Online Stock Trading and Online Stock Brokers

online stock trading

Since the inception of the internet, online stock trading has been on the minds of investors worldwide.

When the internet become available for public use, brokers and investors took full advantage of it as well as the two commonly known exchange platforms, NYSE (New York Stock Exchange) and NASDAQ.

The face of the stock market, investing and foreign currency exchange changed forever. With these advanced programs, brokers were able to reach a greater audience and increase their already strong customer’s base with a greater array of options.

Since this revolution of online stock trading, the programs made available to the everyday trader have also advanced. Now traders can keep up to date on the current stock market news via any electronic device within their grasp.

Now investment in every type of market is possible and at the fingertips of all wishing to dabble in this incredible field.

What draws a person to take part in this varies greatly, but there are a few common factors.

  • The first is the possibility to turn a small investment into a fortune. With the right investments and a keen eye for market fluctuations, even the amateur investor can realize this goal.
  • The second is the risk. The great thing about online stock trading as with regular stock trading is that you control the level of risk. If you wish to invest in one fund with all your money, you can, although it is risky, on the other side of the spectrum, you can invest in mutual funds.

Mutual funds will spread your investment over several companies, so one bad investment barely scratches the overall fund. Investing in futures is another option, based on purchasing contracts for commodities, with the intent to settle on a  low priced contract, assuming the price will go up later.

As it can be seen, online stock trading satisfies all manners of risk takers’ appetites. It all comes down to market knowledge and to what extent investors wish to commit themselves to observing and analyzing the market trend. The stock market is a battleground for everyone trying to outdo the other.

Stock markets even operate on currency exchanges, which can be utilized to turn a profit base on the constantly fluctuating value of foreign currencies.

Online Stock Brokers (Scottrade, Etrade, Ameritrade, Fidelity)

There are many online stock brokers offering their services and advertising a wide variety of benefits provided by their platforms.

When choosing an online broker, one should consider many important factors, such as the trading commissions, user-friendly trading platform, offered tools for trading, pieces of advice and research notes provided to clients, customer service and more.

Additional criteria for selecting an appropriate online stock broker include the following:

  • Minimum deposit requirements. Some brokers require no minimum deposit on opening trading accounts, while others allow trading after paying initial funding worth several thousand dollars. Moreover, some brokers require additional initial payments for providing their users access to premium platforms, functionality, and personalized support.
  • In addition to stocks, many brokers offer other trading products. I’m talking about products such as mutual funds, ETFs, and options. Some brokers even give their clients access to trading futures and forex.
  • Online brokers can offer a variety of financial services.  They now also offer CDs, checking accounts, mortgages, debit cards, credit cards, etc.
  • Account security. This is another important consideration when choosing an online broker. Being a member of FINRA and SIPC is mandatory for a good broker.
  • Not so many brokers offer their services to non-US citizens. You may have to narrow your list if you live outside the US.

When contemplating what online broker to work with, there is no single best advice for all investors. For example, a certain broker can be a good solution for an experienced investor, but a non-advantageous choice for a new trader. Thus, one has to choose its broker based on his/her own requirements.

Below I presented key characteristics of four most popular online brokers in the US.

1. Scottrade

  • Initial funding requirement – $2,500, commission on stocks and ETFs – $7, commission on option trades – $7 + $1.25/contract
  • Offers a range of tools for all investor types
  • Has more than 500 offices in the US for the ones seeking an in-person approach
  • Does not provide many investment options and research tools for traders

2. Etrade

  • Initial funding requirement – $500, commission on stocks and ETFs – $9.99, commission on option trades – $9.99 + $0.75/contract
  • User-friendly website and convenient mobile trading
  • Offers more than 50,000 bond issues
  • Comprehensive research tools

3. Ameritrade

  • Initial funding requirement – 0, commission on stocks and ETFs – $9.99, commission on option trades – $9.99 + $0.75/contract
  • A wide variety of research tools
  • Offers more than 100 commission-free ETFs
  • Access to the third-party research from 12 firms.

4. Fidelity

  • Initial funding requirement – $2,500, commission on stocks and ETFs  – $7.95, commission on  option trades – $7.95 + $0.75/contract
  • Many types of products offered
  • Stock research from 12 firms
  • Great research tools

All of these four brokers offer a mobile application for all of the iOS and Android devices, with the exception of Scottrade, which doesn’t have an Android tablet app.

BA in Accountancy, he entered the entrepreneurial world by starting his first online marketing business in 2004. Passionate about personal finance, the stock market and a digital marketing addict. I also love to read books on entrepreneurship and technology and always on the lookout for new opportunities. I'm an avid golfer and currently a 15 handicapper.

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