Choosing an online stock broker is one of the most important aspects of trading. Here are the top brokers Ive used and can recommend.

Optionshouse

Optionshouse has been around since 2006. It is in fact the lowest cost stock broker we have reviewed here at WiseStockBuyer. They charge a very low $4.95 per stock trade and the same for broker-assisted trades. They also charge a competitive $9.95 for mutual funds. They also have no inactivity fees.

Optionshouse has a good trading platform too, it was awarded 4 stars by Barrons in 2011. Optionshouse also offer a free virtual trading platform for testing your strategies.

They also have a neat little app to make it easy to trade on your iphone, ipad or android devices.

And best of all they currently offer 90 days free trading to get you started.

Scottrade

Scottrade is an old-timer in the brokerage field. They were established in 1981 and have become one of the biggest brokers around. They have nearly 600 local branches that offer clients banking and brokerage services.

Trades are competitively priced at $7 with broker-assisted trades costing $27 and mutual funds $17.

Scottrade offers different platforms. Higher account balances get access to a more advanced platform.

TD Ameritrade

If you have been into investing for any length of time, Im sure youll be at least somewhat familiar with TD Ameritrade. They have been around since 1983, but only started offering internet trading in 2006.

They are one of the largest discount stock brokers with over 7 million clients. They also have over 500 local branches.

Trades cost $9.95 and $44.95 for broker-assisted trades. Like E-Trade, it seems TD really dont want you to trade over the phone. Their platform is excellent with platforms for both IPad and Iphone too. Its worth noting that they have a minimum account size of $2,500.

E-Trade

E-Trade are a major player in the brokerage field. They started in 1991 and were one of the first brokers to allow trading over the internet.

They are perhaps one of the most well known brokers with over 500 local branches you can visit in person.

If you are seeking a well established broker with a solid track record, E-Trade is certainly worth considering.

Stock trades are on the high side for a discount broker. $9.95 for standard trades and a whopping $45 for broker-assisted trades. They clearly dont want you to trade over the phone.

E-Trade offer great trading tools and a great platform.

However, whilst I do like E-Trade, there are a couple of things missing such as a virtual trading platform and an online community. Id have thought a broker of this size would have implemented these features by now. If you can get past these issues, they are most certainly worth a look.

Tradeking

Tradeking have been around since 2005 and have established themselves as a high quality broker. They have won many awards from Barrons and Smartmoney.

They are small in comparison to the big players like TDAmeritrade and E-Trade, but they are growing.

They charge $4.95 per trade for both broker-assisted and online trades.

The platform is excellent to use, the only thing missing is level 2 data, so if you need this, it may not be the broker for you.

Tradeking has a vibrant trading community that has different sections for different ability levels. This is unique as most trading communities are aimed at inexperienced traders.

Some of the other reasons to use Tradeking include no hidden fees, no minimum account size, excellent customer service, low margin rates, no fee IRAs. Other than the no level 2 data, the only other gripe I have is the logging in procedure is very tedious and annoying.

Click here to visit Tradeking

What factors should I consider when comparing brokers?

Cost per trade

This is of course the most obvious one and a very important factor. The amount you pay for your trades can have a huge effect on your trading performance, especially if you have a smaller account size and/or make a lot of trades.

Lets quickly look at the maths. If you make 100 trades per year, at $5 per trade, thats $500 and at $10 its $1,000. If you have a $20,000 account balance, at $5, that is 2.5%, at $10 its 5%. A huge difference isnt it?

Clearly, if you have a bigger account balance and/or make far fewer trades, then the difference wont be so significant. Another thing, whilst the cost per trade is very important, it doesnt necessarily mean you should just opt for a low commission stock broker, you should consider the other factors too.

Minimum Account Size

This is only likely to be an issue if you have a very small account balance. Personally, I think it may be worth saving up some more risk capital before investing in the stock market if you run into these problems as the fees charged for trades is likely to eat up too much of your balance.

Virtual Trading

I see a virtual platform as very important. Trading is far from easy, so the ability to practice our strategies can be a big help. Thankfully many of the major brokers now offer this. E-Trade is the only broker in the list above that do not have virtual trading.

Platforms vary greatly, some are very simple to use and aimed at the beginner, others are more advanced and may be too confusing for a new trader. Brokers such as Zecco have a simple platform. Optionshouse have a more advanced platform. TD Ameritrade and Scottrade offer different platforms to suit all levels of experience.

Some traders like their broker to provide them with training. Many brokers do provide this, but the standard of training is rarely any better than you can find elsewhere. It is also worth baring in mind that if a broker invests heavily in training material, this may be reflected in the fees they charge. Our view is that you are best getting your training from online sources other than your broker from websites such as this one.

Trading forums and community

Many traders like to share their experiences with other like-minded traders. An increasing number of brokers now offer their clients a place to do exactly this with online trading communities. These communities are usually aimed at new and inexperienced traders. Zecco and Tradeking offer two of the best trading communities around.

Speed and Execution

The speed of execution can be very important. For short term investors who makes a large number of trades, the fill price is extremely important. For longer term investors fractions of a second really arnt going to make a lot of difference.

Other instruments

Most online stock brokers offer access to stocks, ETFs, IRAs and mutual funds, but not all brokers offer access to options, futures and forex trading. OptionsXpress is one of the few brokers that offer all of these services.

International traders

Unfortunately if you live outside of the US, many brokers wont accept you as a client. OptionsXpress and E-Trade both take international clients.

What about a full service broker?

In case you are not aware, a full-service broker offers clients much more than just a trading account. They often help you with matters such as:

• Help choosing stocks
• Determining risk tolerance
• Research and market analysis
• Retirement planning
• Tax planning
• A wider range of investments such as derivatives

Are they a good idea?

Our view is a resounding, no. Whilst undoubtedly some of the services they provide can be useful, the problem is the cost. Some of these brokers charge in excess of $150 per trade.

This is over 15 times more than you would pay to buy stocks with TD Ameritrade and over 30 times more than you would pay with Zecco.

On top of this, they often charge yearly maintenance fees, even if the advice they give you results in average or even poor performance. It certainly wouldnt be quite as bad, if the high fees they charges correlated in some way with the performance, but they dont!

By using one of these brokers, you make earning good returns much more difficult, especially if you have a relatively small account balance. Our view is stick with a discount stock broker.

Conclusion

With so many internet stock brokers out there to choose from, you can certainly afford to be very picky. We have deliberately only included brokers that we would use ourselves here at WiseStockBuyer. Stock brokers make a lot of money regardless of whether you win or lose, so you want to be sure you are getting the level of service you require and not paying too much for them.