What are the Different Types of Online Trading Companies?

Investing in the stock market became much more accessible to individual investors with the proliferation of the Internet. Rather than having to physically visit a stock broker at a brokerage firm, an investor can instead buy and sell securities, including stocks and bonds, online with the click of a button. Although there are many online trading companies from which one can choose in order to invest in the stock market, there are some features that might make one option more attractive than the others. Some of these options include commission fee structures, minimum account balances and the accessibility of online trading tools such as charting and historical price checks.

Depending on the frequency with which an investor plans to buy and sell securities, the design of an attractive fee structure will differ. For the more active investor, such as a day trader who tends to move in and out of stocks or bonds frequently, a flat-rate commission fee structure would be a reasonable feature for an online trading company to have. There are trading companies that charge investors per trade, which can become expensive with heavy trading. Typically, the fee structure — including any flat-rate features — will be outlined on the online trading companies’ websites.

Some online trading companies require that investors begin buying and selling securities with a minimum investment. In order to bypass that minimum amount, an investor might need to hold a checking or savings account with the financial firm facilitating the trading. For investors who have only nominal amounts with which to begin investing, searching for online trading companies that might offer the savings or checking account option might be convenient.

Another tip one should know while researching online trading companies is to determine the type of support and direction that will be required to invest. For investors who are in need of some guidance from an investment professional who can offer some guidance on stock and bond selection, a full-service brokerage firm might be the way to go. These firms not only facilitate trades, they also have individual brokers available to consult along the way for a fee.

A discount broker, on the other hand, is more suited for the investment professional who is more interested in finding a brokerage firm that will execute trades and has little interest or no interest in giving investment advice. The fees associated with discount brokers are much less than what it costs to invest with a full-service brokerage. Both types of online trading companies tend to offer tools on their websites for charting and to obtain historical price movements on stocks and bonds.