When starting your options trading journey there are many things to consider. One decision that every trader must face is which online broker to use. It is also the most common question that is asked by those searching for the options trading basics.
The answer can sometimes be very simple and other times more complex depending on the needs of the individual. So first you must think about what your needs are before you assess your choices. This is the first in a series of articles to help you answer the question, “Which is the best online broker for me?”
This series will look at the most commons considerations when searching for your options trading broker:
1) Commission costs and ticket charges
2) Platform choices—Web-based, desktop, smart phone and tablet
3) Does the broker offer a free demo account?
4) Ease of use for your kind of options trading
5) Are you working with a coach or mentor?
6) Trade execution and speed
The great news is that most options brokers today allow you to open a demo account and start using their platform immediately to take a” test-drive”. There are big differences in how each platform approaches trading, especially when it comes to options spread strategies. Trade analytics, managing positions, types of orders, commissions and ticket charges—all all of these are handled differently from broker to broker.
Some of you might be wondering why we have not placed commissions as the most significant priority. The reason is that when you first start trading options, it is much more important that you learn the tools of your online broker and how to easily execute your trades. Commission costs in the past few years have come down quite a bit and only become a factor when you move to live trading. When first starting out, it is much more important to learn how to execute trades and use the tools within the platform
To conclude, happily, there are a many choices when it comes to option brokers. The competition has pushed these brokers to continually improve their trade platforms while keeping commissions at a competitive level. This means you will be hard pressed to make a bad decision. The good news is, you can always switch brokers at any time!
Seth Freudberg and Michael Schwartz
