Opening a trading account in Australia can be a daunting task. With so many brokers to choose from, how do you know which one is right for you? Before signing up with any broker, ask them the following questions to find the best trading account in Australia.
There are a few different trading accounts available in Australia, and the most common are cash, margin, and managed accounts.
- Cash accounts- A cash account is the simplest type of account. With a cash account, you can only trade with the money you have deposited into the account, and you cannot borrow money from the broker or use leverage. It is the best type of account for beginners or those who want to minimise their risk.
- Margin accounts- A margin account allows you to trade with borrowed money, which means that you can use leverage to increase your potential profits (but also increase your potential losses). Margin accounts are more suitable for experienced investors comfortable with taking on more risk.
- Managed accounts- Managed accounts are where a professional money manager trades on your behalf. This type of account is only suitable for investors with a large amount of capital to invest.
All brokers will charge you fees in some way or another. Understanding what fees you will be charged and how they will impact your bottom line is essential. Some standard fees that you may be charged include:
- Commission- Most brokers will charge a commission on each trade you make, which is a percentage of the total value of the trade. For example, if you buy $10,000 worth of shares and the commission is 0.5%, you will be charged $50.
- Slippage- Slippage is the difference between the price you want to buy or sell at and the actual price you get. It can be a positive or negative number. For example, if you want to buy shares for $10 each but the actual price is $9.50, you have suffered from a slippage of $0.50 per share.
- Account maintenance fee- Some brokers will charge a monthly or annual fee just for having an account with them. This fee is usually minimal, but it can add up over time if you have multiple accounts.
- Inactivity fee- If you don’t trade often, some brokers may charge you an inactivity fee. It is usually small but can add up over time if you have multiple accounts.
All brokers should provide some research and technical analysis tools to help you make informed trades. However, the quality of these tools will vary from broker to broker. Some standard research tools that you may find helpful include:
- News feeds- Most brokers will provide some news feed that you can subscribe to. It will give you up-to-date information on the markets you are interested in.
- Stock screeners- Stock screeners allow you to filter stocks based on specific criteria. For example, you may want only to see stocks trading above their 200-day moving average.
Many brokers offer educational resources to help you learn more about trading. These resources can be beneficial, especially for beginners. Some common educational resources that you may find helpful include:
- Webinars- Webinars are online seminars that you can watch at your convenience. They usually cover a specific topic and are a great way to learn more about trading.
- Articles- Many brokers have articles on their websites that you can read at your leisure. These articles usually cover many topics, from basic trading concepts to more advanced strategies.
- E-books- Some brokers offer e-books that you can download and read at your own pace. These e-books usually cover a specific topic, such as technical analysis or risk management.
All brokers should offer customer support if you have any questions or problems. The level of customer support will vary from broker to broker. Some typical customer support options include:
Live chat- Live chat is a great way to answer your questions quickly. Most brokers offer live chat during business hours.
Phone support- Phone support is another excellent way to answer your questions quickly. However, it is essential to note that not all brokers offer phone support.Email support- Email support is an excellent way to get in touch with a broker if you have any questions that are not urgent.