Picking an Online Stock Broker

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(Removed an old reference that Zecco offers 10 free trades per month with an account over $2500. Zecco no longer has this offer.)
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Today stock brokers provide you with a number of services besides trading. There are a large number of brokerage firms which provide different services and features. So it becomes an important task to find a broker which suits your need well. Today stock brokers provide you with a number of services besides trading. There are a large number of brokerage firms which provide different services and features. So it becomes an important task to find a broker which suits your need well.
 +
 +==How to Open an Online Trading Account==
 +#Choose a brokerage - evaluate their price per trade, minimum account balance, product offered, etc. (see below, [[Picking an Online Stock Broker#Factors To Consider Before Choosing a Stock Broker|Factors to Consider Before Choosing a Stock Broker]])
 +#Each brokerage will have its own sign-up interface; they often offer bonuses or promotions to sign up new members, so you might want to look for an advertisement that offers a special deal and sign up that way...
 +
 +==Companies involved in electronic trading==
 +
 +*[[TradeStation Group (TRAD)]] - electronic trading software/platform; online broker-dealer.
 +*[[OptionsXpress Holdings (OXPS)]] - online brokerage platform; "self-directed retail customers"
 +*[[Interactive Brokers Group (IBKR)]] - market maker and electronic broker; could be hit by less need for market makers?
 +*[[ESpeed (ESPD)]] operates an electronic trading platform that offers traders access to financial markets. It also produces software and other technologies aimed at helping investors execute trades and manage their portfolios.
 +
 +'''Exchanges'''
 +
 +Exchanges have purchased many of the independent ECNs (electronic communications networks, the basis for electronic trading), expanding their presence in the budding electronic trading market. For example, NYSE Euronext bought the Archipelago ECN, and Nasdaq bought Instinet, its own ECN. CME and CBOT offer Globex and e-cbot, respectively, etc. ICE and ISE are almost exclusively electronic.
 +
 +*[[NYSE Group (NYX)]] -
 +*[[Nasdaq Stock Market (NDAQ)]]
 +*[[Chicago Mercantile Exchange Holdings (CME)]] has announced its purchase of [[CBOT Holdings (BOT)]].
 +*[[Internation Securities Exchange (ISE)|International Securities Exchange (ISE)]]
 +
 +'''Investment products and services'''
 +
 +*[[MarketAxess Holdings (MKTX)]] operates an electronic trading platform for trading of corporate bonds.
====List of Major Online Brokerage Houses==== ====List of Major Online Brokerage Houses====
* [[TradeKing]] * [[TradeKing]]
- +* [[OptionHouse]]
-* [[Scottrade]]+
- +
* [[Firstrade]] * [[Firstrade]]
- 
* [[Wells Fargo]] * [[Wells Fargo]]
- +* [[Bank of America]]
* [[TD Ameritrade]] * [[TD Ameritrade]]
- 
* [[E*Trade]] * [[E*Trade]]
- 
* [[Fidelity]] * [[Fidelity]]
- +* [[MicroPlace]]
* [[Muriel Siebert]] * [[Muriel Siebert]]
- 
* [[optionsXpress]] * [[optionsXpress]]
- 
* [[Schwab]] * [[Schwab]]
- 
* [[Vanguard]] * [[Vanguard]]
- +* [[Zecco]]
-==Breakdown of Online Brokers==+* [[Scottrade]]
-====[[Fidelity]]====+* [[SogoTrade]]
-Presently, Fidelity is known for its research tools and a website that is easy to use with a wide range of investment tools and calculators. Its customer service scores are also among the best in the business. There are no handling or maintenance fees charged here. Also it is easily accessible as it offers numerous branch offices throughout the country where clients can speak with a trained professional. However, Fidelity's base commission rates are $19.95 per market order which is higher than some other online brokers. Also Fidelity has a minimum opening balance of $2,500 and gives a fair return of intrest on cash. Fidelity lacks in terms of trade execution , low margin rates and immediate response towards customers.<ref>[https://www.fidelity.com/ Fidelity.com]</ref>+* [[Sucden Financial]]
- +* [[MARSCO]]
-====[[TD Ameritrade]]==== +* [[Barclays stock brokers]]
-AMTD is a [[discount broker]]. Some benefits it provides over Fidelity are that commissions are a flat-rate $9.99 for any amount of shares, and there is no minimum investment to open an account. Also TD Ameritrade charges no minimum account balance and inactivity fees. It has good trade executions and it's customer service is rated better than Fidelity. However it pays low [[interest rates]] on your cash balance.<ref>[http://www.tdameritrade.com/welcome1.html TDameritrade.com]</ref>+
- +
-====[[Scottrade]]==== +
-This website offers value for the money for those who don't need a lot of handholding. Trades are fast, customer service is good and costs are low. The minimum opening investment is $500, and market orders are only $7, with no inactivity or maintenance fees. However, Scottrade offers less in the way of research or additional services, so it's best for those who don't need much extra help. Scottrade is having nearly 300 branch offices, which allow clients to talk to an advisor.<ref>[http://www.scottrade.com/ Scottrade.com]</ref>+
- +
-====[[ShareBuilder]]====+
-This is geared to investing rookies. New users can expect plentiful investment strategy primers, ranging from dollar cost averaging to diversification, and the company has no minimum balance requirements. This is one of the few sites that allows customers to set up automatic investments for stock trades, which only cost $4 each. Regular market orders will cost you $15.95. It fills a niche for those who want low-cost automatic investments.<ref>[http://www.sharebuilder.com/ Sharebuilder.com]</ref>+
- +
-====[[E-Trade]]==== +
-This is the most-used online broker. It charges four commission levels ranging from $6.99 (over 1,500 trades per quarter) to $12.99 (under thirty trades per quarter). It offers the latest investment tools, along with free access to real-time Level II Quotes (which normally cost $9.99 per month). An E-Trade account can be opened with $1,000, while a margin account can be opened for $2,000. However, cash deposit in E-Trade fetch very low interest rates, and it has poor customer service ratings.<ref>[https://us.etrade.com/e/t/home Etrade.com]</ref>+
