How we conduct a broker review
This article points to the balanced way in which an online broker is assessed when being reviewed. There is a thorough, unbiased evaluation made of each broker and its strengths and weaknesses when writing a review via a credible framework. Each broker will have several variables that need to be worked through, and each must be assessed in a consistent way to enable credible comparative analysis. Those variables will notably be in the core areas of commissions and fees; spreads and leverage, platform and tools, customer support, regulation, research and education. There will be a hands-on test of the underlying trading platform and type of account opening requested.
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Each broker review should have an overarching expert overview and summary that offers an analysis of strengths, weaknesses, opportunity and threat analysis. Most brokers will have a leading edge in a specific area within the financial industry that will be offset by some areas of underperformance versus industry peers. It is essential to recognise that the offering of some online brokers will be more suitable to certain types of investors over others. Each review takes that into account when considering the end-user.
Each broker summary will give clear guidance as to how the online broker in question is internationally regulated and where it sits versus the competition. Areas covered are commission fees, spreads and leverage, the trading platform, education tools, asset trading coverage, deposits and withdrawals as well as the strength of its customer support.
Introduction of the Broker
It is important to give more depth as to how and where the online broker is regulated. It will also be necessary to provide details of who owns the business and where the broker resides. Many brokers have more than one regulatory body supervising them. That is especially the case with a global online broker. Also, the length of time the broker has been in existence, and the number of clients that are signed up will need to be established. Many brokers are better suited to different types of traders, from beginners up to experienced ones, and that is something that will be highlighted in this section.
Spreads and Leverage
Leverage is an investment strategy used throughout the financial world. It is a commonly used method of finance which can be undertaken by individuals as a means of amplifying or increasing returns or gains, often via a contract for difference (CFD). It brings with it more risk, and it is a commonly held view that up to 75% of CFD trades end in losses. It is a tool that is offered by most online brokers, and the leverage opportunity varies depending upon the account that the end client wishes to open. Each account offers different levels of leverage, and it is normal for intermediate or experienced investors to seek out the high leverage ratios. That is something that can and should be compared when reviewing an online broker. It is important to highlight those brokers that have a good track record or longevity in the market when trading via leverage. Brokers with a reputation for being innovative on their platform tend to offer the best terms for trading in this area. To assess the leverage credentials of the broker being reviewed, it is vital to determine the competitive landscape and conditions around leverage trading.
Platforms and Tools
This is a crucial determinate when reviewing an online broker. A trading platform should be easy to use and ideally have access to a mobile trading function or App via Windows, Apple or Android. It will be relevant to compare the minimum deposits required to open an account on the platform. A review will incorporate a summary of what type of trading platform is utilised and whether there are any in-house or proprietary add-ons. This area can often be comparatively similar to review given there are several generic platforms in operation.
The most popular commercial trading platforms will be MT4 and MT5. However, the software will be differentiated in the way they are presented to the client. As part of the broker review, it is important to stress test the trading platform both online and with its mobile function. Note that while almost every broker offers a mobile app, the quality can vary widely.
The review will assess whether the trading platform has a history of at least two years and easily accessible customer support. Each review will check the ability to have deposits and withdrawals processed within three working days. It will also highlight whether it can deliver a stable international presence in multiple countries. That will also apply to what can be traded efficiently on the platform, from
currencies, commodities and cryptos to equities and indices, and whether what the broker advertises conforms with what can be executed.
Each broker is likely to offer an array of trading tools to support their trading platform. They may include advanced charting, scanning, hotkeys, virtual trading, watch lists, level 2 quotes and back testing. All of this will be assessed as part of the online broker review process.
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Commissions and Fees
A key factor for all investors will be the cost of trading. When assessing execution costs, it will be essential to understand how your orders are routed and ultimately executed. It will require an understanding of the spreads, between buy and sell or bid and offer, that are published on the different assets available to trade. There is also a wide variation between quality and poor order execution. When reviewing a broker, it is very straightforward to assess and compare the spreads that exist on the more liquid assets, often forex like euro/sterling or the dollar/sterling rate. That allows for credible competitor analysis. However, it is important also to analyse some of the less well-known currency or alternative asset spreads. That is where there is likely to be a wide range in the underlying commission and fees proposed across the industry.
As the client becomes more sophisticated in trading strategies, this will undoubtedly impact the decision-making process of which online broker to focus upon. That becomes even more relevant when you look at alternative assets, like commodities, cryptocurrencies and equities. Away from the broker’s comfort zone, the reviewer may find that the offering is wholly uncompetitive when it comes to commissions and fees. The broker review will incorporate a testing process, often via a demo process, to get a further understanding of the attractiveness, versus industry comparators, on the fees charged.
Education is an additional tool delivered by most online brokers. However, the depth of the knowledge offered can vary significantly between platforms. This is an area that should be investigated when writing a review. It is mainly for beginner traders who wish to improve their trading technique and utilise more functionality that the brokers’ trading platform has to offer. Some brokers will provide a social trading function that will enable beginners to monitor or to be active in parallel with more experienced traders.
The best-in-class brokers will allow access to learning centres and a selection of market research alongside an easy-to-use website. This will be judged as part of the broker review and should give some encouragement to different types of clients, whether a beginner or experienced, who are considering signing up to a particular online platform. Be aware that some brokers offer paper trading to practice with fake money, that again is best suited to beginners. It is important to draw out these differences when distinguishing a broker versus its competitors.
Customer Service and Contacts
Reliable customer support is necessary to highlight when assessing a broker. By reliable, we mean it should be 24 hours a day, five days a week and preferably have either an online chat or a phone number than can be accessed (in different languages). It should be regarded as a form of insurance policy, that may only be required if there is a query around a specific trade or when clients are trading in fast markets. All reliable and market-leading online brokers will have a high level of customer support. Also, as part of the customer service, it will be essential to highlight the available funding methods for a client when setting up an account. That will be relevant for both deposits and withdrawals. Some brokers will be particularly helpful in this respect by offering a wide array of payment tools.
Final Thoughts and Broker Details
A broker review will have to incorporate several key factors when assessing its credibility compared to peers in the financial industry. Many of the important ones have been highlighted above. With a practical approach to stress testing a trading platform, it is possible to make competitive judgements on which are market-leading or are suited to specific types of traders. While it is important to appreciate what the broker is offering in terms of tradeable assets and at what cost, it is critical to understand who owns the online broker in question, how secure the platform is and how it is regulated. An understanding of who regulates and supervises the broker will give considerable comfort to an end client.
How a client is protected if the broker falls foul of the regulators or worse, becomes insolvent, must be adequately explained when writing a broker review. Fortunately, there is a gold standard of regulation in place globally, and a core of regulators offer broadly similar levels of protection to the client. Taking into account the small print and digging into the relevant regulation and client ring-fencing features by a broker is probably the most critical part of any online broker review.
It is important to reiterate that any review should state within it the key contacts, address, customer support and website details as well as countries that the broker in question operates from. Many brokers will enjoy a more robust regulated offering in certain regions, and it is essential to make the reader aware of this when writing the article.
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Frequently Asked Questions
FAQs are an essential part of assessing the credibility and competitiveness of an online broker. They also provide a useful comparative framework when building the broker review. They can be as simple as ‘How do I open an account?’ Or ‘What is the minimum amount I have to deposit?’ Other essential FAQs will focus on the trading platform and its accessible tools, as well as the fees and commissions that are charged, and whether they are hidden in a spread.
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