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Online Brokers Comparison For Trading Stocks

Choose The Best Online Brokers

Need an online brokers ? First you need to know the different types of online brokers that are available.

Choosing the best broker for you is the most important undertaking that you will take when learning to trade stocks online.

Types of Brokers

There are two types of brokers: Full Service Brokers and Discount Brokers.

There is a monumental difference between the two!

Full Service Brokers

Full service brokers like Merrill Lynch offer investment advice, retirement planning, etc. These brokers will give you advice on investing. Choosing this type of broker for long term investing would be your best option if you need guidance in these areas.

Discount Brokers

Discount brokers like Ameritrade will offer significantly reduced fees and commissions but they do not offer any kind of advice regarding which stocks to buy or how you are going to retire in 10 years. You are on your own! For swing trading and day trading your best option is to use a discount broker.

After all, you won't need any advice on which stocks to buy after visiting this website!

BUT WAIT! Before you go out and open up an account, you need two know that there are two different types of online brokers...

Web Based Online Brokers

With a typical web based broker (like Ameritrade, for example) you will enter in your order to buy or sell stocks right from your browser. You don't have to download any kind of software. Instead, you just log in to you brokers website, up pops the order screen, and you enter in you order. In reality, this process is kind of like sending an email to them with a buy or sell order. Simple right?

Well, it is easy but there are two problems with web based brokers. These two problems are known as "payment for order flow" and "internalization".

Payment For Order Flow

When you execute a trade, your broker may direct your order to a third party and get paid for it in the form of a kickback. Obviously this can result in you not getting the best price and it can take significantly longer to get your order filled.

Internalization

This is where it really gets good. Your web based broker can fill your order out of their own inventory and profit from it! This is good for them because they can avoid paying ECN fees. In fact, your order may not even go to the market at all. Instead, the broker can trade against its own customers orders with their account!

So keep in mind that your broker may be profiting off of you on a lot more than just the commissions and fees that they charge. Why? Because they control over how the order gets routed.

Direct Access Online Brokers

With a direct access broker, you are trading directly with a market maker, specialist, or ECN via a software application. There is no middle-man involved and no broker intervention. You control how your order gets routed to the various exchanges. It's just you and the market!

Software

With a direct access broker you will need software to execute your trades. You broker may provide this for you or you may have do download a third party software solution for you needs. Check with your broker on the various software applications that are available.

Fees

In addition to the commissions charged for your trades, you may be charged for ECN (Electronic Communications Networks) fees. These fees can be charged to the customer for access to these networks.

Other fees may include market data fees. These fees may be charged for access to the data that feeds your software application. You will need to check with your broker to find out their specific fee schedule.

Best Online Broker For Swing Trading? look below and pick the one the best fit your need

Brokerage Comparison

Below is a chart that provides an online broker comparison. Data has been aggregated via each respective web site and through phone verification. Additional fees may apply, so please visit the individual firms' Web sites for current details.

Logo

Brokerage Name

Investment Types

Lowest Transaction Fee

Account Minimum

Apex Futures

Futures

$1.99

$4,000

Bank of America Securities

Equities, Forex, Futures, Fixed Income and Commodities

$14

$0

E*trade Financial

Stocks, Options, Futures. Mutual Funds, ETF, Bonds, Fixed Income, Intl Stocks

$7.99

$1,000

*

*

*

*

Fidelity Investments

Stocks, Mutual Funds, Options, Bonds, and ETFs

$8

$2,500

Lind Waldock

Futures and Options

$5

$5,000

MF Global

Equities, Forex, Fixed Income, Commodities and Interest Rates

$10

$5,000

Morgan Stanley

Stocks, Bonds, Mututal Funds, Closed-Ed Funds, Annuities, Managed Futures, UITs

Varies

$75,000

Options Xpress

Stocks, Bonds, Mutual Funds, ETF's, Options and Futures

$14.95

$0

Schwab

Mutual Funds, Stocks, Options, ETFs, Bonds, Fixed Income and Annuities

$8.95

$1,000

Scottrade

Bonds, CDs, Coverdell ESAs, ETFs, IRAs, Mutual Funds, Options and Stocks

$7

$500

ShareBuilder

Stocks, Mutual Funds, ETFs and Options

$4

$0

Smith Barney

Equities, Options, Mutual Funds, Commodities, Forex and Fixed Income

$24.95

$0

T. Rowe Price

Stocks, ETFs, Bonds, Mutual Funds, Precious Metals and Options

$12.95

$2,500

TD Ameritrade

Stocks, Options, Mutual Fund and Bonds

$9.99

$2,000

Think or Swim

Options, Stocks, Mutual Funds, Bonds, T-Bills, Futures, Currency

$9.95

$3,500

Trade King

Options, Equities, ETFs, Mutual Funds and Fixed Income

$4.95

$0

TradeStation

Equities, Futures, Options and Forex

$6.99

$5,000

Zecco

Stocks, ETFs, Options, Mutual Funds

$4.50

$2,000

Wells Fargo Advisors

Stocks, Options, ETFs, Forex and Futures

$19.95

$1,000


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