How To Pick Your Next Discount Broker

Picking a new discount broker has never been easy. There are just so many options and so little time to research them all. So how do you know if the broker you pick is the right one for your trading needs?

In this article, we’re going to go over several things that you’ll want to keep in mind when picking your next discount broker. We’ll include the key considerations like commissions/fees, tools, research, education, and investment offerings, and link to a few brokers that excel in each category.

Commissions

There’s more to picking a good broker than low commissions, but that’s where we’ll start. Most discount brokers range in price from $3 to $15 per stock trade, and charge a a base fee (typically $5 to $10) plus an incremental fee per contract traded (anywhere from $0.15 to $1.00). In many cases, getting the deepest discounts will mean sacrificing things like tools or research.

If you want a brokerage with ultra-low commissions that doesn’t scrimp on tools, check out our OptionsHouse review or TradeKing review. Both brokers offer exceptional value.

Tools

When it comes to quality trading tools, brokers can vary widely, and there are questions like, “Should I go with a browser based platform, or one of the more advanced software platforms?”

In most cases, you have to pay extra for more advanced tools, whether it be in commissions or platform fees. The good news is, most brokers come with the essentials for free: things like live streaming quotes, stock screeners, watch lists, and automatic trading capabilities. So unless you’re an advanced trader or you like to trade something specific like options or futures, you should be OK with most brokers.

On the other hand, if you want things like tax management tools, level II quotes, and the ability to trade complex options, you’ll have to look a little harder for a broker that offers what you need.

If you are looking for high level trading tools that go above and beyond what most brokers offer, head on over to our optionsXpress review to see what they have on offer.

Research

Good investing starts with good research, which can be expensive depending on where you get it. So unless you have a friend-of-a-friend who’s cousin knows an analyst at Goldman Sachs, when you’re shopping for a broker, look for one that offers solid market and investment analysis from a trustworthy source.

For access to great research, check out what we have to say about tradeMONSTER in our latest tradeMONSTER review.

Education

Did you know that a lot of discount brokers serve up free education to account holders savvy enough to take advantage? If you’re a beginner, this could be a major bonus for you.

Not only will many brokers allow you to open up a virtual trading account to practice different strategies, but they will train you on investment strategies until you’re comfortable enough to take the plunge with your own dough.

If you’re just starting out and keen to learn, get a free virtual trading account (plus free webinars, tutorials and more) at optionsXpress.

Investments Offered

Depending on where you live, your access to certain investments could be limited by your broker. Many brokers simply offer access to USA traded investments. So if you’re interested in buying foreign investments like ETFs or ADRs, have a look at optionsXpress, Interactive Brokers or MB Trading.

So, there you have it, we’ve covered the essentials of picking your next broker. Hopefully this has made things a little bit clearer, and you have a chance to find a broker that you’re happy with. Just be sure to keep these 5 things in mind the next time you’re shopping around!

And as always…

Happy investing, folks!

Pssst! If you decide to open an account with OptionsHouse, TradeKing, Scottrade or OptionsXpress, they all have great promotions running right now…just follow the links below to claim!
OptionsXpress promo code ($100 bonus)
OptionsHouse promocode (free DELL monitor)
Scottrade promo code (3 free trades)
TradeKing promotional code ($125 in transfer fees reimbursed)

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