Why traders should consider new brokers
The received wisdom in the trading world is that new brokers aren’t the right choice for a variety of reasons. Some new brokers might not have had the chance to prove themselves and their legitimacy, for example, while others might be considered to be unsafe because they haven’t had the chance to be checked and audited by the trading community. However, it’s not necessarily a given that new brokers are bad. In fact, they can sometimes be a good choice for a trader. This blog post will explore when and how it makes sense for a trader to consider using a new broker rather than a more established one.
Previous experience
First off, it’s entirely possible that the broker in question has actually provided brokerage services to the market before — perhaps under a different name or guise. It’s possible that they’ve moved on from a previous brand, often for legitimate reasons — like a refresh. The challenge, however, is identifying that this is the case. Sometimes a broker might make a big deal out of its past investment offers, but on other occasions, they’re likely to want to start afresh. You may have to email the broker’s customer service team to find out about its history.
A fresh offer
Another example of a scenario in which a new broker might come in handy is if they have something fresh and unusual to offer. Take the example of accepting Bitcoin as a deposit method. If you take Bitcoin, it’s likely that you’ll want to make yourself known as a new and fresh broker who is offering something exciting that others don’t have. If you’re a long-standing broker and you simply add Bitcoin to your list of deposit methods, it might get lost — hence the need to rebrand and become new. In that light, a new broker can suddenly seem very appealing, as it’s a way into enjoying new services.
Quick reputation
Finally, sometimes new brokers simply build a strong reputation almost overnight. Often, this happens through luck rather than anything systematic: it could be that one or two glowing reviews on a broker review site go viral, for example, or it could be that the broker inadvertently resolves a specific pain point that causes traders to flock to them. WeCompareBrokers has some good examples of this: their Trade Nation broker review gives you an idea of the information on offer. The role of the trader in this, however, is to be sure that they don’t exclude new brokers before they’ve explored reputations in this way — or they could miss out.
In short, traders should avoid dismissing new brokers outright. On the contrary, it’s essential for traders to think carefully about the wider picture of a broker’s offer — not just their age. By factoring in the year a broker was founded alongside many other characteristics, a trader can make an informed and holistic judgement.