The individual investor has never been so empowered as today. Thanks to the advent of the World Wide Web and the rise of online discount stock brokerages, and individual can now easily manage an entire stock portfolio by themselves and without the high fees that were prevalent just 15 years ago. Back then the only way to get involved with stock trading was to have a stock broker who you would have to call to place trades. The commissions on trades were typically $35-$75 and by the time the trade was placed the price often had changed. The spreads (the difference between the bid price and ask price) were also much larger so the individual investor had more to overcome to reach profitability on a stock transaction.
Fast forward to today and you will find stock brokerages that have little resemblance to those of old. Those who didn’t embrace the online brokerage model soon fell by the wayside. Fierce competition has lowered commissions to single digits and there have even been brokerages that have offered free trading. Online brokerages have even created a profession of “day trading” in which individuals will spend the day monitoring the markets and executing rapid trading programs in an attempt to profit off of subtle moves in stock prices.
For those looking to open a brokerage account StockMarketInvesting.com recommends to look for the following features when evaluating brokerages. Remember, it’s not all about low commissions.
Fees – Make sure there are no fees for inactivity, paper statements, or not maintaining a minimum balance.
Trading Tools – Everyone has a website but you are not always in front of a computer. Make sure the brokerage has phone trading and smart phone apps if you are often on the go.
Options & Futures Trading – Stock trading is popular but don’t limit your opportunities to just one market.
Research – Investment advice is rare among today’s brokerages so you’ll have to do your own research.
Margin Rates – Markets today are very volatile and you may not always have the cash on hand to take advantage of dips & crashes. Margin can allow you to take advantage and often makes sense if the rates are low enough.
There are numerous Online Broker reviews that you can read by doing a simple Google search. OnlineInvesting.info has experience with and can recommend Fidelity, TD Ameritrade, and OptionsXpress for online investing. Each has their own strengths so check them out for yourself to see which is the best fit for your investing style and objectives.