What to Look for in an Online Share Trading Platform

Originally published by: TJ Ryan

What investors should look for in an online share trading platform will generally depend on the type of investor you are. We break down the features you may want to consider based on your investor profile.

Buying and selling shares online remains popular, with the ASX’s Australian Share Ownership Study finding that in 2017, 37% of Australian adults owned shares through listed investments such as managed funds, while 31%, or close to a third of the country, owned shares directly. Of those, a 65% majority traded through an online broker.

So, what do investors need to consider when choosing an online share trading platform? To a large extent, the importance of various features will differ depending on your investor profile in terms of how much and how often you trade.

In 2019, Canstar researched 45 online share trading platforms from 21 providers in Australia and gave them star ratings according to how much value they provide to different investor profiles. Take a look at our comparison tables to see which platforms would provide 5-star rated outstanding value for your investment needs.

Who are you?

Average number of transactions Average transaction value Securities traded Requirements
Casual Investor 8/year $15,000 Shares
The Casual Investor buys and sells shares occasionally and using a long-term strategy to review their investment portfolio.
Active Investor 40/year $15,000 Shares, managed funds
The Active Investor buys and sells shares and derivatives more frequently than the Casual Investor, using the latest market information, data analysis and reports to determine portfolio holding.
Trader 360/year $15,000 Shares, derivatives Dynamic trading platform
The Trader buys and sells shares very frequently, and the latest market information is used to determine their portfolio holding.

Considering online share trading? The table below displays a snapshot of online share trading platforms on Canstar’s database, sorted by star rating (highest to lowest) and with links to providers’ websites. Please note the Star Ratings are based on the casual investor profile (average of 1 trade per month). Always ensure you read the PDS before selecting a online share trading provider. 

What should you look for in an online share trading platform?

Casual Investor

The comprehensiveness of investment tools isn’t always the most important factor in selecting the best broker for the Casual Investor.

Casual Investors typically require a high level of client services and support to be available, as well as excellent educational material and a trading platform that is easy to use.

There is certainly a great need for easy-to-use and easy-to-understand education around the share market. Of the investors surveyed by the ASX in 2017, only a third claimed to understand the trade-off between risk and return, and even fewer understood the benefits of diversification.

If you are new to investing or just want to keep up-to-date with the latest news and investment trends, check out Canstar Investor Hub

Cost also makes a big difference for Casual Investors. This is because typically fees are set at a higher percentage of the investment amount compared to investors trading in higher amounts or more frequently.

Active Investor

The comprehensiveness of research tools is an important factor in selecting the best broker for the Active Investor.

Active Investors may need access to detailed company and market information and may need margin loan availability. They will likely require a dynamic trading platform, meaning you have a live data stream that updates without the need to hit the ‘refresh’ button.

Due to their higher trading frequency, cost is also important.

Trader

Cost is an important factor for the Trader due to their high trading frequency.

The availability of trading in the derivatives market is also an important option for Traders.

dynamic trading platform and access to superior charting tools is often a must for Traders.

Other things we look for

Apart from the features already mentioned, Canstar captures and assesses over 200 pieces of information in our Online Share Trading star ratings report, including:

  • Account services
  • Reporting methods for dividends and interest earned, year-to-date profit/loss statements, and tax reporting tools
  • Client services and support, availability of after-hours helpline, and platform training for the customer online or over the phone
  • Margin loans available
  • Company and market information available
  • Research tools, alerts, and other technical trading information available
  • Basic and advanced charting available
  • Educational and technical help available
  • Online security provided to a high level
  • Flexibility of or restrictions on settlement of account
  • Trading platform functionality, dynamic data stream
  • Accessibility of the channel via multiple methods
  • Fees charged

There is a lot to think about – which is why we’ve taken the stress out of it by comparing online share trading platforms for you. You can make a shortlist using our website and narrow down your search to just the platforms that will meet your profile and your trading needs.

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