How to Compare Online Brokerage Services
Online brokerage services are offered by discount and full service brokers, some mutual fund companies and bank subsidiaries. Each provider caters to a different clientele, so be sure to compare the services offered to your needs.
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Customer Service
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The more service you need, the higher the brokerage costs are likely to be. Experienced investors may just need fast execution, but if you are just starting out, you may need help from your broker on the phone or even in person.
Service Offerings
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Most brokers will allow you to trade stocks and mutual funds; some offer bonds. Brokers catering to more sophisticated traders offer options and futures in the same account and/or access to foreign markets.
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Trading Platforms
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Most brokers offer basic online trading services and active trader platforms. If you are an active trader, find out what is required (e.g., minimum balance, number of trades) to get an active trader platform and what capabilities it offers (trading strategies, charting, screening, etc.).
Reliability
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An active trader needs a robust broker platform. You do not want failure on the busiest day of the year, when a delay in execution may cost thousands in losses.
Convenience
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Some traders may want mobile banking or a Web-based trading platform, accessible from any computer.
Costs
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Once you determine your needs, you can compare costs. For example, if you trade a lot, trading commissions are important. If you routinely carry investments on margin or borrow against your portfolio, check margin rates.
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References
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