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Eights tips on choosing a premium broker in Hong Kong

The online trading landscape is becoming more competitive with new types of brokerages. With the entry of big banks, like Saxo, and other institutional investors, there are now hundreds of ways to trade in shares on the Hong Kong Stock Exchange (HKSE).

Choosing the right brokerage when trading stocks is essential because it impacts how easily you can access your money, whether you can use leverage for trading on margin, and whether you have any support if things don’t go well.

How much commission for buying and selling shares?

When choosing a brokerage, check what commission they charge to buy and sell orders. Some brokers may be zero commission trading but have a different fee structure once you start using margin or futures trading. Others may not provide any free trades but offer an attractive package if you trade often. Figure out how much it will end up costing you to invest your money in the stock market for each transaction – try looking at past examples from previous months or years so that you can estimate or extrapolate future costs.

Is your money safe with the brokerage?

Even when there aren’t many problems with Hong Kong’s economy, disasters can still happen. When there were significant floods recently, Hong Kong’s stock market was shut down for over a week due to the massive loss of paper records. Make sure that you are comfortable knowing that your brokerage will be able to protect you if something like this happens again – even if it means losing all of their records.

Are there any hidden fees?

Industry-wide commission fees are one thing, but make sure you know what other costs arise when using the brokerage service. Things like how much it costs per trade and whether they charge anything extra for margin trading can add up pretty quickly and make an impact on your bottom line. For example, some brokerages in Hong Kong offer free trades in general but levy fees when they think you are trading too frequently on margin.

Can you use your computer?

Some brokerages make you sign up for a ‘pro’ plan to access the desktop website, while others offer a more basic mobile app or no alternative at all. Make sure that you can use your computer with the service rather than being forced to use a system provided by the brokerage. Some of them may be more secure but have an interface that is hard to navigate and utilise, which defeats the point of getting a premium brokerage in the first place.

Is there an app for mobile trading?

If you want to trade stocks from your phone, find out if there’s an app available from your brokerage. Even if you don’t want to trade on your phone, it’s a good idea to check the stock market and what percentage of various shares are being traded for from your mobile device.

What are your fees?

In some cases, you’ll have to pay more than just regular fees. Find out about any ‘interest’ rates that the brokerage imposes, as well as whether there are any minimum amounts required of you before they will let you withdraw money from your account or place trades with their service.

Do they have a helpful website?

The best online brokerages generally have a handy website that allows users fast access to information about trading on margin and other types of trading. Also, check to see what kinds of reports are offered, how frequently they are available, and if you will be required to pay extra for extensive datasets.

Can they handle your type of account?

Two main types of brokerage accounts are available in Hong Kong: cash and margin. Cash accounts require that money is withdrawn from the account before you can use it to trade otherwise, whereas, with a margin account, you can use borrowed funds to access more potential profit through leveraging your trades. Check with your broker whether they handle both options adequately when making your choice because some only offer cash accounts when it comes to standard customer service.

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