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Trading is still providing investors significant opportunities to get sufficient returns. Competing among tons of online brokers is fierce. It is because brokers are currently reducing trading costs and ramping up their services.

A comprehensive guide to selecting a good trading account.

Moreover, new types of trading accounts are also entering the scene. This makes it hard, especially for beginners, to understand what makes a good trading account. Here we will learn about the characteristics of a good trading account and mistakes to avoid while choosing a trading account.

So, here we go:

What makes a good trading account?

A trading account is generally an investment account possessing cash, securities, or other holdings. Usually, a trading account is the primary account of a trader. Trading accounts are also subject to certain regulations as per the type of account you choose.

A trading account differs from other investment accounts due to its activity level, purpose and involved risk.

Key characteristics of a good trading account:

A good trading account must:

  • Complete personal identification process. It must fulfil the minimum margin and maintenance requirements set by FINRA.
  • It must ensure the simplified process of investment. A good trading account should allow its holder access to financial securities from any exchange.
  • New generation trading accounts are good when they offer access to investor-oriented and innovative smart tools. Consequently, it will become easier for a trader to make more informed trading decisions in the best possible way.

These are some must-have characteristics that make any trading account good for investors.

Key mistakes to avoid while selecting a trading account

When selecting a trading account, beginners especially make multiple mistakes. However, here are some common mistakes you must avoid while selecting a trading account:

·         Picking up a trading account based on the cheapest commissions only

This is one of the most common mistakes made by investors. Over time, many discount accounts come up. These accounts charge substantially low commissions. However, you should also be very careful and check other terms and conditions while selecting a trading account. Low commissions aren’t the only factor that can impact your profits.

·         Imitating others while selecting a trading account for you

Never choose a trading account only because someone has recommended that to you. Instead, it’s always important to understand your requirements. Then choose your trading account accordingly.

·         Not paying attention to the minimums of account.

You can find different trading accounts with no minimum requirements. However, some accounts have strict restrictions for minimum deposits. The limit can skew towards $500 or even above. So, it is completely foolish to choose a trading account without paying attention to the account’s minimums.

Additionally, you must watch out for extra account fees also. It is because it’s never possible to avoid account fees completely for any level of trader.

Final thoughts

With so many lucrative opportunities in online trading, there has never been a better time to start trading. However, it’s important to consider the above guide when selecting the best trading account. It will help you make the most out of your trading account effectively.