Choosing the right broker is a big step and one you need to get right for your own financial safety and well being. Unfortunately, there are too many brokers out there that don’t have the best interest of their customers at heart and I have tried many of them.
Many brokers have expensive fees with transaction costs approaching $20 per trade. Other brokers pretend to have tiny fees and look good on paper, but they sting you with ultra-wide trading spreads. Some outfits are also no more than white label spin-offs for more established names.
Even worse, are the prop trading firms that are based off-shore and try to fleece you for every penny in your account. I’ve seen some of these companies and many of them are complete scams.
Always do a lot of research before you put your money down with any broker and make sure the broker is regulated by a respected government organisation. Here is a list of regulators by country.
You should also know what will happen to your money if the company goes into liquidation and avoid keeping unused cash in your broker account.
My Two Favourite Brokers
As I mentioned, I’ve tried a number of different brokers and trading firms in my time. Some firms are literally just white label spin-offs and some of the bad ones are no longer around any more. But here are the two brokers I currently use and trust:
Interactive Brokers is regulated by the SEC and FINRA and is the largest online brokerage in the US. The company is listed on the Nasdaq with the ticker symbol IBKR and provides direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs.
IB also have some of the lowest commissions in the business at just $1 per trade for US stocks and ETFs. That compares extremely well with most other brokerages which charge anything from $5.99 to $20 per trade. Customer support is terrible but for execution and price you can’t go wrong.
I use Interactive Brokers for my longer-term investing portfolio and overall I am extremely happy.
The IG Group is the number one provider for CFDs and spread betting worldwide and is listed on the FTSE 250 with a market cap of £2.9 billion. The firm also operates in the US binaries market as Nadex.
IG gives retail investors leveraged access to over 10,000 financial markets and allows trading on CFDs, forex, stocks, binary options, and more. Recent innovations include Sunday markets, one-click trading, best execution, and pure direct market access.
While I use Interactive Brokers for my investing portfolio, I maintain another trading account with IG Index for shorter-term trading and spread betting. Whereas Interactive Brokers requires fairly large starting capital, IG allows smaller accounts. I fully recommend IG because they offer an excellent service, superior trading platform and I’ve been a happy customer for nearly ten years.