profitable investor, you need a brokerage service that makes it easier to achieve your investment goals and one that fulfills your learning and investment needs.

Each trading platform has pros and cons and this is why it is so important to know what to look for in an online trading platform, so you do not end up with one that does not align with what you are looking for.

For new investors, this is especially important because finding the right platform can be the difference between finding a platform that allows you to trade comfortably and one that causes you misery.

In this guide, we will look at what you should look for so you can find your ideal online trading platform.

1. Outline Your Needs

When you decide to start trading, it can be tempting to start looking at platforms that can help you do so. However, it is important to take some time to outline what is important to you and what you want to get out of the platform you end up choosing.

A Better Online Trading Platform: A Complete Guide 2021What is important to you will be different from that of any other trader and will largely depend on where you are on the learning curve.

If you are just starting, educational materials, glossaries for difficult or new terms, friendly support staff and a demo account might all be important to you.

If you have some trading experience, you may be looking for in-depth analysis and educational material as well as data you can use to train with or base your decision on.

A highly-experienced trader will be looking for advanced charting, many more trading options as well as the ability to trade on derivatives, commodities securities, stocks, and mutual funds.

Once you know where you stand, you also need to ask yourself where you want to go. For example, are you trading to build a retirement fund or trading just to make some money to supplement your income? 

You also need to consider if you want to prepare a portfolio yourself, use portfolio management software, or have a professional do that for you and leave the trading to you.

Remember that because this is a personal journey, there are no wrong answers here. You can decide how involved you want to be, what investment options you are interested in, how much help you need as well as anything else you need right now just to get started.

2.  Look At Different Brokers

At this stage, you already know what you are looking for in a broker and what your goals are. It is now time to narrow down your options.

While certain brokerage and trading features will be important to you, some features will be available across all platforms you look at.

However, all trading platforms will implement these features differently so it is important to ensure the platforms that end up on your list have at least a basic implementation of most of these features.

A basic requirement is to be a member of the Investment Industry Regulatory Organization of Canada (IIROC). You can find this information at the bottom of their homepage or ‘about us’ page. If not, you can check the IIROC to see if they are registered.

Note that some brokers use different names to register on the IIROC website so search for their trading name instead of the name that appears on their website.

By being a member of the IIRC, the trader will be insured by the Canadian Investor Protection Fund (CIPF), which means you will not lose any money if the broker shuts down operations. 

Next, you need to check if you are protected against fraud. Two things to look for include checking the measures they have in place to protect traders against fraud and what you need to do if you need to be reimbursed.

Lastly, find out what people are saying about the trading platforms online. A good way of doing this is by looking up the platform on a search engine or social media.

Do note that there are people who love complaining about the sake of it but if you find a lot of people saying the same thing, then you should be wary of using that particular trading platform.

3. Check the Fees

A Better Online Trading Platform: A Complete Guide 2021While there are a lot of things that matter more than the fees you will pay when choosing a trading platform, it is important to have a clear understanding of what you will pay at any online trading platform.

Do note that premiums that are justified if the platform offers services other platforms do not are exempt from this consideration. However, you should try choosing a platform where you will not lose too much money just for the privilege of trading on a particular platform. 

Having an in-depth look at their account fees (fees for opening an account) is a great place to start. Next, you should try to find out if there is a minimum deposit amount.

The minimum deposit amount should not be confused with the account minimum. The former is the amount of money you need to deposit into your account before you start trading while the latter is the amount of money that your account should always hold to avoid inactivity fees.

Next, you need to check the commissions charged per equity trade. The commissions will eat into your return so be sure to choose a platform that has commissions that are as low as possible. 

All this information is quite difficult to collect but Wealthsimple has a great breakdown of all the fees the best trading platforms Canada charge. In addition to this in-depth breakdown of these trading platforms, Wealthsimple also provides several financial tools that make it easier to build wealth, manage investments, and trade online.

Wealthsimple also offers investors various resources to help them get started easily with their help center helping complement these resources.

4. Account Features

There are additional account features that you might need which will help you further narrow down your selections.  One of these is investment accounts. If the platform allows you to open savings and investment accounts for either you or your dependents that is a huge plus. 

An additional feature that you might find useful is the ability to open a retirement account that supports your Registered Retirement Savings Plan (RRSP). Also, if the platform allows you to move money between your regular account and the retirement account, that is a platform to keep an eye on.

5. Check the Platform

The online trading platforms you are considering should be easy and intuitive to use. Everything you need, including learning resources, customer service, or a demo account, should be available to you everywhere you need them.

In addition, they should be fast enough because trades happen very fast and you do not want to fall behind the curve. 

Next, you should find out how secure the platform is. The broker should be able to protect your information, trading history, and any other sensitive data they have about you. The platform should also use two-factor authentication

Two-factor authentication works in tandem with your website to provide extra security to your account so that even if your password is stolen or compromised, your account will remain safe. If the platform also takes the extra step of encrypting all their data, that is a huge plus on their side and a win for you.

To get a better sense of how a particular platform works, sign up for an account. If they have a demo account, open one and start trading on it. If the broker has a mobile app that is their primary trading platform, download it and try using it for a few days or weeks.

6. How Well Can You Trade on the Platform?

A Better Online Trading Platform: A Complete Guide 2021To complete the process, try seeing how well you can trade on the platform. Because you already have an idea of which types of trades you want to do on the platform, try seeing if they allow you to trade these options easily.

If you know the platform supports certain options and securities and cannot find them, try to see how easily you can find them.

Next, try to find out if their quotes are being posted in real-time. You want to ensure that you are not only able to pull up the price of any investment option but are also able to get the most up-to-date information.

If the information you are seeing is not real-time, try finding out how you can ensure it is so that you can execute the right trades using the best and latest information available.

Next, see if you can set watchlists and alerts on the platform. You might need to execute trades when certain conditions are met so the platform should let you set up watch lists and receive notifications via various means when those conditions are met.

By following the steps above, you should be well on your way to finding the best online trading platform. If you have already had a run at their demo account, you are ready to get in and start trading using real money.

If you must, the resources the platforms you choose provide are a great place to find help and answers. Otherwise, get in touch with their customer service agents.

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