How to find the right broker

Securities trading is becoming increasingly popular for a reason. Investors have the opportunity to invest in forward-looking companies and can look forward to high returns.

Especially if you want to build up a passive income and profit from it over a longer period of time, you should also take this step. Many use a so-called online broker for this purpose. But which providers are suitable for this and which brokers should you rather keep your distance from?

The advantages of an online broker

If you want to buy securities for the first time, you need a securities account. Basically, it would be possible to open one at the bank, but online brokers are a good alternative.

If you choose a broker, you will benefit from better competitive advantages and greater flexibility. Unlike banks, there are no custody account management costs when using online brokers. You only have to pay order fees when buying or selling. Some brokers even offer advisory services for a fee.

A detailed comparison is worthwhile

If you are looking for an online broker, there is no way around comparing the different providers. Not every broker is suitable for everyone, it depends much more on how much money and how often you trade.

This in turn influences which broker is the cheapest. There are now a large number of providers on the market, which is why the choice is often difficult. However, if you take a little time, analyse your requirements carefully and compare the different providers, there will soon be nothing standing in the way of successful trading.

Look for user-friendliness

As a beginner, it is especially important to choose a user-friendly platform. If the app is complicated, you may lose the joy of trading and make investments that you later regret. The operation should therefore be intuitive. This means that no prior knowledge is required and the functions of the app are self-explanatory for the most part.

You should quickly find your way around and be able to use the basic functions easily. If possible, use demo accounts with which you can test the app without obligation. If you do not yet have any experience in securities trading, you should take advantage of the broker’s educational offer. This way, you will learn more about different markets and how stock trading works.

Take a closer look at the broker’s conditions

Before you decide on a broker, it is worth taking a look at the terms and conditions. This step may be exhausting for many, but it provides great advantages when trading. First, take a look at the trading venues with which the broker cooperates. Then you can decide whether they are suitable for your project or not.

Some providers charge penalty interest for credit balances on the clearing account. If this is the case, it may cost you dearly. Also pay attention to whether it is possible to set up a savings plan. If you know your requirements for a broker and compare them with the provider’s conditions, it will be much easier to choose the right broker.

Use a comparison calculator

It often happens that some brokers charge commissions. The order volume is used as a basis, and the provider then receives a fixed percentage. This can be, for example, 0.1 percent of the order volume or a fixed amount. Often a minimum rate is set, which can cost several euros per order. So if you place a lot of small orders, the fixed costs put you at a disadvantage.

If the broker has an upper limit, larger orders in particular are cheaper. It is common practice for many providers to link order fees to the number of orders. This means that it becomes more expensive below or above a limit. So before you decide on a broker, you should know approximately whether you are making small or large investments and how often an order should be placed.

New brokers on the rise

The term neobroker may still be unknown to many. This is a broker with which you can buy securities cheaply and easily. However, in contrast to the usual broker, it has many other advantages. Trading usually takes place exclusively via app. Users also benefit from very low, or in many cases no, order costs.

You therefore have the possibility to manage your custody account, whereby the handling is particularly simple. In many cases, several tools are provided and there is the option of chart analysis. In contrast to classic online brokers, Neobrokers are therefore significantly cheaper.

Also look for tools and functions in a neobroker

In the meantime, there are several neobrokers, but which one you ultimately choose depends essentially on the tools that are offered. At first glance, the offers of the various neobrokers look very similar. However, they differ in terms of their functions and financial products offered. Some providers allow you to practice in the App, which is a decisive advantage especially for beginners.

If you do not want to miss any lucrative offers, you should pay attention to whether price alerts can be activated. With the help of the watchlist, you can put relevant and interesting values in a list. You then have the option of working with different signals, for example when a price goes above or below.

Selecting a broker to suit your investment strategy

Especially as a beginner, you may not yet have a concrete investment strategy, however, this can help you choose the right broker. If you want to invest mainly in shares, you should choose a broker with a large selection of shares. The providers Scalable Capital and Trade Republic even offer free share savings plans.

In addition to the large selection, it is also important to be able to purchase partial shares. If you are interested in ETFs, you should take a closer look at the range of ETF savings plans.

It is always an advantage if there are relatively few fees when buying and selling. At Trade Republic and ING Diba, trading is even free of charge. If you are just getting into the topic of share trading, the broker should offer the possibility to get started with a low savings rate.

ETFs are particularly suitable for spreading risk and investing in a wide range of investment products. Taxes are also incurred when trading. Therefore, make sure that the broker pays the final withholding tax for the trader.

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