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How do I Choose the Best Online Trading Broker?

Article Details
  • Written By: Keith Koons
  • Edited By: Lauren Fritsky
  • Last Modified Date: 12 February 2020
  • Copyright Protected:
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    Conjecture Corporation
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Finding a reliable online trading broker can often feel like trying to find a needle within a haystack because each of them make the decision appear to be solely about the transaction price. When thousands of US Dollars (USD) are being invested, it makes little sense to worry about a nominal transaction fee, so it makes much more sense to choose an online trading broker based on its price tracking software, ease of use, and overall reliability when it comes to locking in prices. These three traits vary greatly between online trading companies, and since they are often the difference between a wise investment and a foolish mistake, they should be considered a priority for any investor. Of course, the total costs involved with each website are also critical to consider.

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There are essentially two types of online trading brokers,, and they are categorized by their fee structures. The most popular type is referred to as a "flat fee" broker, meaning that every time a stock is bought or sold a standard amount is deducted from the user's account. While this type of website is often cost-efficient when it comes to making actual trades, there is normally very little other information available to the investor in order to help make educated decisions. Another popular online trading broker is a percentage-based service, meaning that the website charges a nominal percentage every time a transaction occurs. Both systems have pros and cons, with the greatest differences coming from the value each individual broker provides.

Since there are so many available places to find an online trading broker on the Internet, it makes much more sense to choose one based on reliability and the tools available when logged into the website. For example, many brokers will have live stock tickers that highlight the most active stocks within a certain time period, allowing investors to see at a glance how the current market trends are changing. Other popular options are customizable searches that will actively track any number of stocks that the user defines, which makes it much easier to time buying and selling. Another major factor is the speed at which transactions take place and the website's reputation for honoring buy orders in real time; a budget online trading broker may charge way too much for these extra services.

Once the choices between online trading brokers are narrowed down, it makes sense to revisit the pricing options to see what is included with the membership. Some websites, for example, have an expert online trading broker analyst available at no extra charge to answer any questions that may arise, while others charge $100 (USD) or more for the exact same service. There could be hundreds of other hidden fees on less reputable websites to make their service appear worthwhile, when they are actually little more than a scam. Ultimately, the best online trading broker will be the one who balances helpful tools, instant advice, and great pricing all into one package.

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