Ready to enter the stock market but feel unfamiliar and confused by the term “broker”? Faced with numerous choices, are you wondering what makes a good broker and how to choose one? Selecting the wrong broker can not only cost you unnecessary fees but also affect your overall investment experience. Don’t worry, this article is your complete guide. From the basic functions of a broker to 5 key selection criteria, we will compare popular Taiwanese and US stockbrokers to help you understand everything and open an account with ease!
Imagine the stock market as a giant supermarket with a wide variety of products (i.e., stocks, ETFs, etc.). However, you can’t just walk in and pick them out. You need a “membership card” and a “shopping cart,” and this role is played by the broker. They are government-approved financial institutions that act as intermediaries between investors (you) and stock exchanges (like the Taiwan Stock Exchange or the New York Stock Exchange).
Simply put, all your buy and sell orders must be sent through a broker’s trading system to the exchange for matching. After a transaction is completed, the broker will also handle subsequent payment settlements and the deposit of stocks into your depository account. Without a broker, the average investor cannot participate in market trading, which is why choosing a reliable partner is crucial.
If you want to invest in markets beyond Taiwan, such as buying shares of US companies like Apple (AAPL) or NVIDIA (NVDA), there are two main channels:
For beginners focusing initially on the Taiwanese market, a domestic broker is sufficient. If you want to try US stocks, you can start with a domestic broker’s sub-brokerage service to familiarize yourself with the market before considering opening an overseas account to reduce trading costs.
The market is flooded with brokers, so how do you choose? Don’t panic. By mastering the following five core criteria, you can find the perfect broker for you.
Fees are a hidden killer of your long-term profits! Seemingly insignificant charges can accumulate into a substantial amount with frequent trading. You need to pay attention to:
A good trading system allows you to place orders quickly and monitor the market smoothly. Conversely, an app that frequently crashes or has a complex interface might cause you to miss the best buying and selling opportunities. You can evaluate based on the following points:
It is recommended to download and try out the apps of various brokers before opening an account to get a feel for the user experience.
Your investment horizon determines the breadth of services you need from a broker. Besides basic Taiwan stock trading, you should also consider:
When you encounter system problems, billing questions, or need urgent assistance, quality customer service is your savior. Evaluation criteria include:
While this is more of a bonus, good opening offers can save you a small amount of money. Common promotions include:
However, remember not to choose a broker solely for the promotions. It is essential to make a comprehensive assessment based on the first four core criteria.
Now that you understand the selection criteria, let’s look at some popular options on the market.
For investors primarily focused on the Taiwan stock market, these three are leading brokers with high market share and comprehensive services.
| Comparison Item | Yuanta Securities | Cathay Securities | Fubon Securities |
|---|---|---|---|
| Market Position | No. 1 in market share, most branches | Digital pioneer, great app experience | High integration with financial holdings |
| E-trading Discount | Generally 40% off, less negotiable | Up to 72% off, no minimum fee | Starts from 82% off, minimum fee applies (depends on promotion) |
| App Features | “Investor Master” (professional features) | “Tree App” (intuitive interface) | “Fubon e-point” (highly integrated) |
| Best for | Investors needing in-person services or extensive information | Budget-conscious investors, beginners who prefer a digital experience | Existing Fubon Bank customers, those valuing integrated services |
If you want to dive directly into the US stock market and enjoy low trading costs, overseas brokers are your top choice.
| Comparison Item | Firstrade | Charles Schwab | Interactive Brokers (IBKR) |
|---|---|---|---|
| Commission Fee | Zero commission for stock/ETF trades | Zero commission for stock/ETF trades | Tiered/fixed pricing, extremely low fees |
| Chinese Support | Comprehensive interface and customer service | Comprehensive interface and customer service | Comprehensive interface and customer service |
| Minimum Deposit | $0 | $25,000 (International) | $0 |
| Pros | Simple account opening, beginner-friendly | Large scale, reputable, offers a Debit Card | Most comprehensive product range, most powerful trading tools |
| Cons | Relatively basic features | High account opening threshold | More complex platform, suitable for professional investors |
Note: The information above is subject to change. Please refer to the official websites of the respective brokers for the latest fees and account opening conditions. You can check NerdWallet’s comparison for the latest information in English.
Still a bit confused after all this information? Use this table to quickly pinpoint your needs:
| If your situation is… | Then your best choice might be… |
|---|---|
| A beginner starting with Taiwan stocks, prioritizing low fees. | Cathay Securities (or other digital brokers with low discounts and no minimum fees). |
| Want to try US stocks for the first time but prefer convenience and keeping funds in Taiwan. | Use the sub-brokerage function of your existing Taiwan stockbroker. |
| Plan to trade US stocks long-term and frequently, seeking the lowest trading costs. | Firstrade or Interactive Brokers (IBKR). |
| A professional trader who needs the most comprehensive products and professional ordering tools. | Interactive Brokers (IBKR). |
Choosing a good broker is the first step to successful investing. Reviewing this article’s 5 key criteria—fees, platform usability, service range, customer support, and opening promotions—we believe you now have a clear answer to “what makes a good broker.” Whether you choose a local broker focusing on Taiwanese stocks or an overseas broker with a global reach, the most important thing is to find a platform that best suits your personal investment habits and needs. Now, use our guide to take the first step, open an account, and start your journey of wealth growth!
Rest assured, your assets are protected. In Taiwan, the stocks you buy are registered with the “Taiwan Depository & Clearing Corporation” (TDCC). The broker merely manages them on your behalf; ownership remains in your name. If a broker unfortunately goes bankrupt, your stocks will not disappear. The regulatory authorities will coordinate the transfer of your assets to another broker. In the United States, the “Securities Investor Protection Corporation” (SIPC) provides protection up to $500,000, which covers both cash and securities.
A trade settlement default is a very serious matter! It occurs when an investor fails to deposit the shares into their account by T+2 (the second business day after the trade date) after selling, or fails to deposit sufficient funds into the settlement account by T+2 after buying. The consequences include:
Therefore, always ensure you have sufficient funds and stocks in your account before trading.
No, it does not. An individual is legally allowed to open accounts with multiple different brokers. Many investors open multiple accounts to take advantage of different brokers’ promotions or app features, for example, using one for swing trading and another for long-term buy-and-hold investing. The only downside is that management can be more fragmented and cumbersome.
Absolutely. Many mainstream US brokers, such as Firstrade and Interactive Brokers, have invested heavily in localization. From the account opening interface and trading platform to customer service, they almost all offer full Chinese support. Therefore, language is no longer a major barrier to investing in US stocks.
