Whenever a trader is starting out in trading, one of the key determinants of his success is choosing a broker. In order to do that, it is necessary to consider various questions like what range of financial products and services does the broker offer? Is there a support team who you can contact in case you are confronted with technical issues? What is the commission for placing orders, withdrawal and how much are you ready spend on it? Who regulates the broker and will your investment be safe?
Exante’s PR manager Gita Evele spoke to Hendrik Klein with more than 20 years of experience in the financial markets to ask his opinion on the matter.
There are definitely certain criteria a trader should take into account before selecting a broker dependingon what kind of investment opportunities he is looking for. There are brokers that might not be suitable for particular investment strategies and some require a unique approach and, therefore, have their certain priorities. Our own investment strategy at Da Vinci Invest falls under that category as it requires very special latency and technical infrastructure and not many prime brokers can support this,” – says Mr. Klein, CEO at Da Vinci Invest.
Moreover, it is highly important at what stage is the trader. If he is new and just a beginner it might seem wise to go with a more retail-oriented broker, while in case he is more experienced he could require a more sophisticated set-up depending on the investment strategy, - Hendrik adds.
Needless to say, the finance industry is constantly changing. As a result, professional traders are more demanding than ever when it comes to selecting online brokers for their financial decision-making. They need to be able to adjust their trades no matter if they are in the office or en route. Hendrik also shares his expertise on how their strategy shaped the criteria for selecting a broker: “We developed our strategy in 2008 and it continuously changes the requirements. Moreover, during the years we faced various challenges as many brokers including very well-known ones claimed to have good infrastructure to support the trading strategies, however, were not able to step up the plate.”
Online brokers seized the opportunity to tap into the vast market potential and expanded their range of financial services and products to cater to professional traders. Choosing the right broker is the first and most important step that a trader has to take towards an efficient as well as effective trading process.
However, what does the future hold? Mr. Klein anticipates that there will be even lower commissions, therefore, the competition will be under more pressure. On top of that, a lot of focus will shift to the technological aspect as well as IT infrastructure and brokers will continue to attempt and reach zero latency.
Therefore, in order to fully take advantage of online trading, be sure to spend some time on figuring out all of the above questions. Once you have that sorted out, you can begin to search for a suitable broker and invest your money wisely.
Hendrik Klein is co-founder, chair of the board of directors and developer of the investment strategy at Da Vinci Invest AG. Hendrik began his career as a DTB trader (Deutsche Börse, today EUREX) through MTH, Newedge and as stockbroker at the Landesbank Baden-Württemberg. Hendrik Klein speaks regularly at investment conferences and discussion panels on subjects concerning absolute return.