==Types of Broker Services Available== ==Types of Broker Services Available==
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==Factors To Consider Before Choosing a Stock Broker== ==Factors To Consider Before Choosing a Stock Broker==
-====Discount vs full service brokers====+#'''Discount vs full service brokers:''' The first thing to consider is whether you want a discount or full service broker. Discount brokers are only responsible for trading on behalf of their clients, while full service brokers provide you a great number of featured services. These may include advisory dealing and discretionary dealing. Therefore, discount brokers charge you lower commissions than full service brokers.
-The first thing to consider is whether you want a discount or full service broker. Discount brokers are only responsible for trading on behalf of their clients, while full service brokers provide you a great number of featured services. These may include advisory dealing and discretionary dealing. +#'''Other costs:''' Beyond the commissions, there are a number of hidden costs charged by brokers. These include annual maintenance fees, asset transfer fees, account closing fees, inactive account fees, etc.
- +#'''Minimum deposit:''' Different brokers have different minimum account opening balances. Some discount brokers also give free trades once your account has crossed a minimum threshold.
-Therefore, discount brokers charge you lower commissions than full service brokers.+#'''Products offered:''' Most brokers provide a variety of trading instruments such as [[stocks]], [[mutual funds]], [[futures]] and [[options]]. However, you should ask for exactly what all products can be traded through your account.
- +#'''Customer service:''' You must collect some customer service reviews of the brokers you are evaluating. Evaluate the website user experience and the availability of real-time, over the phone customer service.
-====Other costs====+#'''Execution and communication speed:''' One of the most important factors is execution speed. If a broker' execution speed is as slow as 15 - 20 minutes, then you may buy a loss for yourself. Equally important is the communication speed of your broker. If your broker delays the orders or is not sincere and answerable, you can lose money.
-Beyond the commissions, there are a number of hidden costs charged by brokers. These include annual maintenance fees, asset transfer fees, account closing fees, inactive account fees, etc.+#'''Availability:''' If you prefer trading on the phone, see whether the broker is easily accessible through this medium. Visit the broker's site a number of times to ensure that the link is available for online trading. Some sites do not work during login or while placing orders or server drops due to overload.
- +#'''Research activities:''' Most brokers conduct research activities for their clients. It is important that your broker conducts regular analysis and research activities for use when advising you on your portfolio, market directions, new strategies and other reports.
-====Minimum deposit====+#'''Trading platform:''' For online trading your broker must use software which is comfortable to use, quick and easy to handle.
-Different brokers have different minimum account opening balances. Some discount brokers also give free trades once your account has crossed a minimum threshold - for example [http://www.zecco.com Zecco] has a minimum of $2500 to earn ten free trades per month.+#'''Extras:''' A good broker often has different plans and schemes for their customers. Look up such schemes as you'll pay a lower [[brokerage fee]].
- +#'''Other factors:''' It is important to ensure that the broker is registered with a regulatory authority and is registered with exchanges. Also make sure you get your statement regularly on weekly, monthly or quarterly basis.
-====Products offered====+
-Most brokers provide a variety of trading instruments such as [[stocks]], [[mutual funds]], [[futures]] and [[options]]. However, you should ask for exactly what all products can be traded through your account.+
- +
-====Customer service====+
- +
-You must collect some customer service reviews of the brokers you are evaluating. Evaluate the website user experience and the availability of real-time, over the phone customer service. +
- +
-====Execution and communication speed====+
- +
-One of the most important factors is execution speed. If a broker' execution speed is as slow as 15 - 20 minutes, then you may buy a loss for yourself. Equally important is the communication speed of your broker. If your broker delays the orders or is not sincere and answerable, you can lose money.+
- +
-====Availability====+
- +
-If you prefer trading on the phone, see whether the broker is easily accessible through this medium. Visit the broker's site a number of times to ensure that the link is available for online trading. Some sites do not work during login or while placing orders or server drops due to overload.+
- +
-====Research activities====+
- +
-Most brokers conduct research activities for their clients. It is important that your broker conducts regular analysis and research activities for use when advising you on your portfolio, market directions, new strategies and other reports.+
- +
-====Trading platform====+
- +
-For online trading your broker must use software which is comfortable to use, quick and easy to handle.+
- +
-====Extras====+
- +
-A good broker often has different plans and schemes for their customers. Look up such schemes as you'll pay a lower [[brokerage fee]].+
- +
-====Other factors====+
- +
-It is important to ensure that the broker is registered with a regulatory authority and is registered with exchanges.+
- +
-Also look towards that the transactions you place in front office are transacted and you get your statement regularly on weekly, monthly or quarterly basis.+
==Resources== ==Resources==
<references/> <references/>
 +[[Category:Mature]]
 +Online Stock Broker Commission Chart [http://www.bullishness.com/online-stock-brokers http://www.bullishness.com/online-stock-brokers]

