If you have been thinking about starting trading, one of the very first steps is to open a trading account. While it might seem an easy thing to do, it is important to choose an account that will allow you to carry out all your trading activities and maintain a competitive cost.
So here’s a quick guide of aspects you should consider before picking an account provider.
What is a trading account?
A trading account is an investment account that holds securities, cash and other holdings like any brokerage account.
In the past, traders used to communicate their buying and selling decisions verbally or with hand signals, since the stock exchange required the physical presence of traders in the room.
But with the introduction of electronic systems and online platforms, trading became an activity that could be carried out remotely: the only requirement is to have a trading account with a registered stock market broker; who conducts trading on the trader’s behalf.
More than a trading account: a platform
As said, a trading account allows you to buy and sell in the stock market. But to do so online, you need a digital platform. Which is why, when you open an account, you are also given access to the provider’s platform.
Each bank or company has developed its own platform, often available for computers and mobiles, and with specific features or tools. Therefore, when opening a trading account you need to consider it as well. Speed, security and usability are essential things to look for in a platform, but you should also analyse tools: some are basic and only consist in stock screeners, others include live quotes, news, economic events calendar, and customisable dynamic charts.
Hidden prices of trading accounts
Every provider offers trading accounts at different prices, often with monthly fees based on the kind of services they include. But there are some factors you should regard, beside the price.
In fact, some banks may charge “hidden prices” for your account.
If you don’t regularly use your account you may incur in inactivity charger, or you may need to pay an extra fee in order to get your portfolio transferred. Furthermore, when opening the account you may need to put down a custody or a deposit, in addition to the standard fee.
So be careful when picking a provider and look carefully at the whole offer, including hidden costs.
A trading account as solid as its provider
Stock trading can be a delicate activity so, in order to protect your investment, you need to pick a solid, reliable bank. In the last few years, a lot of new fintech companies and banks have entered the scene, often attracting clients with their lower prices.
But for your trading account you want a provider that most of all has experience in the field. This is often combined with a strong record of processed trading orders and a high total of financial assets. All things you should look for.