12 Ways to Compare Your Online Stock Broker

Blain Reinkensmeyer

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Having a good stock broker is very important for any investor. Paying high commissions and receiving little on the research side won’t do much in the long term. This article presents 12 key factors to help compare all online stock brokers and ultimately find the best broker to suite your needs.

We previously covered the 5 Top Online Stock Brokers here on the site and this article is a great complimenting piece. Online Stock Brokers we have reviewed in the past include: Zecco, TradeKing, Etrade, Scottrade, TD Ameritrade, amongst others.

Comparing Online Stock Brokers

This list of 12 factors to help you compare online stock brokers are not in any particular order. Every investor is different and as a result factor 1 (trade costs) may not mean nearly as much as factor 11 (account security). It all depends on personal preference.

1. Trade Commissions
What does it cost to buy shares of stock? Does the fee change based on the type of order or size of order? For example, does it cost less to place a market order than it does to place a limit order or stop loss order? The best any investor can get from a broker are what are known as flat-fee trades, charging a flat rate regardless of the type, price of the stock, or size of the order.

Our Recommendation: Zecco or TradeKing

2. Customer Service
When picking up the phone or emailing a broker, is a well trained customer service representative ready to assist? How any investor is treated as a client is more important to some than others. But, even for those that don’t rely on customer support that often, to know that they have award winning service there when they need it is comforting. (Read how TD Ameritrade Introduced Ted in late 2008, the First Virtual Investment Consultant).

Our Recommendation: TradeKing

3. Trading Tools
Trading successfully is a lot easier when investors have great tools at their disposal. Whether paid or free, a great broker should offer access to a wide variety of tools to help make the most of each and every trade. From real time streamers to last sale tickers, live news feeds, and for some even level II quotes. Tools are essential for the active investor.

Our Recommendation: Etrade

4. International Exposure
When comparing brokers find out where they offer services and make sure they offer services in your country. For investors in the United States this is not a problem, but for nearly everywhere else finding a good broker that offers international trading can be difficult.

Our Recommendation: Etrade

5. Account Minimums
One of the most common catches of an online broker comes tied in with the account minimum. Investors may think they signed up for $1 trades but once they place that first order and are charged $20.00 they are be in for a rude awakening (simplified example). A good broker will have a minimum deposit of less than $5,000 to gain access to ALL services, tools, and most importantly flat fee commissions.

6. Other Fees
Fees beyond trade commissions include not maintaining a minimum balance, transferring money in and out, or having an overall inactive account. While over time most brokers have grown to exclude any such maintenance fees it is still important to understand as every broker is different. Just like a bank account stock brokers also make a portion of their profits of extra service fees.

7. Market Research
A good discount broker will provide a variety of both free and paid market research tools. The key to finding great market research is by looking at the most well known brokers. Etrade, Scottrade, TD Ameritrade, Fidelity, and several other discount brokers all provide fantastic research tools due to the excess capital they have to spend.

8. Investment Options
A stock broker should offer access to not only trading stocks, but also mutual funds, ETFs, and options. Most brokers offer these investment options as standard but some will go out and beyond to make the overall experience great. Scottrade offers a well known mutual funds center for example and TD Ameritrade has its own Independence ETFs available to all of its clients.

9. Retirement Accounts
Funding a Roth IRA or other retirement account is an extra plus that some online brokers offer. Most brokers will go out of their way to try and market retirement accounts to their clients. Logging into an account and having one click access to both trading and retirement accounts is a nice convenience for any investor.

10. Banking
The emerging trend for the larger online brokers is to offer banking and other financial services. This goes beyond money market accounts and CDs. Checking accounts and even home mortgages are now more widely available. Brokers engaged in the banking business also have service centers across the country where any client can go in to receive live personalized assistance. Etrade is well known in this area.

11. Account Security
As a growing concern for all investors due to the advancements in computer hacking, scams, and credit fraud, online brokers are investing heavily into account security. Most brokers will have account security information featured on their site and before opening an account take a few minutes to read through their policies.  Etrade for example offers clients a security key that changes passwords every minute, and TradeKing prompts its clients to type their passwords in via onscreen keyboards so it is never saved as a cookie.

12. Speed
For the active trader execution speed is absolutely critical. We won’t rat out any brokers here but we have tested and tried most of them and there can be noticeable differences in trade execution times. While it may be difficult for investors to really find out the execution speed until they open the account, it is something to keep a eye out for if the broker does market itself for such an asset.

Further Reading: View more Stock Broker Articles and see our list of the 5 Top Stock Brokers based on trade commission pricing.