Brokers are needed when investing capital in equities or funds. When deciding to invest in securities trading, the investor becomes the investor who must open a securities account.
So he has to go in search of a financial service provider in the stock market business in order to find the right online stock broker in London or to decide for a stockbroker.
Broker or stockbroker
A broker was originally a participant in trading on an Anglo-Saxon stock exchange. His job was to determine stock market prices.
Today, he is a broker of securities transactions for third-party investors, who may act only on behalf of third parties. However, the broker is allowed to maintain business relationships with private customers. The contractual relationship of the broker exists only between him and the investor.
Therefore, if the investor wants to change the broker, they cannot take their custody account or transfer it to another financial service provider. The deposit can only be settled directly between the two parties.
Broker or bank
Even banks can act as brokers. Therefore, the investor has to decide if he wants to go to the bank branch or the internet to find the right broker.
At the bank, he sits directly opposite his advisory broker, who explains the investment strategies to him and explains opportunities and risks. He can present his wishes personally and build trust.
He does not need an Internet connection for his stock market transactions and does not have to bother himself with technical questions. The bank is the right partner for beginners or investors who value personal attention.
In contrast, the direct banks, which appear on the Internet as a broker, and the online broker, are significantly cheaper. They have no branches and pass on the saved costs as price advantages to the customers.
Experienced investors and risk-conscious beginners can take advantage of online brokerage, but they cannot stop exploring the market. The price issue is just as important to note as the not easy to see through and difficult to compare conditions of online brokers. Also, not all online brokers are “white sheep”. So it takes some effort to find the right broker.
Requirements for the investor
Before the investor starts to find the right broker, he has to list his own needs. He needs to be clear on whether he wants to be a day trader or only intends a single investment on the stock market. In the first case, he should look for an online broker that is constantly available and has a large supply of securities.
Then he is able to do his business daily several times and from any location. In the second case, if the investor wants to place an inheritance or a lottery prize once and otherwise do not want to have much to do with it, he does not need such services as the 24-hour service or a full securities program of an online broker. He does not care if his broker is an online broker or not;
Requirements for the right broker
Once the investor has determined his own investment requirements, he can set out to find the right broker for himself. His needs already determine whether he should go to a normal bank, a direct bank or an online broker.
Whatever direction the investor takes, he should clarify some aspects when choosing his broker; otherwise he runs the risk of missing the right broker.
1st aspect: company headquarters
An important question is where the broker is based. It is much more important for online brokers. As long as the business between investor and broker is running smoothly, there is no problem with the head office if he is not in an exotic tax haven.
As soon as disagreements arise, some brokers tend to forget their German language skills and make incomprehensible statements in their mother tongue. They try to prevent, but at least complicate, the enforcement of legitimate claims.
The location of the broker in Germany or one of its branches enables the application of German law and, above all, the determination of the place of jurisdiction in German courts. If the head office of the broker is located in a country of the European Union, after all, EU law is valid. It would be better,
2nd aspect: contractual fundamentals
The basis of the business between investor and broker is the concluded individual contract as well as the general terms and conditions. (GTC) .
These arrangements should be accessible and visible at all times, so that they can be accessed without difficulty in case of ambiguity.
3rd aspect: capital
The capital of the investor to be traded is booked in a separate account that does not allow for mingling with the deposits of other investors. The broker informs in detail about all risks that may arise with the transactions of securities trading. The investor will be informed in advance about all deposits and withdrawals.
The costs and the conditions associated with the inputs and outputs are clearly and clearly communicated. All capital movements take place exclusively via an SSL-encrypted Internet connection. The total losses of the capital are secured.
4th aspect: cost of extra services
A not to be underestimated aspect are the costs of extra services. They are often hidden in the terms and conditions of brokers and may cause inconvenience to investors. If a non-interest offer is adjusted by splitting, the fees may be charged in duplicate.
If, in a highly volatile market, the price of the security changes during the order process, the investor may be confronted with unwelcome fees. Such cases should be resolved before ordering the broker.
An investor who wants to find the right broker should look around among banks, brokers and online brokers and compare their services. Prior to this, he was to determine the requirements of his needs in order to be able to formulate the aspects for finding the right broker.