How to Find the Best Online Stock Trading Company

Reduce your trading costs with an online broker.

Stock market investing can be a good way to boost your returns and grow your nest egg, but if you are not careful you could find a good deal of your return eaten up by commissions, charges and other costs. Choosing a low cost online broker can save you a great deal of money on your stock market investments, but it is important to choose your brokerage firm carefully.

Instructions

1. Look for the SIPC logo on the broker's website. The SIPC is the Securities Investor Protection Corporation, and this organization provides coverage in the event the broker goes out of business. If your account is worth more than half a million dollars it is a good idea to ask about any umbrella coverage the brokerage firm carries. Many traditional and online brokers carry additional insurance coverage over and above what SIPC provides.

2. Find out the minimum balance requirements of every broker you are considering. Some online brokers use a tiered commission structure in which account holders with higher balances pay lower commissions, with those who hold lesser amounts of money charged more. Some online brokers also charge a yearly maintenance fee to investors with less than a certain amount at the firm.

3. Get a commission schedule that includes not only regular stock trades but option trades and margin trading as well. Even if you do not think you will need these services, it is important to get a feel for the costs involved.

4. Compare the costs of a sample trade among all the brokers you are considering. Comparing the cost of buying or selling a lot of 100 shares of stock ensures that you are comparing apples to apples when looking at online brokers.

References

• Investopedia: 10 Tips for Choosing an Online Broker