How to Select an Options Broker: Part Two
When looking for the best options trading brokers, it is important to compare what each broker has to offer. Knowing what essential services a broker offers, as well as trading tools that can help you become a better investor, can certainly be helpful in your long-term success as an options trader. Some of the important criteria that can help you be more successful as you trade in options are listed below; these important points can be used in comparing various options brokers.
Virtual Trading/Practice Account
A virtual trading account allows investors an opportunity to practice their trading skills without actually risking any money. This is an especially important learning tool for anyone who is new to options trading; however, it can also prove very valuable for experienced traders, as well. With a practice account or paper account, you can try out new strategies before deciding if it is something you want to implement and you have the advantage of not having to risk your money while testing these methods.
It’s Important to Use Live Data with Full-Access and Functionality of the Trading Platform
When trading options online, options traders need reliable access to live data. The technical analysis of data as well as speed of execution is crucial to the options trader. Investors need to know that the data they use to create systems and build indicators is not only accurate, but is also the same data that is used when they execute a trade. In addition to having full-access to the trading platform, the functionality, speed and ease of use of this platform will be essential to the successful options trader.
The educational materials offered by some options trading brokers can be extremely valuable and is an ideal way to increase your understanding of trading. When looking for an options broker, you might want to consider the benefits of the educational materials they provide. These materials can range from tutorials on using specific tools, navigating the site or even advanced strategies for trading options. In addition to written materials and articles, many options brokers offer videos and webinars to increase your skill and knowledge in trading options.
Research and Technical Tools
For successful trading, analyzing and researching data is crucial. The options trading broker you choose should have the technology and tools needed to effectively and accurately analyze various types of data and perform essential research.
Customer Service: phone support (hours), email, live chat
As with any type of service industry, the customer support and service offered by an options broker should be an important factor in determining if they are the broker you want to do business with. The things you will want to consider include their response time, accuracy, professionalism, and quality of service. Customer service should be evaluated not only on their phone support, but also on email and live chat support as well.
When evaluating an option broker’s customer service, it is important to note the hours that phone support will be available, as well as whether they offer live chat. After all, when you need an answer, response time is crucial.
Mobile Trading app
The ability to do paper trades, execute actual trades or simply perform research and analysis from your phone or iPad can be extremely helpful. Many traders want the flexibility of being able to execute these applications while on the go and with mobile trading apps, they no longer have to be tied to their computer.
Trade on Margin
Trading on margin refers to the amount of securities or money an investor must have in their options account as collateral for writing an option. The requirements will vary depending on the type of option, but these requirements are determined by the Federal Reserve Board; however, individual brokers may also have their own requirements.
Margin requirements can be complicated and can change from one options broker to another. Due to the fact that these margin requirements can significantly impact the risk of each trade, it is important that options traders understand the specific margin requirements of their brokerage and are able to meet these requirements if needed.
The initial deposit needed to open an options account can vary from one broker to the next, but many will require only a small minimum deposit to get you started. Many new investors choose to start small and not put a lot of money on the table, especially while they are learning and gaining confidence in trading options.
Here is a list of the top recommend options brokers.