Best Online Brokers 2018
FXEmpire is a leading authority on online brokerage services. Our research is conducted in a variety of ways including through in depth expert analysis, comparison and continued monitoring of the brokers’ offering and services. Additionally we factor in our objective user reviews as well as our user-rated awards questionnaires. It is for this reason that FXEmpire is perfectly placed to help our readers choose reliable Forex, Stocks, CFDs or Options brokers to work with. With that in mind, we have compiled this resource, which looks at all the key factors a trader should consider before selecting a broker to work with, as well as a list of the best brokers to save you the legwork and hassle that comes with finding a broker. We hope you find it useful.
Introduction to Online Brokerage Services
To be able to trade in any financial market, there is a need to open a trading account with an online brokerage firm. This is because individuals cannot get access to the floors of the various trading exchanges. Imagine a scenario where traders from all over the world have to congregate at the NYMEX exchange to trade crude oil, or have to go to Saudi Arabia to trade on the Tadawul Stock Exchange. There would be utter chaos.
As recently as 20 years ago, trading on many stock exchanges were still done using an open outcry system where broker representatives would have to take phone calls from their firms and place trades on behalf of their clients, screaming out orders as they did. Cases of traders collapsing on the floors of the exchanges out of sheer exhaustion were rife.
Technology has changed all this in the 21st century and brought some semblance of order where there was chaos. Today, trading assets on the stock, forex and futures markets is much more efficient and more seamless than it was. Majority of these advances were spearheaded by the brokerages themselves or by companies providing technology support to the brokerages and exchanges.
In describing the best online brokerages, the metrics that would be used would be the following:
Here is a full description of how the fulfillment of the expectations within each metric, provides the ultimate experience in broker-trader symbiosis.
At the recent IFX Expo 2017 held in Limassol Cyprus, a hot topic at the discussion sessions was the issue of regulation. Regulation has become a very big issue in the financial markets. Industry experts are of the opinion that it is no longer just enough for a broker to be regulated. Just how much regulation is too much regulation? Before this question is answered, let us understand why regulation of online brokerages is very important.
Brokers play a multi-faceted role in the financial markets. They not only provide access to the various financial markets using the trading software they offer their clients, they also serve as the depository of monies from traders all over the world used as trading capital. When trading capital is lodged with an entity, there have to be checks and balances to ensure that these monies are not tampered with. There also has to be a process to ensure transparency and fairness in the conduct of trading and brokerage business, especially when market making counterparties are involved. Then there has to be a system of redress and compensation when brokers are found to have shortchanged their clients. This is where regulation comes in.
Regulatory agencies are found all over the world, and together, they provide licensing and oversight of brokers operating in the forex, options and stock markets. Some countries provide stricter regulatory conditions than others. So the issue is not always whether a broker is regulated or not, but whether the regulators “over-regulate”. Some countries have taken regulation so far that they are actually stifling the very markets they are trying to protect. As a trader, where does this leave you?
Technology has broken down borders and unless otherwise prohibited by your nation’s government, you can take your money to any brokerage in the world where the regulatory conditions are more favourable. Some countries require a minimum starting capital of $25,000 to be able to open a margin trading account. If you do not have this money, why get stuck in this mire when you can take your money to another regulated jurisdiction where the requirements for capital are less demanding? These are the regulatory issues that need to be taken care of. Ensure your online brokerage is regulated, but not in a suffocating manner.
Everything around trading and online brokerage services today revolves around technology, from the order process to price data, order transmissions to trade execution. Therefore, traders must be sure that the online brokerage they use provides them with cutting edge technology that makes the process of trading simple and not more complicated. There are many online trading software out there that put more labour on the traders. Traders spend time just figuring out how to get around the software: such software are not for you.
The best technology for online trading should do the following:
- Be able to provide quality tools for trading such as indicators and expert advisors. They should also be able to offer the options of adding custom software or APIs for trading.
- Should be able to provide for the different needs of the various trader levels. The needs of a beginner forex trader will be very different from an institutional level trader. There should therefore be multiple trading platforms for different trader levels.
- Should be available on mobile and have the capacity to deliver the same tools and trading experience as if the trader was trading from a conventional desktop client.
- Give traders access to a great system of platform navigation which shows the relevant information where the traders want it. Some online brokerages have developed a system of multiple displays which the trader can select. Some online brokerages have taken it a step further to provide custom display functions so that traders can arrange the display just the way they want it.
- The role of educational resources for continuous trader progression and development cannot be downplayed. Online brokers are realizing more than ever before that their success depends on the success of their traders, which in turn is a function of the quality of educational and research resources offered by the brokers.
- Efficient and fast-paced order execution is now the hallmark of 21st century trading. High speed algorithms and software processes that reduce latency of the ordering process are now being offered by several online brokerages.
Too much is at stake in the financial markets and the technology behind the software used can make a huge difference.
