Choosing the Best Online Broker in 2019

Some of the factors you should consider when choosing an online broker are fees, commissions, and account minimums.

With the ever-increasing incorporation of technology into the financial markets, costs and commissions are reducing while the number of available services is increasing. Some even claim that this is the best time in history to be an investor.

With so much change in the financial sector, it may be challenging to choose the right brokerage or even the right type of brokerage account among the selection of brokerage accounts offered by even one broker. Even more challenging is the fact that many investors have different needs. For some, minimizing cost is the most critical factor. For others, taking advantage of the most advanced technology in the financial sector is the most important. However, what are the essential variables that you should consider when deciding on a brokerage account for your needs? Below we list the five most important things to be aware of when evaluating an online broker.

Choosing YOUR online broker

There are five factors that you should consider when evaluating an online broker. Which are:

  • Commissions
  • Account minimum
  • Account fees
  • Trading style
  • Technology
  • Promotions

Too busy to research all the technical information about a brokerage? Check out our list of the best brokers for each type of investor.

What are the commissions on your favorite investment types?

Most brokers offer a similar selection of investment options to their account holders. These offerings generally include things like exchange-traded funds, mutual funds, bonds, options, and individual stocks. Some brokerages will also offer Forex and futures trading.

The first step is to identify what types of investments you need to have access to in order to satisfy your investment needs. The second step is to identify the commissions you will have to pay for trading those particular financial instruments. Below is a selection of commission pricing examples that can help you evaluate whether or not the fees offered by any broker are within the industry standards:

Individual stocks: Commissions for individual stock trades are typically assessed on a per-trade basis for $4-$7 per trade.

Options: In general, the commissions attached to options trades are the same as the commissions for individual stock trades. However, it’s typical to find an additional commission attached to options trades that can average anywhere from $.15 to $1.50 per contract.

Mutual funds: While not universal, many brokerages offer mutual funds with no transaction fees or commissions. However, be sure to check on the expense ratios (internal maintenance fees) that are charged by the mutual fund itself, not by the broker. These can be surprisingly high.

ETFs: An exchange-traded fund, or ETF, are purchased for a share price and treated just like a stock. Because of the similarities to individual stocks, most brokerages also charge commissions on trades with ETFs. However, many brokerages offer “commission-free ETFs,” which is an essential feature if you are considering using ETFs in your investing strategy.

Bonds: Bond ETF’s and mutual funds can usually be purchased with no transaction fee and with no commission by many brokerages. However, this is not universal, so be sure to verify the fees associated with your specific account.

What is the account minimum on your preferred account type?

Many of the highest-rated brokerages offer accounts that have no minimum account balance. Some of these brokerages include Ally Invest, Merrill Edge, and TD Ameritrade which are considered, by Business 24-7, as three of the best brokers available in 2019. You can check out their list of the best online brokers here.

Some brokers require a minimum initial investment. However, that account minimum is highly variable with some brokerages requiring as little as $100 to open the account and others requiring $1000 or more. Mutual funds generally require a similar minimum investment, which means investing with a small amount of money could make it challenging to invest in a mutual fund.

What additional fees will you pay?

It’s nearly impossible to completely avoid account fees. However, it is possible (and wise) to minimize those fees as much as possible. Closing your account generally incurs a fee as well as withdrawing funds from your account in any way. If you’re simply closing your brokerage account, you will probably have to pay these fees. However, if you’re transferring to a different brokerage, it’s possible that your new broker may offer a limited reimbursement for the transfer fees.

Many of the other fees can be avoided by simply choosing brokers that don’t charge those fees. However, many of the fees can be hidden inside of user agreements and not explicitly stated on the company website. Be sure to carefully read all contracts before signing up with a broker.

Another good tip for identifying account fees is to open a demo account with the brokerage that you are evaluating. As you “practice” using the demo account, you will be able to see the fees that are typically associated with trades and accounts in that brokerage.

What are your trading style and tech needs?

Many beginning traders are unaware of their “trading style.” This can make it difficult for them to identify what features and tools are necessary for their investing and which are unneeded extras. One thing that is almost always beneficial for investors of all levels his further education. Most brokers offer training and education to account holders, usually for free. These educational materials typically take the form of tutorials, video courses, and seminars.

In contrast, many experienced active traders may require specialized tools and services that support the increased frequency and size of their trades. This can include things like advanced trading platforms, research and data offerings, reduced commission, advanced analysis tools, charting, and social trading services.

Also, remember, the majority of brokerages include many of these more advanced features with your account fee, so there’s almost no reason to pay extra for them. Be wary of brokerages that charge additional fees for these kinds of services.

Are there any promotions you can take advantage of?

The last and least important variable when evaluating and online broker is the promotions that it offers. Why is this the least important variable? Because the details of the initial promotion can cause problems down the road. For example, a promotion may be an initial offering of “commission-free trades,” but the details of that promotion may hide an increased commission rate. An increased commission rate will devour almost any benefit provided by the promotion.

That said, many brokerages do offer legitimate and valuable promotions which can be useful when deciding between two or three brokers that fulfill all of the other requirements listed above.

Business 24-7’s online broker ratings

The online broker reviews performed by are objective, comprehensive, and thorough. If you find sorting through all the information above to be too time-consuming or too complicated, check out our in-depth reviews of each brokerage. We’ve already done all the research for you and provide relevant information in an easy to read format.

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