As a trader in the UK, you have many choices when picking a broker. But why should you use a licensed broker? What advantages do they offer? In this article, we’ll take a closer look at some of the benefits of using a best stock broker and why you should consider them for your trading needs. Stay tuned.
What is a licensed broker?
To become a licensed broker, firms must first meet stringent criteria by the Financial Conduct Authority (FCA). It includes having the financial resources in place to cover client losses, segregated client accounts, and adequate risk management processes. So, what does this mean for you as a trader? Well, for starters, your broker is better equipped to handle your money and protect your interests. But that’s not all.
Advantages of using a licensed broker
Here is a look at the advantages of using a licensed broker.
Segregation of funds
One of the key advantages of using a licensed broker is that your funds will be segregated from the company’s funds. It means that if your broker were ever to go bankrupt, your money would be protected, and you would be able to get it back. It is a crucial difference between licensed and unlicensed brokers, as unlicensed ones are not required to segregate client funds. It leaves traders at a greater risk of losing their money if something happens to the broker.
Protection from fraud
Another significant advantage of using a licensed broker is that you’ll be better protected from fraud. The FCA requires brokers to have robust anti-fraud measures such as Know Your Customer (KYC) checks and transaction monitoring.
Better customer service
Typically, licensed brokers also offer better customer service than their unlicensed counterparts, and it is because they are subject to stricter regulations and have to meet higher standards. If you ever have problems with your broker, you’re more likely to get a resolution with a licensed one.
Lastly, using a licensed broker can give you more peace of mind, and it is because you know that the FCA regulates your broker and that they have to meet specific standards.
How to start trading with a licensed broker?
Now that we’ve looked at some of the advantages of using a licensed broker let’s look at how you can start trading with one.
If you’re based in the UK, many licensed brokers can choose from. First, you need to consider what type of trader you are. Are you a beginner or a more experienced trader? What kind of assets do you want to trade? And what type of trading platform are you looking for?
Now you can compare different brokers to see which one meets your needs. When comparing brokers, look at the fees they charge, the type of assets they offer, and the features of their trading platform.
You can also read online reviews to understand what other traders have thought about a particular broker. But remember, everyone’s experience is different, so take these reviews with a grain of salt.
Once you’ve found a broker, you’re happy with, you can open an account and start trading. So, what are you waiting for? Start your search for the best online stock broker today.
Tips for choosing a licensed broker?
Now that we’ve looked at the advantages of using a licensed broker, let’s take some tips for choosing one. Here are four things to keep in mind when choosing a licensed broker.
Check the FCA regulates the broker
You first need to ensure the broker you’re considering is regulated by the Financial Conduct Authority (FCA). You can do this by checking the FCA Register, and it will give you peace of mind that your broker is subject to strict regulations and that they have to meet specific standards.
Next, you need to compare the fees of different brokers. Look at account fees, trading commissions, and withdrawal fees. You also need to consider the type of account you’re looking for. For example, some brokers offer VIP accounts with higher fees but also offer more features and perks.
Consider the type of trader you are
When choosing a broker, you also need to consider what type of trader you are. Are you a beginner or a more experienced trader? What kind of assets do you want to trade? And what type of trading platform are you looking for?
Read online reviews
Finally, read online reviews before choosing a broker, giving you an idea of what other traders have thought about a particular broker. But remember, everyone’s experience is different, so take these reviews with a grain of salt.