How to Compare Online Trading Accounts

Trade your stocks online through your online brokerage account.

Gone are the days of keeping your stockbroker's number on speed dial. Technology has handed the power to buy and sell stocks over to the investor and his laptop. You need an online stock trading account to buy and sell stocks online, and there are many companies offering this service; it can be difficult to decide which one is right for you.

Instructions

1. Research each online broker's commission fees for each trade you make. Know that you are charged a commission fee two times: once when you buy stock and again when you sell it. Check to see what each brokerage charges you per trade.

2. Compare each brokerage's requirements for a minimum initial deposit. If you don't have a lot of cash to invest using an online trading account, the amount you'll need to start your account may be the biggest factor in your decision. The minimum initial deposit can run from zero to $10,000, according to Barron's Broker Review of 2011.

3. Check the other fees you'll have to pay with each online brokerage that you are considering. Some charge maintenance fees, some require a minimum account balance and some have tiered commission schedules.

4. Research the trading options each brokerage offers. All of them offer stock trading, but some also offer other forms of investments, such as U.S. Treasury bonds, municipal bonds, CDs and 529 plans.

5. Compare the trading and investment tools that each online trading account offers its users. Does it have calculators, streaming tickers, alerts, trade time guarantees and so forth? These things may not be the most important to you, but they are worth looking into because the tools provided help you conduct more informed trades.

Tips & Warnings

• Take the time to research different companies before choosing one!

• Read the fine print of all user agreements before signing up for an online trading account -- know exactly what you're signing up for.

References

• U.S. Securities and Exchange Commission: Tips for Online Investing: What You Need to Know About Trading in Fast-Moving Markets; Modified August 2007
• Stockbrokers.com: Barrons Broker Review 2011