DINEO TSAMELA: Finding the right trading platform
Whether you want to trade equities locally or on international exchanges, finding a credible and well-run platform is key
For many investors who are just starting out, finding the right trading platform is important. Whether you want to trade equities locally or on international exchanges, foreign exchange or derivatives, finding a credible and well-run platform is key.
The first thing you need to verify as a new trader is what you're going to be charged to open an account and keep it open.
Some online platforms don't have monthly account fees, while others have a fee that can be waived if you make a specific number of trades in that month.
Watch for fees
There are brokers who require traders to have a minimum amount in their accounts. While many are doing away with this requirement, if you are looking to trade offshore or trade currencies, you might have to pay a minimum fee. This will usually have to be paid in a foreign currency.
If you have access to a trading platform - that is, software that comes with charting solutions or real-time pricing - you'll probably have to pay for those extras. Some traders are happy with executing trades with an online stockbroker and using different trading software to read charts.
Some brokers offer demo accounts or a trial period so you can get a feel for the site. Take advantage of this and play around with the platform. You'll be able to tell if it suits your needs. Is the site simple to navigate and is its functionality intuitive?
Also look at the platform's alert functions.
A good fit
For instance, if you take a certain position in the market, will you receive an alert if things start going wrong? Is there a stop-loss function, and does it work? If there's a glitch in the system, is there a way for you to recoup your losses with the broker?
Perhaps you'd like to begin by trading shares, but see yourself moving to alternatives such as derivatives. Then you should look for a platform that offers a wide range of products and adequate support.
Some brokers also offer educational resources. Some offer these for free, but others may charge for access.
While a little hand holding is OK, do not become entirely dependent on your trading platform.
Apart from monthly account fees, most brokers charge statutory fees as well as a brokerage fee. The brokerage charge will usually be presented as a percentage of the trading amount.
Low fees don't always mean you get great service or a good platform.
Although you want to keep trading costs as low as possible, you don't want to compromise on the trading experience or the quality of the platform and its functionality.
You should also aim to go with a broker who has a mobile app and other channels that you can use to place trades, such as by phone. These could cost extra, so clear this up before you sign up.
Go back in history
It's easy for new traders to be lured by glamorous trading platforms promising guaranteed results and personalised training.
While this is great, don't forget to dig into the platform's history.
What do people have to say? What's the platform's record? If you can't find anything, be suspicious.
Engage with its customer service desk. How quickly do they respond to queries? How many channels are available for you to contact them? Poor or nonexistent customer service should be an immediate red flag.
Also, make sure the site doesn't experience frequent and regular downtime.
Trading is a time and precision game. The last thing you want is to lose money because your broker's site is slow, or down.