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Trading Online - Which Broker to Use: Online trading can be addictive with all the research you can do on stocks, bonds, and mutual funds. The way the markets have been going lately it's a daily roller coaster ride. Buying and selling stocks should be easy once you've made up your mind. Online brokers have come a long way over the last decade and lowered their minimum trade fees to under $10 so now it's much more convenient to trade stocks and not worry that you are paying too much to do it. TradeKing offers $4.95 trades which was the lowest we could find. The service side of online brokers is what should be critical. You want your trades to go through in a timely manner and customer support is crucial when we are talking about $1000's at stake on some trades. While online broker ratings have steadily improved, JD Power and Associates did a survey last year and found that 41% of investors had some kind of problem while using their online brokers. So which brokers are the best? Do you need a full service broker or can you manage with the discount guys? We found 3 well done online broker surveys - one by Smartmoney.com, one by Consumer Reports, and of course the J.D. Power and Associates survey. Consumer Reports based their survey on trading, minimum trade fees, mutual fund programs, no transaction fee funds that are available, banking and asset management services, research and education on their sites, and customer support. CR looked at 19 online brokers to get their results while SmartMoney looked at how easy it was to fill out and make trades, how efficient was the live chat with customer service, did they respond to emails with questions, and what kind of services did the brokers offer beyond trading. J.D. Power and Associates took a look at online investment firm ratings and website capabilities, trade execution, cost of trades, and overall customer satisfaction. Not surprisingly the results were mixed across all 3 surveys, although some brokers stood out amongst the pack. Comparing online brokers is not the easiest task since some excel in certain areas while disappoint in others. TradeKing offers some of the cheapest trading fees in the business but their mutual fund programs were lacking with zero NFT (no transaction fee) funds available. Charles Schwab offers a nice selection of mutual funds and over 5000 NTFs but their cost per trade was one of the highest amongst the top rated firms. Down below we have tried to list the "top picks" in various categories of online brokers. Best Online Broker: Across the board, Firstrade Securities received excellent ratings for trading, trade fees, mutual funds, and customer support. Firstrade had plenty of NTFs to choose from and their interest rates on cash in your account was one of the highest in the crowd. You can find them online HERE. The website is easy to follow with lots of stock and mutual fund information. The ability to educate yourself on trading is an essential tool before you make any trades and Firstrade does a great job of helping to guide their customers from beginners to seasoned veterans. Etrade also scored very well in these surveys with trades costing less than $10 on average and having some of the most extensive online research and education available for their clients. They recently got caught up in the subprime mortgage mess and their stock price plummeted. We don't see them going away anytime soon as their trading services are first rate. You can find them online at Etrade.com Discount Online Broker: If you are the type of stock trader that makes maybe 2 to 3 trades a month (at most) and know the ins and outs of how to place a trade online and follow your portfolio with online tools and reports, then using a discount broker makes sense. On the other hand, if you need lots of help and guidance, then go with a full service broker (see below). As for the discount brokers, they all compete on price very well but Scottrade got very good scores from SmartMoney and J.D. Power and Associate (Consumer Reports put them near the top of their ratings too). Scottrade customers were right up there with Vanguard customers as being the most satisfied with their broker (per J.D. Power and Associates) and their cost per trade is one of the lowest you will find. They don't offer lots of mutual fund programs although you can pick from a number of NTF funds (over 1000). Again, Scottrade is a solid online broker for traders that know what they are doing and don't need a lot of hand holding to get their trades done. You can find them online at Scottrade.com. Full Service Brokers: For investors that like to talk or even meet with their broker, Edward Jones is a reputable brokerage firm that gets great marks for stock picking, statements, customer service, and investor satisfaction. If you are going to be investing $50000 or more in your portfolio, trust is a key part of that equation. Edward Jones does a great job of communicating their services and educating their clients on stocks, bonds, mutual funds, ETFs, and more. I personally do my online trading through Charles Schwab who I am totally happy with, but my local Edward Jones broker always touches base with me once a year to see how things are going. I don't get that same kind of attention from any other full service broker (who I'm not currently a client with). That tells me that someday if I choose to make the transition away from Charles Schwab and go with a full service broker, Edward Jones would most likely be my choice as well. Their online website focuses more on the bigger picture of retirement, saving for your kids college education, and investment basics than do some of the other brokers. You can find their website online HERE. Merrill Lynch was another full service broker that was rated high by a few of the surveys, but scored less than impressively with another. We know that their CEO just recently resigned and now they have a new leader, so we will have to see how that pans out for their future. We will keep a watch on them for next years results. © 1999-2008 Funskins.com - Product Reviews