There is always a need to talk to the brokers about something. It could be platform issues, issues with a payment channel, or just a basic, simple inquiry. Many brokers are located in countries that are far away from their traders. This distance can be bridged by an interactive customer support service. The Live Chat is indispensable to the broker’s business. Many traders love to be able to talk to the other party on the other side. It provides instant access and resolution of issues. For brokers, merely having an email or a phone number which rings and puts traders on hold forever is an outdated model of customer support. Twitter and Facebook handlers are now a must for every online brokerage.
Innovation drives the markets. This is why forex robots became an instant hit in 2006 when they first hit the market. Mobile apps also became a market disruptor by allowing traders to trade stocks, forex and options on the go. So much so that no broker would survive in today’s markets without them. Some brokerages have taken existing products and turned them into something new and exciting for market participants. The role of innovation in today’s online brokerage offerings cannot be overemphasized.
The ability to offer exciting new products always excites investors and market participants. This is why cryptocurrencies like Bitcoin, Ethereum and Ripple are taking the markets by storm. A whole new industry has developed around them. Many traders who were simply getting tired of the same old stuff are starting to see their trading interest energized by these new products. Such products increase trader participation and can increase revenues for online brokerages, as well as provide traders with extra ways to trade the market for money.
Trading the Financial Markets with Your Online Brokerage
Here is what is involved in trading the financial markets with your online brokerage platform.
Stock brokerages are of two types: full-service brokerages and discount brokerages. Full-discount brokerages offer a wide range of services, including but not limited to investment advisory services, research, tax advisory and retirement planning services. These added services make the cost of using a full-service brokerage quite high. Most retail traders opt for discount brokerages because of the low amounts charged on trade commissions. However, discount brokerages do not provide all the extras that come with a full-service brokerage.
Stock brokers tend to offer equities around particular regions of the world. However, the listing of many foreign companies in the US stock market makes the stocks listed on the Dow, Nasdaq and S&P almost universally available on stock trading brokerages across the world.
In choosing what online stock brokerage to use, a consideration of the listed equities on the platform must be made so you are sure you trade only equities you are familiar with.
Online brokerage accounts for stocks allow traders to choose between two commission payment structures. There is the opportunity to choose a commission structure which allows the trader to pay a monthly fee, irrespective of how many trades are performed. There is another commission model where charges are based on number of trades.
- Leverage/Margin Requirements
Stock brokerage accounts can be maintained on a cash-only, or cash + margin basis. Cash-only accounts are unleveraged accounts where traders can only trade stocks with their own money. The traders have to come up with every dime to be used in trading. Many discount brokerages offer cash-only accounts for as low as $500 starting capital. Margin + Cash accounts can provide leverage to the trader to trade with, but the minimum cash requirements are much more; sometimes up to $2000.
Options traders also pay commissions on trades. Many stock brokerages also offer options trades. If you are trading options with an online brokerage, here are some things which should be provided for you.
- A Glossary
You need to know the terms used in the options market. Commonly used terms in the options market include: Naked Call, Naked Put, Condor, bull/bear spreads, and other trade types. Other terms are Expiry, Expiry value, Out of the money/In the money/At the money, Open interest, Decay, Strike price, Underlying asset, American/European options, Premium, etc.
You need to understand the various contract specifications, with examples of how they are used. Intrinsic value, pricing of options contracts and the margin provided for options trades are factors you should be familiar with. Your options online brokerage should be able to provide basic education about these topic areas and provide a video walkthrough of the trading platform.
- Margin Requirements
Options trades are very expensive to setup and have very high margin requirements. Therefore, options traders will need to come up with far more money than stocks or forex traders.
The trading of currencies is particularly unique because it is a 24-hour market. Today’s forex market has so highly evolved that the entire industry is a multi-trillion dollar industry servicing online brokerages, traders, programmers, financial technology companies and content marketing agencies.
Forex is a leveraged market, and can only be traded on margin. Brokers provide access to different types of accounts, as well as two fundamental brokerage models (market maker/dealing desk and ECN/non-dealing desk brokerage models).
In conclusion, it can be deduced that online brokerages have evolved out of the advances in technology, which were meant to improve inclusivity and make trading a much more seamless process. Online brokerages have made the process of opening accounts, verifying these accounts and trading itself very easy. Anyone with a phone and internet access can trade.
Online brokerages have been able to expand their businesses to go outside the traditional scope of simply offering traders with a means to buy and sell stocks, currencies and options. This also gives traders enhanced trading experiences and make the financial markets one of the most exciting ways to make money.
Some of the most exciting online brokerage services are listed on this website. Feel free to look around.
- New Zealand
- South Africa
- South Korea
- Hong Kong
- United Arab Emirates
- Russian Federation
List of Brokers
|BROKER||USER RATING||REGULATED BY||HEADQUARTERS||MIN. DEPOSIT||OFFICIAL SITE|
|ASIC, CySEC, FCA||Israel||$100||Open Account|
|ASIC, BVI, FSA(JP), FSB, MiFID||Ireland||$100||Open Account|
|ASIC, CySEC, FCA||Cyprus||$200||Open Account|
|CySEC, FSB||Cyprus||$100||Open Account|
|BaFin, FCA||United Kingdom||$300||Open Account|