If you want to get into trading, then picking your first brokerage is a huge decision. Some brokerages are more novice-friendly than others. If you are a novice investor, you would want the brokerage to guide you and school you on the basics of trading.
You would want the brokerage to help you formulate better trading strategies, at least in the beginning. And you would require the brokerage to provide you with a high quality customer service. Not every brokerage spends so much effort on novices.
However, the market wouldn’t survive without a steady inflow of new traders. Hence, there are plenty of brokerages which can serve as the stepping stone into the world of trading. In its 2012 annual review Barron’s rated 27 online brokerages on as many as eight attributes.
It also ranked the brokerages on several different aspects, where the core strengths of each brokerage may be highlighted. Brokerages most suited for a novice was one such core area.
TD Ameritrade (henceforth TDA) was rated as the best brokerage for novices with 4 stars. Even in the overall rankings, TD Ameritrade had the 6th spot with 32.3 points and 4 stars.
Their trading platform offers a wide range of tools and features to suit traders of every experience level. Their web platform also gives you access to Trade Architect, which helps intermediate level traders learn about the tools added to the firm through the acquisition of thinkorswim.
Their mobile apps are also very well designed and user friendly. In addition, there are several research amenities that can be availed of without paying additional fees. One downside of TDA is the high costs involved, although their service is exceptional for the price.
Fidelity earned a spot as the 2nd best brokerage for novices with a rating of 4 stars. In the overall ranking, Fidelity earned the 11th spot among 27 brokerages, with a rating of 4 points and having earned 30.5 points.
Barron’s has also rated them for their excellent in-person service because of the large number of their local offices and for their good return on long term investment.
Fidelity provides good 3rd party research tools that are customizable. On the downside, the best tools on their Active Pro platforms are only available to those customers who keep a $25,000 minimum account balance. You also need to make over 120 trades yearly.
E*Trade earned the 3rd spot with a rating of 4 stars. In the overall ratings E*Trade scored 31 points. E*Trade has also been noted as a good brokerage for long term investment. They have an excellent trading platform: the Power Etrade Pro 5.0.
Real time quotes are readily available through their website E*Trade 360. Recently, client education has been focussed upon a lot with over 57 live events in 2011 alone and more are in the offing in 2012.
Just this facility makes E*Trade a good choice for novice traders. E*Trade has a really good mobile trading application, the Etrade Mobile Pro. They also provide banking services. On the downside, a trader needs to pay to upgrade from the E*Trade 260 to the Power E*Trade Pro in order to utilize all the tools on offer.
Charles Schwab (CS) has been rated as the 4th best brokerage for novices with 4 stars. Taking all parameters into consideration CS, has earned 28.1 points. CS offers excellent customer service through personal interaction as a result of a high number of local offices which can be a big help to novice traders.
It also offers access to a variety of 3rd party research and valued avenues for educating novice traders. On the downside, their website is pretty outdated and their trading platform leaves a lot to be desired.
If you’re looking for more broker comparisons, check out this handy comparison table.