Does the broker match my investment strategy?
Every investor is different. Some specialize in stocks while others prefer bonds or mutual funds. Some investors focus on foreign markets while others put their money in the U.S. All of these strategies have their advantages and disadvantages, but here are some of the key components to consider when looking at an online broker:
Commission costs are unavoidable no matter which broker you choose. However, some come with larger fees than others. This is generally going to be a feature of a discount online broker. Investors don’t want to pay exorbitant fees for trades, and therefore, a broker that charges less is going to be more popular. But, usually, the cheaper online brokers offer less in terms of services and research.
Research and Analysis
Good brokers can help you navigate the market and make smart investment decisions. With solid research and analysis, you can take advantage of market swings and trends and anticipate your next move.
Trades versus Trades
If you’re going to make multiple trades a year, it makes sense to go with a broker that offers commission-free trades. Some brokers, like ETRADE, offer discount commission fees when you make multiple trades within a specific timeframe. However, you can’t rely on frequent trading to save money. Remember, this only applies to certain types of stocks or options.
What are the broker's trading fees?
It's important to pay attention to the trading fees and the fee structure used by a broker. You don't want to get caught by a hidden fee. Most reputable brokers will clearly state all fees in dollar and percent amounts so you can see exactly what you are paying for.
What are the trading hours?
This is one area where brokers can differ significantly. Some brokers have a longer trading day than others and some are open 24/7. This can be important if you need to get in touch with your broker or if you need to make trades outside of traditional market hours. Some brokers also offer extended trading hours on the weekend.
What is the trading platform used by the broker?
This is an important consideration, especially if you plan on trading stocks. A web-based trading platform will require that you have an internet connection. That might not sound like a big deal but you'll want to make sure that you have a stable internet connection before you trade.
What are the minimum account requirements?
Some brokers require a higher minimum account balance or trading volume than others. This is something to keep in mind, especially if you're looking at a discount broker.
Can you get help if you have questions or problems?
It's important to know that you can easily get in touch with your broker for assistance. Many brokers offer 24-hour customer service in case you have questions or problems.
Does the brokerage offer banking services?
Financial information is a critical component of your financial life. The financial services offered by online brokerages go far beyond just trading. Some brokers offer checking, savings, certificates of deposit, money market accounts, and even credit cards. Some brokers also offer online versions of their own financial products and those of other companies.
But remember, while the services may differ, the online brokers have the same key goal: to make lots of money. So make sure the services offered by the brokerage fit the needs of you and your family. In other words, don’t simply choose an online broker because he or she offers a particular service that you think you need – make sure it’s a service that you actually need.
Do They Provide Low-Cost Trades?
Not all online brokers offer cheap trades. Some of them may offer very expensive trades, particularly the online brokers owned by traditional brokerages or large banks. If you don’t want to pay a lot for your trades, make sure the online broker you’re considering offers cheaper trades.
Are They Licensed?
Do they offer investment advisory services?
If you prefer to leave your hands-on trading to someone else, you may want to look for a broker that also offers advisory services or wealth management advice. Fidelity Investments offers this along with a full-scale investing suite.
Are they insured?
Check to make sure that your money is safe. Look for a broker who has the National Securities Clearing Corporation (NSCC) protection and the Financial Industry Regulatory Authority (FINRA) as back-stop.
Do they offer customer service in different languages?
If you want able access to customer service and other important account information, you may want to avoid brokers who only offer customer service through email. There may be times when you want to talk to a real person about your account, and it’s helpful to know that a broker in your language is available.
Do the have any in-house products?
While there’s nothing wrong with having in-house products, you may want to avoid brokers who only offer them. These products are usually paid research produced for the brokerage that you can’t access through other brokers.
Can you work from a mobile device?
Does the broker offer any research tools?
As you set out to start trading options and stocks, you might want to be sure you have an online broker offering quality research on stocks and sectors. Some brokers do offer research available to those who register with them for free. These tools can help you learn about stocks and options, making the possibility of success that much more likely. However, the free research options tend to be limited. If you require a more robust research package, you’re likely going to have to pay for it.
What can I invest in with this broker?
The world of financial investment and trading is dominated by the large firms that offer stock, options, bonds, mutual funds, and other investment vehicles. These firms have their benefits, but they can also have their drawbacks. For one thing, a lot of investment firms try to act like a be-all, end-all for all your financial needs. Many offer some financial products, but they don’t offer others. Some might even be part of a larger company that functions as a one-stop shop for financial products and services that can have a big impact on the fees and commissions on other services. A lot of people, particularly smaller investors, would be better off with a more streamlined alternative.
If you’re looking for a more affordable alternative to traditional investment firms, you can find it with online investment brokers. Online brokers are those who offer financial services that are designed for smaller investors. They give you a variety of investment opportunities that other financial firms might not be as willing to offer. While they can’t provide the range of investment vehicles that a major firm can, they can offer more personal investment guidance. Online investment brokers are staffed with licensed financial professionals who are often experienced investors themselves. These investment firms provide financial advice and friendly customer service at highly affordable rates.
What type of customer services options do they have?
An important part of choosing an online broker is the customer service available to assist you. There are many different options, and not all are equal.
The first type is telephone-based customer service; however, this option is disappearing as many online brokers are moving to a more online-based support system. It may still be worthwhile to see if a broker offers telephone-based support, but be aware that it may not be around for much longer.
The second type of customer support is online based. These can include email, chat, and forums where customers can ask questions regarding their account or make suggestions to improve the service. Check to see if other customers have provided the online support team with positive feedback.
The third type of support is self-help support that includes the online account interface and other resources that will provide guidelines for investors based on specific investment needs.
The fourth type of support offered is mentor support. These brokers hire financial experts to oversee and mentor customers. You can expect this type of support to be more in-depth and personalized.
The fifth type of support is a team of professionals that includes the advice of financial analysts. These professionals offer advice to investors based on their personal needs and financial objectives.
The sixth type of support is a team of personal coaches. Many online brokers employ a team of experts that can assist you by working with you and your team on specific investment strategies. Their goal is to achieve specific financial goals.
Can't Find One You Like? Use Multiple!
If you're researching for online discount stockbrokers to make trades with, you can try out
Many Brokers, to see what kind of price the best-known online brokerage firms are offering.
A few things can get in the way of your first online trades. If you're new to picking stocks, you may want the help of a full-service broker who can pick tops and bottoms for you. Some online discount brokers specialize in penny stocks, which may not be suitable for recent college grads or small-time investors. You may also want to sort by mobile app, active traders, or different top options. You may also be saving for that retirement down the road or purchasing your first home.
The different features made such a list very difficult to create in the past; Young Investors was one of the first to try to organize the broker info. Because it is difficult to organize, check their website.
What to Look For in an Online Broker
If you’re looking to invest in the stock market, whether through trading or retirement planning, you’ll probably want to opt for an online broker. Online brokers are the most convenient way to do most of your investing, and you can access all the different options in one place.
CompareHedge is the place to do that. In the guide below, we’ll go over some of the qualities you want to look for in an online broker. We’ll also give you a rundown on some of the best online brokers that are available. But before we get to that, let’s take a closer look at some of the qualities you’ll want to keep in mind.