Unsure, confused, and lost when it comes time to choose a brokerage, many folks simply choose the brokerage one with the hottest offer available at the time they’re looking. We’ve all been there.
But it’s the wrong way to think.
When it comes to choosing an online brokerage for your needs, there are quite a few things you must identify, including their:
- Commissions and fee schedules
- Speed of order executions
- Ease of use
- Site security
- Customer support issues
Of all the decisions we have to make—in life, on Wall Street, in school, in traffic waiting for the guy in front of us to turn off his blinker before we go mad—choosing an online brokerage should be easy and simple.
Some of the best brokerages out there include eTrade, Ameritrade, Interactive Brokerages, and Tradestation. But which is best for you when choosing an online brokerage?
When it comes to choosing an online brokerage and considering commissions and fees, your brokerage will charge something on each and every transaction you make. Sometimes there are other fees for deposits and withdrawals, or extra fees for special orders. Be aware of all commission structures and applicable fees so you’re not being taken to the bank.
Speed of order execution is important.
If your transaction isn’t placed quickly enough, it can negatively impact your trade—or even affect whether your trade is placed at all. The best brokerages out there will place your trade as quickly as they can, ensuring the best trade possible.
Always make sure a brokerage’s site is fast and responsive. If it has a historical tendency to move slowly, you may want to move quickly—over to another brokerage. The last thing you want to experience is a slow site that can lead to missing profit opportunities or misplaced orders.
Make sure there’s ease of use.
Trading and investing are hard enough for some people. The last thing investors need to see is a disorganized mess that’s hard to navigate or understand.
Ask around, do you due diligence.
Are your prospective brokerage’s security measures up to par? Does it have a trustworthy site that can’t be hacked? Identify and ask questions to see what security measures are in place.
The last thing any of us needs to do is lose money, especially to a hacked site.
Make sure the site has a good reputation.
Some of the best online brokerages—like the ones I mentioned above—have great track records for high quality servicing to customers. Stick to what’s well known and used often, and you can sleep better at night. (We mentioned those sites above to help make your decision-making process a bit easier, too. They have some of the highest qualities.)
Consider the brokerage’s market knowledge and its level of customer support.
We’ve all been through poor customer support issues before. And—as always—it’s inexcusable. If you get a guy on the line that has no idea was a limit order is, for example, move on. If you get a guy on the line that’s rude or places you on hold without a care in the world, move on. It’s your money at stake. If you have a technical issue on your end, you want to make sure it can similarly be fixed by someone knowledgeable.
In our opinion, you really can’t go wrong with the brokerages listed above.