Revision as of 01:45, February 17, 2012

If you want to invest your money in the stock market and other instruments, you need to get a stock broker. A Stock broker is the middle man between you and the market. He buys and sells stocks and other instruments on your behalf, and in consideration charges you with a small commission.

Today stock brokers provide you with a number of services besides trading. There are a large number of brokerage firms which provide different services and features. So it becomes an important task to find a broker which suits your need well.

How to Open an Online Trading Account

  1. Choose a brokerage - evaluate their price per trade, minimum account balance, product offered, etc. (see below, Factors to Consider Before Choosing a Stock Broker)
  2. Each brokerage will have its own sign-up interface; they often offer bonuses or promotions to sign up new members, so you might want to look for an advertisement that offers a special deal and sign up that way...

Companies involved in electronic trading

  • TradeStation Group (TRAD) - electronic trading software/platform; online broker-dealer.
  • OptionsXpress Holdings (OXPS) - online brokerage platform; "self-directed retail customers"
  • Interactive Brokers Group (IBKR) - market maker and electronic broker; could be hit by less need for market makers?
  • ESpeed (ESPD) operates an electronic trading platform that offers traders access to financial markets. It also produces software and other technologies aimed at helping investors execute trades and manage their portfolios.

Exchanges

Exchanges have purchased many of the independent ECNs (electronic communications networks, the basis for electronic trading), expanding their presence in the budding electronic trading market. For example, NYSE Euronext bought the Archipelago ECN, and Nasdaq bought Instinet, its own ECN. CME and CBOT offer Globex and e-cbot, respectively, etc. ICE and ISE are almost exclusively electronic.

Investment products and services

List of Major Online Brokerage Houses

Types of Broker Services Available

  • Execution dealing: Brokers are only responsible for buying and selling of stocks on the behalf of their clients.
  • Advisory dealing: Here brokers provide you with complete education on stocks. They advise you about the best performing stocks and various other services to help earn a good return on your money.
  • Discretionary dealing: Under this service the broker collects all the information regarding the stocks in your portfolio, manages the portfolio, and conducts trade himself on your behalf.

Factors To Consider Before Choosing a Stock Broker

  1. Discount vs full service brokers: The first thing to consider is whether you want a discount or full service broker. Discount brokers are only responsible for trading on behalf of their clients, while full service brokers provide you a great number of featured services. These may include advisory dealing and discretionary dealing. Therefore, discount brokers charge you lower commissions than full service brokers.
  2. Other costs: Beyond the commissions, there are a number of hidden costs charged by brokers. These include annual maintenance fees, asset transfer fees, account closing fees, inactive account fees, etc.
  3. Minimum deposit: Different brokers have different minimum account opening balances. Some discount brokers also give free trades once your account has crossed a minimum threshold.
  4. Products offered: Most brokers provide a variety of trading instruments such as stocks, mutual funds, futures and options. However, you should ask for exactly what all products can be traded through your account.
  5. Customer service: You must collect some customer service reviews of the brokers you are evaluating. Evaluate the website user experience and the availability of real-time, over the phone customer service.
  6. Execution and communication speed: One of the most important factors is execution speed. If a broker' execution speed is as slow as 15 - 20 minutes, then you may buy a loss for yourself. Equally important is the communication speed of your broker. If your broker delays the orders or is not sincere and answerable, you can lose money.
  7. Availability: If you prefer trading on the phone, see whether the broker is easily accessible through this medium. Visit the broker's site a number of times to ensure that the link is available for online trading. Some sites do not work during login or while placing orders or server drops due to overload.
  8. Research activities: Most brokers conduct research activities for their clients. It is important that your broker conducts regular analysis and research activities for use when advising you on your portfolio, market directions, new strategies and other reports.
  9. Trading platform: For online trading your broker must use software which is comfortable to use, quick and easy to handle.
  10. Extras: A good broker often has different plans and schemes for their customers. Look up such schemes as you'll pay a lower brokerage fee.
  11. Other factors: It is important to ensure that the broker is registered with a regulatory authority and is registered with exchanges. Also make sure you get your statement regularly on weekly, monthly or quarterly basis.

Resources

Online Stock Broker Commission Chart http://www.bullishness.com/online-stock-brokers

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