Brokerage account selection criteria

The stock exchange is a large market on which various securities are listed. It creates huge opportunities for investing, both in Poland and abroad. However, in order to trade in your capital on the stock exchange and become a stock exchange investor, you need to have a brokerage account. How to choose it so that it facilitates generation of above-average, anticipated profits?

What is a brokerage account?

Before we discuss the most important issues that need to be taken into account when choosing a brokerage account, it would be good to say what it actually is. A brokerage account or investment account works similarly to a bank account, except that it allows for trading money on the securities market. It is an essential tool which provides the investor with more possibilities of ordering sale or purchase transactions on the stock exchange. Every investor who wants to invest on the stock exchange needs to have a brokerage account, which they can open with any brokerage house or agency (eg.: The best option is to establish cooperation with a broker licenced by the Polish Financial Supervision Authority. This ensures the legality of its business.

With a brokerage account, you can invest in any chosen instruments, including shares, bonds or ETFs. Remember that bonds are debt securities, while ETFs are financial derivatives. When you order purchase of securities via your account, the order is executed by a broker and then the purchased assets are recorded in the system on the client’s brokerage account. This account also records funds deposited by the holder and potential profits earned in the course of investing on the stock exchange.

How to choose a suitable brokerage account?

When an investor who wishes to trade their capital on the stock exchange decides to take a step in this direction, they need to find the most favourable brokerage account offer. This will involve choosing an account from among many various offers prepared by brokerage houses or agencies. When picking one of them, one should take into account the following issues.

- The amount of fees related to establishing and using the brokerage account

- Online access to quotations

- Access to selected foreign markets

- Access to recommendations of brokerage agencies and investment advisors

- The option to use the demo version of the brokerage account

- The option to integrate the brokerage account with own personal bank account

- Access to a mobile app

Fees related to the brokerage account may be charged as soon as it is established, although the vast majority of brokerage firms do not do so. However, you need to pay attention to the fees charged in connection with the account, e.g. the fee for maintaining an account if at least the minimum deposit is not paid.

Brokerage agencies primarily collect fees in the form of commissions on orders. Please note that these commissions may vary depending on the type of investment instrument you wish to use. A different commission may be charged in connection with purchase or sale of shares, and a different one for bonds or ETF contracts.

For the sake of your own convenience and the ability to make reasonable investment decisions, it is worth having access to online quotations shown in real time. The platform provided by a broker should enable this as part of “live trading”. Then, you can make decisions on an ongoing basis, e.g. to sell specific assets in a timely manner.

If an investor wants to invest on Polish and foreign markets, they have to check whether a given brokerage account will enable them to do so, especially in view of the fact that foreign markets offer practically unlimited possibilities of diversifying the investment portfolio.

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