How do I Compare Online Stock Trading Services?

You can do more on the Internet than drool over long-lost high school flames 40 pounds later and shop for movie rentals. You can invest in your future. Unless you need somebody to hold your hand or require expert investment advice, trading stocks with a broker over the telephone is a bad deal. It generally costs considerably more than opening up and controlling your own online account. Online brokerages even offer research and stock tips you used to have to pay a premium to a financial advisor for.

Visit the websites of brokerages you are considering. Virtually all online brokerages provide key information you need to make your decision on their homepage.

Find out the minimum initial investment the different firms you are considering requires to open an account. Some may prove cost-prohibitive, numbering in the thousands or even tens of thousands. Other online brokerages use minimums of $1,000 or less. A few even waive or reduce their minimum if you commit to automatically invest funds, usually around $100, on a monthly basis.

Evaluate trading commissions. Most online brokerages charge per-trade commissions. A few charge based on the number of shares you trade; however, firms that do this are few and far between. Some brokerage charge different commissions based on the number of trades you make or your account value. For instance, firms often offer lower stock trading commissions for customers who execute over a certain number of trades each month or maintain a balance of cash and equities at or above a certain level.

Assess incentives. If a brokerage offers a trading commission incentive or free trades, decide it even matters to you. If you only trade a couple of times a month it might not. If you're an active trader, low or no commissions or access to advanced trading tools might make sense. Some online brokerages attempt to entice traders with other perks. For instance, if you transfer assets from another firm, you might receive a cash bonus. Others give away items such as free smartphones.

Ask online brokerages what other trading options they offer. Some are like supermarkets that make you bag your own groceries; they offer no frills, online-only trading with bare-bones commissions. This can be a great bargain, but what if the Internet takes the day off? See if your brokerage of choice uses other trading platforms like automated telephone systems or actual living breathing warm bodies.


  • If you plan on using your account to trade other products, such as mutual funds or ETFs, choose wisely. If you know the fund family you want to buy a mutual fund from, for example, contact them and see if they offer brokerage services. Many big names, such as Fidelity, T. Rowe Price and Charles Schwab, do. By taking this route, you won't have to pay a commission to trade the firm's funds. Some firms even offer other company's funds with no transaction charges.
  • While most firms don't do this with stocks, many offer automatic investing services for mutual funds. If you are a long-term investor looking to deal in more than stocks, this feature might be key. Most mutual fund companies offer free monthly investments into their own funds, at the very least.

About the Author

As a writer since 2002, Rocco Pendola has published numerous academic and popular articles in addition to working as a freelance grant writer and researcher. His work has appeared on SFGate and Planetizen and in the journals "Environment & Behavior" and "Health and Place." Pendola has a Bachelor of Arts in urban studies from San Francisco State University.