How to find and choose a broker: professional tips for investors
From this article, you will learn how to choose a broker who will help you to invest correctly and earn money on bonds. We will tell you about the important points when choosing a broker that you should pay attention to, both in terms of security and convenience.
How to find a reliable broker
One of the most important questions when starting to invest is the question of choosing a broker. A potential investor must be ready to entrust his earned capital and not experience fear and discomfort when making a bank payment with the designation "replenishment of a brokerage account."
At the same time, due to the imperfection of our legislation, it is not worth fully counting on a quick and effective protection of the investor. Therefore, the investor should be more proactive in choosing a broker and conduct certain due diligence (independent verification). We share information on how to choose the right broker.
There are 2 important points that an investor should pay attention to when choosing a broker:
- Availability of the appropriate license at the broker.
- Broker activity.
You can check the license for conducting brokerage activity in the official register of the National Commission for Securities and the Stock Market, where there is a list of all professional participants in the capital market of our country. If your broker is on the list, check if he has licenses for operations.
Such an additional check is explained by the fact that not all licenses allow carrying out brokerage operations. Therefore, the presence of the line "Professional activity on the capital markets in the trading of financial instruments, which involves brokerage activity" in the license is mandatory.
If the broker is not in the official register, there is a high probability that it is a "scam project".
Important: only the presence of a license allows you to legally conduct brokerage activities in Ukraine.
How to find a good broker will be told by the rating of the settlement center and by servicing contracts on the financial markets, where you can check the activity of the activity. It is desirable to view the ratings for several months. This will give an understanding of how many active players are on the Ukrainian financial market.
Read also: How to start investing in Ukraine in 2023
How to choose the right broker
Having decided on a basic list of brokers that you can trust, you need to choose the one that suits you. For this, we will give you some useful tips.
Check the broker's ability to open a securities account
Try to find a broker who has the opportunity to open an account in securities. This will increase the speed of operations and simplify your communication with the broker according to your wishes.
Check the list of broker services and their cost
Be sure to clarify the following points with the broker:
- what services does he offer;
- tariffs for brokerage operations, keeping an account in securities, opening accounts, depository services.
Not all brokers allow you to place limit orders, and some may not offer services for selling financial instruments to the market at all. The possibility of providing at least minimal financial consultations is also important. Your money requires communication with a live person on the phone, and if necessary, a visit to the office.
Familiarize yourself with the reputation of the broker
Check with your future broker:
- the presence of connections with potentially sanctioned persons or Russian Federation;
- where the assets are kept (in an account or segregated).
Chat with the broker in person
Before choosing a broker and trusting him with your capital, find time to talk to a person on the phone or during a personal meeting. This will allow you to understand how comfortable it will be for you to work together, because in case of trouble or, on the contrary, opportunities for earning, it is this person who will explain to you what is happening in the financial market in general and with your investments in particular.
Read also: What are military bonds and how do they work
FC Daliz-Finance LLC has the opportunity to purchase military bonds on the secondary market, and has experience in purchasing military bonds through primary dealers. In the first months of the war, our clients bought military bonds worth more than 500 million hryvnias. Join their number by submitting an application on our website.
Frequently asked questions: how to choose a broker
What is the difference between a broker and a trader
A broker is an intermediary who enters the stock market with his client's capital and receives a commission for the transactions. And the trader conducts purchase/sale transactions at the expense of his own funds and earns on the difference in asset prices. A trader trades in financial assets, and a broker acts as an intermediary in transactions.
What are the risks of working with a broker
The main risks of cooperation include:
- loss of investment due to incompetence of the broker;
- bankruptcy of the broker or revocation of his license.