Active Traders: 6 Questions to Ask Before Committing to a New Broker
In today’s landscape, many self-directed traders start their trading journeys in equities and ETFs via app-based interfaces offered by major retail broker-dealers or native fintechs. Once they’ve built their knowledge of market structure minutiae and honed their own trading strategies, these individuals often seek out alternative brokers more catered to their level of sophistication. But how to go about identifying them?
Selecting a new broker can prove to be a daunting task. It goes without saying that it’s critical to properly research and vet the many different options out there – but what are some of the most important criteria to consider? The equation is far more complex than simply determining what, where and when you can trade. To aid in the process, we put together a list of key questions to ask yourself when assessing potential new brokers. Applying these criteria before signing up can help you determine whether their offerings align with your goals. With these considerations as a guide, you’ll be in a better position to find a provider that can facilitate your trading success, no matter what that looks like.
#1: What tools will you provide to support my trading strategies?
As an experienced self-directed trader, you’re likely familiar with the ins and outs of the markets – but that doesn’t mean you have everything you want or need to achieve your goals. The right broker should have a client-first mentality and offer support throughout every stage of the relationship. Ideally, it should offer access to advanced technology, as well as automated, streamlined processes for key account management functions such as onboarding and money movement.
That’s a high-level overview, but there are a host of additional questions that can help you drill down further in each area. Let’s explore some of these in detail.
#2: How quickly can I get started, and how easily can I make changes to my account as needed?
Active traders usually want to get right down to business – and that means onboarding efficiency is crucial. Speed, simplicity and configurability should be your north stars here.
At Mondeum, we facilitate a transparent onboarding process via a digital portal, which in many cases enables new clients to get up and running within days. Operational functions like managing funds and even pausing accounts are intuitive and straightforward. Additionally, you can change your selected trading platform directly within our system – in many instances, there’s no need to make a phone call or lose critical time waiting for a service desk to update your account. It’s a two-pronged approach to client service – you can interact directly with our team when you need support, but you also gain the autonomy to optimize your own experience.
#3: What trading platforms and trading technology do you offer? Is it built in-house, or do you work with third parties? If so, who?
While some brokers build their technology in-house, others choose to offer access to widely used trading platforms built by dedicated technology providers (and some offer both). While there’s no one right or wrong approach, not all platforms are created equal, so it’s important that you delve into the capabilities offered by each broker in order to make the best decision possible.
At Mondeum, our traders today have access to DAS Trader Pro and Sterling Trader Pro, two platforms with strong industry footprints. Our team has the knowledge to help you understand their various features, the nuances of each one, the core differences between the two platforms and more – and many of our clients bring experience with one, the other or both. Specific capabilities offered by both DAS and Sterling include customizable hotkeys, multiple stop types and chart-based visualizations built into the platform.
#4: What is your pricing model? Can you provide a full breakdown of your fees?
In the world of equities and ETFs, knowing your total cost of trading is key. That requires transparency around all associated fees. It’s vital to dig in, figure out how all the dollars and cents break down and compare what you learn across different brokers.
For our part, Mondeum charges a flat commission rate of 5 mils ($0.0005) per share – no tiers, no breakpoints, no minimums. This reflects our core values of openness and simplicity in how we do business. There’s nothing secretive happening here – our other fees, for trading, platforms, and market data, are clearly outlined, straightforward and competitive.
#5: Where can I route my trades?
Over time and with experience, self-directed traders develop their own individual preferences when it comes to order routing. This can involve several factors, including trading objectives, market conditions, desired speed, and venue preference. The ideal broker will give you significant freedom to control your order flow and customize it for your trading strategy and style.
Mondeum’s variety of smart order routes means you can expose your orders to your choice of lit, dark and midpoint venues, as well as a PFOF route that allows you to collect a portion of the rebate yourself. While we can’t tell you what routing strategy to use, we can walk you through the design of our pre-set routes and even create a custom route to your specifications, giving you the power, tools and support to continually adapt and refine your strategies.
#6: What demographic of traders do you cater to?
It’s important that your broker of choice is equipped to support your specific level of expertise. Active traders require high-performance trading technology that still offers a logical user experience, as well as engaged, responsive client service to solve complex issues. Knowing your broker’s core audience can tell you a lot about these considerations and more.
At Mondeum, we cater only to traders with at least one year of margin trading experience. Our average client knows key market structure concepts and is looking for speed and efficiency in their trades. Crucially, they are not typically traditional buy-and-hold investors – they are looking to transact on a shorter-term scale, in most cases holding positions for no more than three days. All of these factors have a significant impact on the technology we offer, the services we provide, the way we do business and more.
We can’t promise that this list covers every possible question you might want to ask of the brokers you’re considering, but we’re confident it will get you started on the right foot. By identifying characteristics that apply to your unique trading profile, you’ll be one step closer to narrowing down which broker is best suited for your budget, trading strategy and more. At Mondeum, we pride ourselves on offering next-gen solutions built for today’s active trader. If any of our answers to the questions above appeal to you, get in touch with us today. We’d be happy to share more about our client experience, pricing models and more.