Choosing An Online Broker

There are many things to consider when choosing an online broker since many of them offer different things as to features and capabilities of trading platforms and mobile technology, commission rate structures, speed of execution fills, offering real-time data, and different types of financial instruments available to trade.

Although, with the fierce competition of online brokers today it really is amazing of all the advanced technology and features that trading platforms already offer (and getting more advanced all the time) as well as the cuts they have made to commission rates over time.

Depending on the type of trading style that you will be doing, you may want to consider some of the following things when choosing an online broker:

• Day Traders need more specialized online trading brokers that can provide advanced trading platforms with direct market access (DMA), super-fast execution fills, real-time level II quotes, low commission rates, highly advanced charting capabilities, real-time screeners, streaming live news, and advanced real-time technical analysis trading tools of all sorts. Having the ability to see everything in the financial markets in real-time can give you a big edge for day trading (to learn more about this type of trading style see Day Trading).

• Swing Traders, Trend Traders and Position Traders (traders holding positions overnight) are typically just fine with the more traditional online retail trading brokers that also offer very advanced trading platforms. These brokers can offer you a comprehensive professional trading platform loaded with all kinds of research and education tools, screeners for stocks, exchange-traded funds and options, plenty of monitoring and analysis tools, and advanced charting capabilities equipped with all sorts of technical indicators to help you identify potential great trading opportunities. Many of these brokers even offer real-time level II quotes (to learn more about these types of trading styles see Swing Trading, Trend Trading and Position Trading).

Either way, upon opening up a brokerage account with an online broker, you can trade virtually anywhere in the world and have the tools necessary to make intelligent and timely trading decisions all right at your fingertips – whether it’s from your home computer or from using mobile devices such as laptops, tablets or even smart phones. Some traders even travel around the world and just trade on the go.

(see our recommendations of award winning best online brokers in the trading and brokerage industry).

The Advancement Of Today’s Professional Online Trading Broker’s

Today’s professional online brokers can offer you a wealth of advanced trading necessities which are mostly free to their customers upon opening a brokerage account. After opening an account, you will get instant access to a professional grade trading platform that is equipped with all kinds of trading tools and features including some of the following:

With today’s high-tech professional online brokers you have the opportunity to trade the way you want no matter if it’s day trading or holding trades overnight, doing technical or fundamental research at any time of the day or night, and being able to easily submit your trading orders 24/7. Everything can now all be easily done with having easy access to your trading platform anytime you wish.

Discounted Commissions

Today’s commission rates to execute stock trades online are really nothing to worry about (financially speaking) with online brokers. Commission rates have really come down compared to what they use to be not so long ago and are in the neighborhood of around $5 per each stock trade made online (some brokers charge a little more, some a little less). Commission rates can vary, however, for other types of financial instruments being traded such as with options, exchange-traded funds or futures. In our discussions, we will keep it simple for commission rates made on stock trades.

Commissions can be charged in different ways:

For example:

• Per Trade (one flat-fee) – $4.95 per trade regardless of the size of the shares being traded. Trading 300 shares versus trading 1,000 shares or even 3,000 shares would still be the same commission charge of $4.95.

• Per Shares Traded – This can vary from broker to broker as well as from the monthly volume of shares being traded. The more shares traded (over varying thresholds), the lower the commission charges can be reduced. For instance, if the per shares traded was $0.005, then buying 300 shares would cost you $1.50 in commissions. Buying 1,000 shares or even 3,000 shares would cost you $5 and $15 in commissions respectively.

Keeping commissions as low as possible is very important since it has a direct impact to your bottom line trading profits, especially if you are a more active trader (like a day trader) where commissions can start to add up rather quickly.

Tip:If one online broker charges commissions of $4.95 per trade while another one charges $6.95 per trade, consider what you will be getting from one over the other. The one that costs more in commissions may be much more valuable to you in the long run. For instance, with the broker that charges commissions of $6.95 per trade, you might be getting a more robust trading platform with a lot of advanced trading tools and features as well as possibly getting real-time level II quotes and getting better execution fills. In addition, they may offer more types of financial instruments available to trade such as Futures and Forex. In this case, you may want to strongly consider going for the more expensive broker instead of the cheaper one. When it comes to online brokers – cheaper isn’t always better.

Other Fees

Be aware of any fees (if any) such as for annual account maintenance fees or inactivity fees that can be charged to your trading account. If there are any such fees, there may be a way to get out of them by either maintaining a certain amount of money in your trading account or by exceeding a certain number of trades executed over a given period of time.

Account Minimums

Depending on which online broker you are considering in opening an account with, some will allow you to open an account with $0 while others can have an account minimum ranging anywhere from say $500 to $10,000. However, for day trading, you will need at least $25,000 to open and maintain in your brokerage account since FINRA requires this under the “Pattern Day Trader” rules (see the FINRA section under day trading).

Excellent Customer Service

Many online brokers also take great pride in providing excellent customer service to their clients. Having access to excellent and knowledgeable customer service representatives is a huge benefit, especially if you are a newer trader. If you ever have a question about how to do something or need help with your account or platform, they are ready to assist you.

And, you can usually reach customer service in several different ways including by phone, e-mail, or even by online instant chat.

Important Online Broker’s Features

When choosing an online broker some of the key features to keep in mind should include:

• User Friendly Trading Platform
• Professional Grade Trading Tools
• Crystal Clear Charting
• Valuable Educational Resources
• Ability to Trade Different Types of Financial Instruments
• Low Commission Rates and Fees
• Advanced Order Execution
• Smart Order Routing
• Excellent Customer Service
• Real-Time Level II Quotes (Especially for Day Trading)
• Transparent Trading and Tax Reporting

To see our recommended award winning online brokers, click on Best Brokers for Trading that have an excellent reputation in the trading and brokerage industry.