In our previous article, we reviewed key criteria on how to choose the right trading platform.
Our team did comprehensive research by doing multiple interviews with micro traders on what is crucially important for them in terms of trading. And today, we want to share our findings with you.
Most traders named fund transfer as a key factor in choosing the trading platform. That means your platform should provide you with a fast, efficient (in terms of price/cost), and reliable way to deposit and withdraw funds. You should be able to send funds from your bank account to your platform account, ideally without or with small fixed fees. Easy to say, but how to do that? Here is the tip – check which bank platform is using (by checking the deposit option) and use the same bank – that will guarantee you fast and comparable cheap transfers (especially for the platforms which operate abroad).
A similar condition is applied for funds withdrawal – check the platform T&C before registering. A good platform will allow you a free transfer once a month (and will apply a small fixed fee for the following one if you need to transfer more)
Remember that such fees could easily consume the revenue you made out of stock trading, and since it’s not obvious from the beginning – it might be too late to consider such after you start.
The second point to consider – will the platform you think about will pay the interest if you have a positive cash balance. Let`s assume that you deposit funds to a platform of your choice, but currently, you are not investing it. It might be a different reason – you are waiting for a better price, or you just closed your position, etc. So, you have a positive balance on your account. Always remember the rule of alternative usage of funds – meaning that you could potentially do this amount of money work for you (alternative income source) – short-term bank deposit, FX trading etc. If your platform does not pay you interest – you can count this as your cost to your investor`s P&L. Make sure your platform threats your money well.
The third condition you should know before signing with a trading platform – is a list of tools this platform can support. Maybe today, you focused on stocks and haven’t heard about ETFs. But after some time, your strategy could change, and you`ll look for different investment tools to diversify your portfolio. It might be ETFs, bonds, crypto, or foreign currency – because it is extremely inconvenient to support and manage multiple platforms for different investment tools. The “All-in-one” approach works well.
Stay smart – read Finsmarta!