Once investors have gained the necessary knowledge and experience with the stock market, they next need to find a suitable stockbroker. One of the easiest ways to become involved with purchasing and selling stocks is by using an online broker. Today, a large number of options exist, some of which are better than others. The most suitable option for each investor depends on his or her personal needs.
Before deciding on an online broker, investors need to think about what is most important to them. For example, individuals who are often on the road may prioritize mobile trading, while those who are on a budget may want the least expensive platform for placing trades. By thinking about what they need from a stockbroker, people can begin to narrow down their options. Following are some aspects to consider when looking for an online stockbroker.
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Miscellaneous fees: Always look at the fees that a broker charges. Smaller niche brokers may have a number of fees that are only meant to generate revenue. Sometimes the hidden fees are deeply buried on the broker website, so it is necessary to conduct a thorough review before making a decision. In addition, reading online reviews can help you to identify brokers who charge hidden fees. Potential costs include IRA fees for retirement accounts, inactivity fees, and transfer fees.
- Customer service: Individuals want to be able to connect with a knowledgeable and trained customer service representative quickly when they are in need of assistance. Questions to consider when deciding on a broker include how many service representatives are available at any given time, and whether the broker prefers phone or email communications. Some investors consider customer service more critical than others, but even people who do not frequently need to contact a broker can feel comforted by knowing that their choice has been recognized for award-winning service.
- Security: Since investors place so much sensitive financial information on a broker’s site, they should ensure that the brokerage has excellent security. Most brokers now use security questions and SSL websites, but others offer additional security. All brokers under consideration should belong to FINRA and SIPC in order to ensure that they adhere to basic requirements. Beyond that, people may want the added security provided by larger, more established brokers.
- Trading tools: Trading is much easier when individuals have access to great tools. Some of the leading stockbrokers offer a wide range of tools, such as real-time streaming quotes to stock scanners. Investors should take a look at the tools offered and ensure that they are high quality and adequate for their investment needs. Many online brokers also offer free market research tools. Typically, the best tools are reserved for brokers who charge higher rates per trade, but that is not necessarily the case.
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Investment options: The best online brokers facilitate more than just stock trades. These brokers often have a decent selection of complex options, ETFs, and mutual funds. The larger brokers tend to offer ETFs with no commission. Some options may even have conditional order, futures trading, direct market routing, and forex trading. All of these options make it easier to diversify portfolios and explore new investment opportunities, but they may prove unnecessary for some individuals.
- Speed of execution: Active traders want a stockbroker with a fast execution speed. The time and quality of execution can prove radically different between brokers, and individuals can learn more with a little bit of research. Most investors would rather save a penny per share on the cost of a transaction for the slower rate, but very active traders may become dissatisfied.
- Account minimums: A number of brokers will let investors open an account with no minimum deposit, while others demand several thousands of dollars in the account. For some traders who have no minimum or a low one, more money must be deposited to gain access to premium functions or personalized support. Beginning investors who do not want to put a lot of money at stake may prefer brokers that have no minimums.
Who are the Top Online Stockbrokers in Today’s Market?
A number of high-quality online brokers exist. One of the top options is TD Ameritrade, which was declared the top online broker for several years running by StockBrokers.com due to its moderate $9.99 fee. TD Ameritrade has an excellent desktop platform called thinkorswim, and its Trade Architect offers a number of tools and features. The broker also has mobile apps, great educational tools, and top-notch research functions.
Another common option is E*TRADE, which has an excellent mobile app with industry-leading research tools. The $9.99-per-trade cost is made worthwhile with great customer service.
Scottrade is one of the largest networks of online brokers with 500 branch offices. The broker has won awards for its customer service and has a cheap fee at only $7 per trade.
Other celebrated options include TradeKing, which offers a $4.95 fee backed by strong customer service, and OptionsHouse, which also has a flat $4.95 fee and strong trading tools. Merill Edge is an ideal option for people who want to join broker and banking services. The Preferred Rewards program can qualify investors for free equity and ETF trades, and regular trades are $6.95.