Until recently, phone trading or floor trading were the only way for every day people to enter the stock market. You would have to communicate to a broker what you wanted. Now, online stock trading has replaced all that. Anyone from first time traders to experienced day traders may monitor, order and research trades. There are so many discount brokers online, it can be confusing. Which one should you trust? To find out, we have done a little research in order to find the best online broker sites.
What you should know about online trading.
First, before entering the stock market, you really ought to do your homework. Learn as much as you can about the investment vehicles you can choose. There are a lot of different choices, and each one come with varying degrees of risk.
A simple rule to know is that the higher the risk, the higher the loss. But also the higher the potential payoff. In that respect, not much separates high risk investments from gambling.
Outside forces can affect the performance of your stocks. This includes weather, world events, natural disasters and civil unrest in other countries.
Low risk investments are the like of bonds or mutual funds. Examples of high risk investments are Forex trading and futures.
What to look for in an online broker site.
There are some basic features you should expect, and will be available with all the best online broker sites.
Expect to get tools for researching and monitoring of your stocks, features to allow you to manage your investment portfolio, a report on the current risk of your positions and other powerful charting and reporting options.
Other considerations should be the ease of use of the platform.
Of course, the cost of investing should always be a concern.
One of the benefits of an online broker, is that you perform your own trades at a much lower price than directly paying a stock broker to take care of them on your behalf.
You’ll find that most of the services out there are offering set trading fees, however others have tiered trading costs. The benefit of the latter is that, the more you trade, the cheaper each individual trade becomes. TradeStation is one of these online brokers with tiered trading. Bear in mind that if you are making less than ten trades per month, then tiered trading won’t be worth it, and you will end up paying out more in fees than if you had chosen a fixed fee broker.
If you are new to investment or online brokerage, then I suggest that looking for a broker that offers the best online support and educational tools should be a priority.
The best online broker sites
The good: OptionsHouse has the lowest stock trading fees you are likely to find.
The bad: They are not offering broker support as part of their service.
OtionsHouse is continually ranked as one of the best online broker sites for good reason. They have super low fees and offer an intuitive, easy to grasp platform for your trading.
Thankfully with OptionsHouse there is no minimum balance needed for you to open an account. This is in contrast to other online brokerages that require a $2000 balance.
Stock trades cost $4.95 per trade, which is a good deal lower than the $7 market average. If you need help, then they can provide a broker, however this costs $20.
They are also noted for their intuitive interface. To make a trade, simply look up a quote and then click bid to buy or sell. There is only 4 primary screens to handle, and you can easily navigate through tabs across the top to check out account activity, stocks, tools and options. If you aren’t sure about any of the tools or features, click on the “Quick Assist” icon and hover over different parts of the screen. You get a helpful pop-up that tells you what different things do.
In terms of educational tools, they are a little lacking. There are no investment courses here, unlike other online traders.
Instead, you can practice on a demo account with $5000. Often the only way to learn something is to do it, so this simulated trading area is a useful way for you to figure out strategies.
The good: TradeKing offer a low trade fee.
The bad: Their trading platform isn’t as customizable as some other online traders. There is also no trading simulator available to try out.
The good: They are noted for having a well organized trading platform.
The bad: Unfortunately you’ll need to make a minimum investment of $2500 to begin trading here.
The good: There is no minimum investment needed for you to open an account and begin trading immediately.
The bad: The fees here are very steep.
The good: Excellent educational resources are available here for beginners.They are also known for their excellent customer support.
The bad: The fees are a little higher than some of their competitors.
The good: There are fantastic resources available here for learning about trading. They have a knowledge center that you can learn from to help you make sound trading decisions.
The bad: If you need help with your investments you can use a broker. The broker fee is very high though.
The good: The have a fully customizable trading platform.
The bad: If you are an infrequent trader, their tiered trading means you will incur greater charges than if you used other services.
There is a lot of choice out there among the best online broker sites. Personally, I would choose OptionsTrading as one of the best online broker sites. Why? They have some of the lowest fees going. Although they don’t have top educational tools, you are able to experiment using their simulated investment platform where you can play around with $5000. Combine this with your own research and free online educational resources and you should be able to teach yourself to a reasonable degree before investing any real money.