Choosing online broker
One of the first decisions you have to make when starting investing is to choose what broker you will use. Choosing the right broker may be quite difficult. There are many online brokers, each of them with different capabilities, different requirements and different costs.
You can always use several brokers at the same time. This is even a preferred way to go when you have a bigger capital (20 000 € or more). In such case you should diversify and not put all your money into a single broker account.
When choosing your broker you should consider at least the following:
- what capital you have for investing — is it 5 000 €, 10 000 €, 50 000 € or more?
- what markets do you plan to invest in — stocks, options, ETFs, forex, or maybe a little bit of everything?
- how often do you plan to trade — once a month or multiple times a day?
- what is your investment perspective — would you like to trade in a short term (day trading), middle (swing or trend trading), or in a long term (e.g. for retirement)?
Having these points in mind, you can start looking for brokers available in your country of residence. Every broker will require from you a proof of residency when opening an account, so there’s no way you can open an account with a US broker if you’re not a US resident.
It’s hard to choose from many available online brokers, so in order to simplify the choice, you can divide brokers into following groups:
- Cheap (discount brokers) — help you keeping your trading costs low, especially when you’re starting with low capital
- Professional — brokers that focus on order execution and making sure you are as close to the markets as possible
- With wide market range — some brokers are working hard to have all markets of the world in their offer
Obviously, one broker may match more than one group.
For a list of online brokers, see the Brokers section of our Google+ community. Of course it’s not meant to be the full and comprehensive list of online brokers. It’s going to be improved over time — new brokers added and the info for existing ones improved and completed.
Below I’m providing only the brokers which, in my opinion, have the greatest potential and fit for the needs of most long-term investors.
Discount brokers
Degiro
Makes it really cheap to buy instruments on popular exchanges — US stocks for as low as 0,50 €, ETFs for 2 € (some of them you can even buy once a month for free). You can start investing with Degiro with as low as 0,01 € of initial funding.
It’s worth mentioning that Degiro provide such a low-cost service because of its default policy to loan your securities to third parties. However, you can choose a Custody profile (a bit more expensive) to prevent that.
Professional
Dukascopy / Dukascopy Europe
Although this broker is focused on ECN forex market, it worth recommending because of its reliable tools, platform and professional support. The account may be opened in one of many different currencies and the funds are protected by the Swiss government.
Dukascopy is highly valued for very high liquidity, tight spreads and quick execution.
Dukascopy Europe is a low-cost subsidiary of Dukascopy Bank. The latter one accepts initial funding as low as $100 and spreads from 2 pips on EURUSD.
Wide market range
Interactive Brokers
In my opinion, this is number 1 when it comes to the wide market range. IB offers possibility to invest in securities ranging from US stocks, futures, metals on London bullion market, to hedge funds. You can trade on markets in 24 countries. What is more, you are not limited to a single currency on your trading account — you can trade in multiple countries with different currencies without needing to exchange your funds every time you trade.
The fees and initial required funding are not as attractive as with Degiro (minimum $10 monthly fee), but when your priority is being able to invest worldwide, it’s definitely worth it.
Do you know any other online brokers that haven’t been mentioned here or on the Google+ page? Have you used them yourself? Please comment below and help making the comprehensive list of online broker options available for Europeans!
You can find me on Twitter, where I occasionally tweet about finances. There’s also a newly created Google+ Community where I would like to create a place to exchange ideas, share knowledge and get to know each other. See you there!
Enjoy your life and have a net positive week!
