Online Investing: How To Find An Online Discount Stock Broker
Published by Ian Stone in Stock Market Investing, 1 month 3 weeks 1 day 10 hours 43 minutes 59 seconds ago
"Small opportunities are often the beginning of great enterprises." Demosthenes (384 BC-322 BC)
Fortunately,for the savvy investor, the Internet has tipped the scales in his favor. Online trading and investing has leveled the playing field and allowed the little guy the opportunity to show up the established big boys on Wall Street.
The individual investor can receive the same instantaneous real-time information and trade execution that used to be the purview of large institutional trading operations.
The term disintermediation describes the commercial impact of the Internet. Disintermediation occurs when a middleman is not needed anymore and is eliminated. It's unfortunate that Internet commerce has wiped out many of the mom-and-pop sole proprietors that provided goods and services to local communities. But it has also resulted in eliminating the need for the glad-handing brokers and mutual fund companies that prey upon the individual investor.
Disintermediation of this group is one of the greatest benefits of our online society.
Enter The Discount Brokers
Successful investors trade online using one of the top discount brokers as their access to the market. For investors who are uncomfortable using their computers for investing, I still recommend using a discount broker.
Most discount brokers will provide a real person to talk to when executing trades and,this is key,those real people are usually paid a salary and do not earn commissions. The cost of executing trades through a representative will cost a little more than executing them online and for that reason, I recommend using a representative for dipping your toe in the water. Eventually, as you grow accustomed to accessing the market through the Internet, you can transition to becoming a full-fledged online trader.
What To Look For
Many good comparisons of online brokers can be found through a simple Google search. Look at the most recent surveys from Barron's, Consumer Reports, or JD Power & Associates. Evaluate the discount brokers on:
Overall Cost
Equity trades for $10 or less are the norm and the price is still coming down. Thanks to technology, the days of stock brokers charging $200 commissions are numbered.
Evaluate the companies on their interest rate on cash balances and bear in mind that many of the trading services also have money market funds available that you can jump in or out of manually at no cost. Other considerations include the cost to trade options, margin rates, and any account maintenance fees. Execution
Nothing is more frustrating to an investor than poor trade execution. Before the Internet, investors could not tell how or when the broker executed their order. Now investors can execute an order themselves and watch it get filled online.
Smart order routing (SOR) allows you to put in an order and the online broker will route it through the most efficient channel to give you the best opportunity for making the trade. Talk to your prospective broker about their execution and routing algorithms.
Online Trading Interface
The best discount brokers provide an interface that is invaluable to the individual investor. These trading platforms contain a suite of critical tools that allow you to monitor your positions, receive live real-time information from the major exchanges, back test strategies, chart stocks, perform technical analysis, receive fundamental analysis, receive streaming news, and more.
In fact, these trading platforms are worth paying for, but you can usually convince the discount broker to provide them free of charge through a simple software download. Customer Service
You should kick the tires on the firm's customer service before you buy. This is easy to do by calling the toll-free number for customer service several times and asking some questions.
In today's market, the discount brokerages must compete on customer service as well as price. Don't accept mediocre customer service. Another dimension of customer service that you should consider is the availability of a brick and mortar office in your town.
How convenient is it for you to wander down to their office? Once you're there, do they treat you right? Sometimes the physical presence of a brokerage office near you seals the deal.
Other Services
The top discount brokers will give your bank a run for its money. You should be able to attach a checking account and an ATM card to your brokerage account.
The broker should also provide traditional banking products such as FDIC-insured certificates of deposit, as well as the ability to buy treasuries and corporate bonds.
Fortunately,for the savvy investor, the Internet has tipped the scales in his favor. Online trading and investing has leveled the playing field and allowed the little guy the opportunity to show up the established big boys on Wall Street.
The individual investor can receive the same instantaneous real-time information and trade execution that used to be the purview of large institutional trading operations.
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The term disintermediation describes the commercial impact of the Internet. Disintermediation occurs when a middleman is not needed anymore and is eliminated. It's unfortunate that Internet commerce has wiped out many of the mom-and-pop sole proprietors that provided goods and services to local communities. But it has also resulted in eliminating the need for the glad-handing brokers and mutual fund companies that prey upon the individual investor.
Disintermediation of this group is one of the greatest benefits of our online society.
Enter The Discount Brokers
Successful investors trade online using one of the top discount brokers as their access to the market. For investors who are uncomfortable using their computers for investing, I still recommend using a discount broker.
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Most discount brokers will provide a real person to talk to when executing trades and,this is key,those real people are usually paid a salary and do not earn commissions. The cost of executing trades through a representative will cost a little more than executing them online and for that reason, I recommend using a representative for dipping your toe in the water. Eventually, as you grow accustomed to accessing the market through the Internet, you can transition to becoming a full-fledged online trader.
What To Look For
Many good comparisons of online brokers can be found through a simple Google search. Look at the most recent surveys from Barron's, Consumer Reports, or JD Power & Associates. Evaluate the discount brokers on:
Overall Cost
Equity trades for $10 or less are the norm and the price is still coming down. Thanks to technology, the days of stock brokers charging $200 commissions are numbered.
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Evaluate the companies on their interest rate on cash balances and bear in mind that many of the trading services also have money market funds available that you can jump in or out of manually at no cost. Other considerations include the cost to trade options, margin rates, and any account maintenance fees. Execution
Nothing is more frustrating to an investor than poor trade execution. Before the Internet, investors could not tell how or when the broker executed their order. Now investors can execute an order themselves and watch it get filled online.
Smart order routing (SOR) allows you to put in an order and the online broker will route it through the most efficient channel to give you the best opportunity for making the trade. Talk to your prospective broker about their execution and routing algorithms.
Online Trading Interface
The best discount brokers provide an interface that is invaluable to the individual investor. These trading platforms contain a suite of critical tools that allow you to monitor your positions, receive live real-time information from the major exchanges, back test strategies, chart stocks, perform technical analysis, receive fundamental analysis, receive streaming news, and more.
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In fact, these trading platforms are worth paying for, but you can usually convince the discount broker to provide them free of charge through a simple software download. Customer Service
You should kick the tires on the firm's customer service before you buy. This is easy to do by calling the toll-free number for customer service several times and asking some questions.
In today's market, the discount brokerages must compete on customer service as well as price. Don't accept mediocre customer service. Another dimension of customer service that you should consider is the availability of a brick and mortar office in your town.
How convenient is it for you to wander down to their office? Once you're there, do they treat you right? Sometimes the physical presence of a brokerage office near you seals the deal.
Other Services
The top discount brokers will give your bank a run for its money. You should be able to attach a checking account and an ATM card to your brokerage account.
The broker should also provide traditional banking products such as FDIC-insured certificates of deposit, as well as the ability to buy treasuries and corporate bonds.
About Ian Stone
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