Best Broker for Beginners The following online brokers are those that we believe to be the best choices for beginner options traders and traders using small amounts of capital. We have based these recommendations on a combination forex black scholes research and experience and we strongly suggest you consider using one of these brokers listed below. Choosing a suitable online broker when you are relatively new to options trading is somewhat of a different process to choosing a broker when you have plenty of relevant experience.
Equally, choosing a broker to use when you are planning on only making small trades is different to choosing a broker if you are planning on making larger trades. While we recognize that not all beginners will be small traders, and not all small traders will be beginners, we believe that there are certain brokers that are particularly suitable for traders that fall into either of these categories. This is because many of the factors that need to be considered are the same. As well as our recommendations for suitable brokers listed above, we have also provided some information on which factors you should be taking into account when deciding which broker to use. Options traders all have slightly different sets of circumstances and slightly different requirements and ultimately a lot is down to personal choice. A broker that is a good choice for one trader may not necessarily be a good choice for another trader. As such, we would never recommend just one single broker to a broad audience, but would rather provide our readers with a range of suggestions and offer advice on how to select the most suitable.
This is why we have classified our recommendations into a number of different categories. Factors To Consider When choosing a broker you need to think carefully about which aspects of a broker you need to be taking into consideration. For beginners and those looking to make relatively small trades, we believe that the following factors are particularly important and it’s these that we suggest you look carefully at when deciding which online options broker to select. The advent of online brokers has made it somewhat more difficult to distinguish between the two as there tends to be a lot more flexibility in the services offered. These days a number of brokers can effectively be placed in either, or both, of the categories as they offer a choice of service to their customers. What you must decide is whether you want the additional services that are on offer, such as receiving expert advice on potential trades and investments, or whether you prefer to have a broker that simply acts upon your instructions.
There’s an idea floating around that suggests beginners are better off using a full service broker while they are still learning and benefitting from having a professional guide them as necessary. There are certainly benefits in that course of action, however we suggest that even beginner options traders should use a discount service. If a different form of investment was involved, such as investing in stocks and shares using a buy and hold strategy, then the arguments for using a full service broker would be stronger because there are real benefits in having an expert help you to plan your investments, find suitable investment opportunities, and monitor your portfolio. However, options trading is a unique form of trading and there is so much more involved than simply selecting stocks that are going to go up in value in the long term.
In our opinion, it’s much better to be hands on from the very beginning, learning how to identify your own trading opportunities, and decide which options trading strategies to use. As such, we would advise beginner traders to stick to discount services primarily for the reasons listed above, but also because of the additional costs involved in using a full service broker. The higher commission charges can really eat into any returns that you make, particularly if you are making fairly small trades, which can make it very difficult to be profitable in the long run. Fees The commissions and fees charged by an online broker are, somewhat obviously, something that any type of options trader needs to take into consideration.