Best online option broker
To keep it simple, look for brokers that offer flat-fee trades, ie charging a flat rate regardless of the type, price of the stock, or size of the order.
Customer Service When picking up the phone or emailing a broker, is a well trained customer service representative ready to assist? How any investor is treated as a client is more important to some than others. Trading Tools Trading successfully is a lot easier when investors have great tools at their disposal. A top stock broker should offer access to a wide variety of trade tools to help make the most of each and every trade. From real-time streaming quotes to last sale tickers, quality stock scanners, mobile trading apps, and level II quotes to name a few.
Strong tools are essential for active investors. Account Minimums Some brokers allow you to open an account with no minimum deposit while others may require several thousand dollars.
Also know that some brokers require higher minimums to gain access to premium platforms, functionality, and personalized support. Market Research A good online broker will provide a variety of market research tools. The rule of thumb here is simple: Investment Options A online stock broker should offer access to not only trading stocks, but also a strong selection of no load mutual funds, commission free ETFs, and complex options. Other unique investment offerings to look for could include direct market routing, conditional orders, futures trading, and forex trading.
Other Fees Fees beyond trade commissions include inactivity fees common with active trading brokers such as Interactive Brokers, Lightspeed, and TradeStation and IRA fees for having a retirement account. Just like a bank account, stock brokers also make a portion of their profits off miscellaneous fees.
There is no reason why you should pay an annual fee to have an retirement account. If managing your own portfolio is not of interest, all full-service brokers offer optional advisory services as well. Furthermore, robo-advisors such as Betterment are growing in popularity. Once again, the experience at larger established brokers is going to be superior to smaller brokers.
Banking Larger online brokers offer banking and other financial services. This goes beyond money market accounts and CDs. Checking accounts, mortgages, debit cards, and credit cards can also be offered. The leader in this space is, hands down, Bank of America Merrill Edge. Account Security Because of the web today, all online brokers invest heavily into account security. For a list of all our reviews, plus information on exactly how we go about reviewing brokers, please visit this page.
These reviews can help you make a decision about which of our recommendations is the right one for you. Despite the importance of choosing a broker carefully, many traders sign up with any old broker and simply join the first one they come across or the one that offers the best sign up incentive.
Not putting any thought into what broker to use is a big mistake because, this really is a decision that is well worth spending some time on. If you are lucky enough to know an experienced trader that you trust then asking them which broker they use is a good way to find a decent broker, but that isn't a course of action that is available to everyone.
Alternatively, you could try out a range of different brokers, compare them, and decide which one is best for you. However, this would be pretty time consuming. We have produced this section specifically to help you choose a broker. As well as the list of our top rated online brokers above, we have also produced a number of other lists. Each one of these contains a number of recommended online brokers that are particularly suitable for a specific purpose.
You can see each of the broker categories that we cover linked over to the right. We have also provided some brief details about each category further down this page. The first page in our section on the best options brokers is a comparison between the two main types of brokers: The distinction between the two is quite important to understand, as the services offered by the two is substantially different.
In very basic terms, a full service broker will provide clients with advice and guidance in addition to executing orders as instructed while a discount broker will simply carry out orders on behalf on their clients. Both types have their advantages, and we explain more on the following page: Full Service Brokers vs Discount Brokers. When you first begin trading, the chances are that you will be starting out with a relatively small amount of capital, and indeed you may be planning to only ever make small trades.
Beginners and those trading with a low budget should be looking for fairly specific attributes before signing up with a broker. An appropriate commission structure and low minimums for both the size of your deposits and value of your trades is essential. Any sign up incentives being offered could also be significant too. If you are a beginner when it comes to options trading we suggest taking a look at what we have found to be the best brokers for people just getting started. As you probably know, contracts can be based on a variety of different underlying securities which give you many choices.
Probably the most commonly traded are stock options; those contracts where the underlying security are stocks in publically listed companies. It isn't particularly difficult to find brokers that are suitable for trading stock options, but it's still important to choose your broker wisely. If you are planning on trading mostly stock options, then please visit the following page for relevant recommendations.
These all do an excellent job when it comes to trading stock options. Forex options are contracts where the underlying security is foreign currencies. These are also very commonly traded, so finding an broker where you can trade forex options is not too much of a challenge.
However, there are certain brokers that particularly stand out and that we believe are worthy of our recommendation. It's very important to find a forex broker that can meet your needs. For a complete list of these recommended brokers and more details on what you should be looking for when deciding where to sign up, please visit the following page.
Binary options are a unique form of contract that work a little differently to most others please see our page on Binary Options for more details and they are ignored by many traders as they often perceived to be a bit more complicated than the more standard type of option.