brokers

3 Top Reasons to Use Online Stock Brokers

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Online trading has exploded over the past couple of decades, since the beginning of companies like Datek Online (remember them?). Its popularity was made by the ease of use, cost of trades, and increasing number of platforms on which you could trade.

There are many other reasons why so many people are doing it, but let’s check out what I think are the top 3 reasons.

Better level of control for commissions, trade executions and transparent pricing

online-stock-brokers-image

Image of TDAmeritrade’s Online Platform

One of the key things that caused many people to go the online route was that the commissions for brokers were already through the roof. The lower level of commission also made smaller trades, micro-accounts and more frequent trading possible, meaning that ordinary people could access the market directly for purchasing stocks, bonds, contracts & much more.

Instead of calling your broker, you could open your browser or start up your trading apps to get the best current pricing; decide on whether you want to go long or short; and set the market, limit or stop limit orders for the stock you wanted to purchase, allowing you to dictate your execution pricing and your total purchase/sell cost.

A better level of control effectively means that you will have more control over your profits or losses. This new trading phenomenon wound up working for many people, and encouraging dozens of online trading companies to spring up seemingly overnight.

Accessibility to your trading accounts 24/7/365

I’m not a frequent or avid trader by any means, but even I enjoy those advantages of being able to access the account pretty much where, when and how I want. If I had to rely on a standard broker, who may be unavailable when I decide to call, to buy and sell everything for me, there would be a limit to how quickly I can make an investment. In the financial world, time is money and every second counts.

So, if you trade online, you will make all of the trades yourself. You can do everything at the exact second you want to. Even the smallest delay in buying or selling can cost you a very large amount of money. But you will need to learn about online trading from someplace like Online Trading Academy, you will never lose money because your broker was unreachable at the time you wanted to make a trade.

Most modern brokers offer a variety of platforms to access your accounts: web-based sites, apps on your phone or pads, even proper software for your PC or Mac. And you will still be able to dial-in on the old phone, and make trades for an extra fee.

Look for a good online stock broker

Really, check out the offerings and decide what you want or need. You will need to decide what products you want to trade: stocks, bonds, forex, contracts, commodities, etc.; then consider what kind of tools you actually need: will you be trading via web or app or via a full software application.

Lastly, don’t forget to look at the additional research brokers these days offer. Many offer lots of research tools, reports, stock scanners, and much more for no additional fee; while others charge bare-bones fees for stock trades, then have an a-la-carte attitude to the many services available, so trading costs will be low until you need to pay for additional services. However, most fees are minimal compared to what you would pay to an actual traditional broker.

Check out this video for more information. And search through this site for more ideas on use online stock brokers for trading. Or perhaps you have a favorite you’d like to share.

Stock Brokers: Which online brokers can YOU use?

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There’re a lot of good sources of information on brokers for those who live (‘reside’) in the UK or US. But what about those of us who “don’t qualify”?

Are you NOT a US Resident? Oops, I’m sorry… We can’t help you.

Look no further. I’ve done a little research from the SmartMoney’s Annual Broker Survey, and not surprisingly they are listing a number of well known companies, newcomers and upcomers… But the list is ABSOLUTELY NO USE, if you are not a Resident of the United States nor a citizen.

I won’t go into why this is silly, but suffice to say, the lower the price of trades, the less likely the broker will accept international clients, like you and me. At least that was the rule, now it’s not so clearcut.

From the original 16 listed brokers, I’m making my own list of InvestorBlogger’s Short List of Brokers who accept International Clients (i.e. non-resident, non-U.S. citizen investors who would like to trade the U.S. markets).

  • 1. ETrade: One of the first brokers I applied, too. They approved my application, but the service wasn’t great then. It should be now.
  • 2. TDAmeritrade: Where my current brokers’ account is held. Fast, lots of resources. Service is available, but somehow distant.
  • 3. Charles Schwab: Did consider them, but they have quiet higher initial requirements, or at least did. You do have to register through their one of their international sites, not from the US site.

Other Serious Contenders included,

  • 4. FirstTrade also offers International clients trading services.
  • 5. OptionsXpress would allow me to register and fund an account, which was a surprise. They have branches in different countries, including Singapore
  • 6. Interactive Brokers allowed me to register, but I never completed the applications. I should have. The service allows you to trade many markets, not just the US.

7. Sogotrade, Zecco, Banc of America, all had slightly fussy processes or requirements but at least welcomed international investors.

One of the problems was finding the information. Often sites would require you to hand over your email address without stating clearly that you would be able to then register for an account. Other sites had the information hidden away in Help files or FAQs. Still others didn’t say openly that they accepted international investors, or directed me to ‘international sites’ which wasn’t helpful, (yes, you, Fidelity!).

I would strongly suggest that you read through the websites to find the best deals, the markets you want to trade, though the application requirements for most accounts are pretty similar:

  • 1. passport copy;
  • 2. proof of address;
  • 3. an application form;
  • 4. a W-8BEN form (for the IRS); and
  • 5. minimum account funding (at least!)

Once you register, you won’t have access to the full-range of US products, either such as IRAs or other accounts/services because of legal restrictions. But if you are in a country with a tax-treaty arrangement with the US, this may not be an issue!

Disclaimer: I’m a satisfied customer of TDAmeritrade, but there are no affiliate links in this post.