Comparing online brokers: should you trust internet reviews, or not?

We look into online brokers based on popular reviews.  Should you trust them or not? 

Beginners in trading often find it difficult to choose the right platform. A simple internet search will reveal a slew of online trading platforms that appear to offer similar advantages such as low spreads, zero commission and the most fair trading conditions on the market. 

Being able to see past the fluff and know what really matters when choosing an online broker is important, to say the least. In order to be successful, day trading requires very specific conditions, such as the lowest possible commissions and fees, fast order execution, and a customer service that is able to tackle potential problems promptly and effectively. There are also additional factors to consider, such as unknown fees that can be hidden in the small print. These could be, for example, overnight fees or hefty inactivity, deposit or withdrawal fees that eat into the gains of traders. 

  You might be surprised to hear this, but there are numerous trading platforms, some of which are well known and quite popular, which don’t fulfill all the criteria listed above. 

We have compared different areas of trading experience, such as platforms, fees and customer service to find the brokers who offer all the things that really matter to beginners and seasoned traders alike. 

Bid/ask spreads and various fees

Many brokers claim that they offer the most competitive spreads on the market but unless you read their actual spread list, there is no way of knowing if this holds true. The rule when it comes to spreads, is that the tighter the better. It might take some extra effort but it’s a good idea to become a ‘fee sleuth’ and check the actual spreads on your broker’s website. Honest brokers are upfront about their spreads and fees and let you decide if this is a good deal for you. 

A spread is the difference between the cost of buying a currency pair (ask) and the cost of selling it (bid). It is measured in pips, and for most currency pairs a pip is 0.0001. 

Let’s have a look, for example, at an online comparison of Best CFD Trading Platforms in the UK on Investing Reviews. Investing Reviews lists a combination of older and well-established brokers with newer market players that are less known. On this website, IG Investments was voted as the best overall online CFD trading platform. IG’s minimum spread for forex is 0.6, while for indices it’s 0.1, which are both competitive spreads. You should always check what the spread is for the particular instrument that you would like to trade, as brokers might offer better spreads on particular instruments. Are you interested in gold? Oil? Check the spread for your instrument of choice. 

Some brokers charge an inactivity fee to those who take a break from trading but maintain an account. IG Investments, for example, charges a fee after 2 years of inactivity and it is £12 per month. Other brokers like eToro charge $10 monthly after 12 months of inactivity, while Plus 500 charges a $10 inactivity fee after only three months of inactivity! 

 Not all brokers will charge you for inactivity. Capital.com and Fineco Bank, for example, don’t charge an inactivity fee, and also don’t charge a monthly account fee, withdrawal and deposit fees. Fineco Bank however will charge you an annual management fee. 

Other fees you should be aware of include deposits and withdrawals, as well as monthly account fees that brokers might charge. As we said, those fees can sometimes be hidden in the small print and go unnoticed by clients. Interactive Brokers, for example, will charge $20 per month for an account up to $2000, $10 for an account that is more than $2,000 and an additional $20 per month if you don’t generate a minimum of $20 in commissions. eToro charges a $5 withdrawal fee every time you withdraw money from your trading account. 

Fast order execution

You might think that when you click ‘enter’ on your online trading account, your order is executed immediately. However this is not the case. Your order doesn’t connect you automatically to the securities market, but goes directly to your broker. Your broker is then responsible, given the size and the availability of the order, to execute it. The order execution policy should be outlined and provided by the broker website. 

Efficient order execution is extremely important to trading providers, who hire a designated team of specialists to analyze client orders and break down the data. To maximise results they need a robust and reliable trading platform. 

According to an online comparison by stockbrokers,  the best trading platforms in the UK include IG, Interactive Brokers and Fineco Bank. All three websites offer competitive pricing and a top platform with numerous trading tools. From the newer and less established platforms, Capital.com stands out for offering lower commissions and fees, and for recently winning the UK 2021 Investment Trends award for Best Mobile Platform App, Overall Client Satisfaction and Education Materials. It has however a limited offering of investments of shares and CFDs trading when compared to others.  

Customer Service

Considering all the issues that might come up while trading, fast and efficient customer service is very important. We recommend that you visit neutral consumer review websites and read real reviews by traders to understand better if an online platform can be trusted or not. Don’t worry, if a broker is a scammer, the rating on reputable consumer websites such as TrustPilot will be negative. 

It is always a good sign when the company takes the time to reply to negative comments and, if possible, provide solutions to disgruntled customers. This shows that the broker has invested in manpower to deal with customer issues and is more likely to answer your messages or emails, and help you solve any problems fast. When it comes to money delays, you’ll be grateful for choosing a platform that can provide fast and effective customer service. As an example, look at platforms like Fineco Bank or Currency.com, which have almost five stars in rating.

Surprisingly, some of the largest and most popular platforms don’t always rank high in customer service. eToro for example stands out for its unique copy trading features and low fees, yet it has an unresponsive customer service that during busy periods might take weeks to get back to you.

Other factors you might want to consider

Choosing the broker that is best for your individual needs is important and, as we said earlier, it might take some individual research. If you are a complete beginner, you might want to look for a platform who can provide some sort of free investment education to help you get started. Why is this so important? Even though copy trading platforms might be fun and exciting, they don’t help you develop your own trading skills. Simply copying other people’s strategy cannot get you far if you are a novice. Trading education will help you familiarize yourselves with basic financial concepts, teach you how the markets operate and give you step-by-step instructions on how to open your first trade. A number of brokers also offer demo accounts to help you practice trading with virtual money. 

Ultimately, whichever broker you decide to go for, make sure that they are licensed by a reputable regulator such as the NFA in the US, FCA in the UK, CySEC in Europe and ASIC in Australia.