How to Compare Online Trading Sites

Choose an online trading site that fits your needs before you buy a stock.

Online trading is readily available to anyone with a computer. Before choosing an online broker, you must assess your needs. You will then be able to select an online brokerage firm that best suits your financial level and your experience level.

Identify Your Needs

List your needs in order of importance. Some the important factors are commissions, minimum deposit to open an account and speed of execution of trades.

Online Search

Compile a list of online trading sites by asking friends or relatives, checking print and TV ads and looking on the Internet. Go to each site that seems interesting to you.

Commissions

Look at the commission schedule for each trading site. The three main categories for commissions are stocks, options and mutual funds. Write down the commissions based on the type of trading that you plan to do. Search for fees and charges that may be listed in the fine print. According to Smart Money, you may pay low commissions but make up for it in other not-so-obvious ways.

Minimum Starting Balance

Find out how much is required to open an account. Narrow your search based on how much starting capital you have.

Research Your List

Visit the U.S. Securities and Exchange Commission (SEC) and the Better Business Bureau (BBB) websites (see Resources). Check the two or three firms that look good to you. Look for reviews of online brokerage firms.

References

• SmartMoney: SmartMoney 2010 Broker Survey

Resources

• The Better Business Bureau: Homepage
• SEC: Protect Your Money: Check Out Brokers and Investment Advisers
• Online Broker Review: Homepage
• Viewpoints: Online Brokerage Firm Reviews