There are several key factors to consider when choosing an online broker. While you should always think carefully about how you spend your money, you want to think even more carefully before you pick your broker, not only to protect your money, but also to avoid building bad habits due to a problematic trading service, avoid frustrating experiences that may dishearten you from future activity, or simply losing time by not focusing on the right opportunities.

But one thing is inevitable, fees will always be involved, and they will certainly impact your bottom line. This is why going through a broker fee comparison is a crucial step in the process of getting started.

Here is how some of the popular brokers in the market stack up against one another:

• Interactive Investor: founded in 1995, and among the biggest brokers in the UK, Interactive Investor has a monthly account fee of 9.99 GBP and a trading fee of 3.99 GBP to 7.99 GBP.
• XTB: founded in 2002, and based both in Warsaw and London, XTB has no annual fees and low trading fees.
• FinecoBank: founded in 1999 in Italy, Fineco does not charge an annual fee, no commissions on CFDs, and low fees for stock orders.
• Saxo Markets– part of Saxo Bank, Saxo was founded in 1992, and has been available in the UK since 2006. Saxo charges 0.1% on UK stock purchases with an 8 GBP minimum charge. They do not charge an annual fee but they do charge a 25 GBP penalty fee for each annual-quarter of inactivity.

There are many more prominent banks and brokers to choose from, not to mention a vast expanse of fees to examine, but this goes to show the variety of costs, and why it may be difficult to classify one broker as “low-cost” and another as high.

Fees Explained

As simple as the fee comparison may seem when taking into consideration the cost of opening an account, it can be difficult to say that one broker costs less than another. Fees vary based on the financial instrument being traded and the particular action being taken.

You have trading fees, which is what the broker will charge every time you buy and sell. These will mostly be commissionsor spreads. Commissions will be charged as a percentage of the sale price, but can vary based on the amount involved. A spread is the difference in the price a seller will ask for, rather than the price as shown on the stock exchange itself, that is to say, the actual value of the stock.

Other fees are separate from the actions you take while trading. Those are annual account fees, fees for withdrawing money from the account, penalties for not trading for a long time, and the exchange rates being offered when you exchange one currency for another (while trading in foreign markets).

You may very well also be required to deposit a minimum sum into your account. All in all, the aforementioned fees are simply the most basic ones, and things get more complicated based on each specific transaction, as well as the various services one can procure from their broker, and depending on what is being offered and to whom.

In Conclusion

As you can see, the fees differ not only in their amount, but also in regards to when and if they are being required. This emphasizes the importance of choosing the right broker, because ultimately you want your fees being consolidated under one roof for the sake of simplicity, and being able to keep track of them.

One broker may charge higher fees yet offer inferior trading platforms and services. Another may offer a free platform and no fees to open and maintain the account, but steeper commissions and penalties for inactivity. 

In conclusion, be sure to take everything into consideration before finally choosing a broker.