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My Preferred Brokers As A Small Retail Investor

My preferred brokers as a small retail investor

Last update: 23/11/2018

Added 22/11/2018:  References bad (anecdotal) customer experiences DeGiro; Linking a thorough comparison done by The Poor Swiss.

Added 23/11/2018: Link to The Poor Swiss updated comparison of DeGiro and IB.

When trying to reach FIRE you can’t get around brokers. I’m no different. I have two brokers I use for various reasons and means. In short, I will cover why I chose which one, and for what reason. I will also keep this post up to date if I have new experiences to share.

Note: I will not cover all the possible brokers since I don’t have experience with them. I only want to give you my experience with those that I have worked with so far. This is also independent of my performance. In case I talk about bad customer experience with a certain broker, I will support using third party articles.

My preferred online brokers for stocks

DeGiro Logo

DeGiro

DeGiro is a real price maverick[Dutch link] in Europe. Traders also might know them for their free ETF selection. Important to note with this “free” selection is that you have to make sure you choose the exact security. “Exact” means: ISIN, name, currency, and exchange have to match. This really summarizes why I’m considering moving my personal portfolio from Lynx to DeGiro.

At the time of writing, they are active in 18 countries such as, but not limited to:

  • Belgium
  • The Netherlands
  • Germany
  • France
  • Czech Republic
  • Poland
  • Spain
  • etc.

While they are well known throughout Europe for their low rates, they also receive (some) critique (at least up until a year or two-three ago) for:

  1. lackluster customer support [1][2].
  2. by default opting in clients for letting them lend out their securities.

DeGiro has been working on mitigating the first point and you can prevent the second point by opting for a custodian account. Although by doing this, you agree to marginal higher fees in certain cases (please check their site for your country’s fees and charges).

A word of caution about these additional fees. While they seem low at first, once you reach a certain level of equity it pays to look for an alternative broker if you do not want your shares to be lent out (and even if you don’t mind it!).

The Poor Swiss made an excellent comparison between a basic, custody and IB(/Lynx) account. While the comparison is done for CHF, EUR accounts won’t differ too much and might actually be more interesting due to the EURCHF exchange rate.

In conclusion, given their low costs (again, please check the site for your country for the exact details), as well as friendly UI, they are the preferred platform for many.
This holds especially true if you trade little (about once per month as part of your periodic deposit) and don’t hold a large portfolio.

Lynx.be broker logo

Lynx

At the moment, I use the Belgian broker named Lynx for my personal stocks portfolio. This might change in the future, depending on how the fees and commissions evolve. I also don’t trade as diversified as I anticipated, so the extensive platform at my disposal remains untouched.

For a lot of my European readers they are, as of November 2018, active in 9 countries:

  • Belgium
  • The Netherlands
  • Germany
  • France
  • Czech Republic
  • Poland
  • Slovakia
  • Finland
  • Switzerland

They have a partnership with Interactive Brokers and thus use the same platform but with their own requirements as well as brokerage fees and costs.
The biggest downside in my experience is the archaic offline trading tool. It’s too cluttered for most people and has a rather steep learning curve depending on what you plan to trade.
To counter this, Lynx is constantly developing their online trading platform.
It might not be as extensive as DeGiro or even banks, but they are getting there and for most people, that should really only get a handful of ETFs, it’ll suffice. Then again, DeGiro might be a better solution for them as they are cheaper.

My main reason for choosing Lynx over Degiro is for their advanced trading options (which I don’t use as much as I thought I would) and the help they offer manage it through their excellent customer support. This support also helps me with anything else: managing the technicalities of my account, helping with local tax questions, etc.
Besides that, depending on how much I trade with them, it’s possible to get cheaper rates (though this might depend on the local branch as it’s not official 😉 ).

In conclusion, I’d recommend Lynx if you trade a lot each month and especially in different securities at the same time.
They also become an interesting option once your equity gets into the 6 figures, i.e., above 100,000 EUR.

My preferred Forex brokers

A small disclaimer first: forex involves leverage and high volatility. Only trade with money you are willing to lose. I have several years of experience with them but nonetheless, I have an affiliate link for both of them.

MT.COOK Financial logo

MT.COOK financial

When it comes to my forex account. I use MT.COOK financials.

When you look up more info about MT.COOK you might notice they aren’t well regulated this could be considered a downside. However, because they are regulated in South Africa, MT.COOK is not influenced by the limitations of those good-looking regulators such as in the USA (NFA), Canada, or the EU now with ESMA – MiFID II.
All those regulations create issues due to significantly lower leverage, FIFO rule (NFA), not being able to pay IB’s (FSA in the UK).

The only regulator out there that are for now still more enabling is the ASIC from Australia, but even they might go for tighter regulations very soon. While some of these regulations are good for the individual investor. A lot of them go so far that it’s nearly impossible to even trade correctly (using correct money management).

On the other hand, complying with these regulations is a lot more expensive, and the cost, of course, is transferred to the clients, so they operate on a much more expensive feed. By not going with the well-known regulators. MT.COOK can keep their costs low.

MT.COOK has been an A book brokerage, whereas most of the other brokers use B book or at least a hybrid of the two (A + B), so those brokers are actually playing against their clients, where there is a conflict of interests. this in itself shouldn’t be a problem but there is also a cost linked to it.

One last thing that MT.COOK offers is what they call a Hybrid PAM. Explaining this will take us too far but it allows for a very interesting managed account structure.

One major blocking point is that they require a minimum deposit of 5000 USD. Although, especially in forex, trading with too little is a guaranteed way to lose your money.

My experience with them thus far is positive. They offer a very close and friendly customer support (even through Skype) and have tight spread that is a lot lower even during the change of day, unlike Pepperstone.

Pepperstone logo

Pepperstone

An alternative to MT.COOK is Pepperstone. This broker has a UK as well as an Australian license and might give traders more comfort.
They offer four different trading accounts:

  • Standard STP: This classic account type offers interbank spreads from 1.0 pips and no commissions.
  • Razor: This raw spread forex trading account offers spreads starting from 0.0 pips and charges a commission of $3.50 per $100,000 traded.
  • Islamic: The Pepperstone Islamic Account offers straight-through processing and no swaps, with spreads starting from 1.0 pips and no commissions.
  • Active Trader Program: Active traders can access a host of premium account features, including a dedicated relationship manager, a segregated customer account and advanced reporting tools.

The minimum deposit is 200 AUD which is very low. Although this might seem good, as mentioned with MT.COOK, you can’t really trade with such a low amount, especially European traders who have new strict regulations placed on them.

I have a year of experience with them before they force-close my account and tried to reopen it in under their UK branch. My overall experience is good to very good. You should pay close attention to end-of-day. The slippage can be brutal, especially for more exotic currency pairs.

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Mr. FightToFIRE

Writer at Fight To FIRE
I'm the owner and the main writer of FightToFIRE, a personal finance blog focussing on Financial Independence and Retiring Early. During the regular working hours, I'm a developer for a major financial institution in Belgium. During my off-hours, I write. do some weight lifting and other stuff to keep me healthy and fit.
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