An overview of the types of online brokers and tips for choosing your broker.

You’re in the market to find an online stock or options broker. But what kinds of services and tools should you look for? How does your brokerage firm work to get your trade executed — quickly, cheaply, and for the best available price?

Read on. You’ll learn more about stock trading online, how to compare stock brokers, the difference between discount brokers and full-service brokers, and a little about the big picture of the stock market and its players.

Full-Service or Discount Broker?

If you’re looking for stock market advice, you may be willing to pony up for the costs of a full service brokerage — but many investors find that the extra cost of these brokers may not be worth it. If you want to call the shots as you buy stock or sell it, you may prefer stock trading with a deep discount broker. (It can save you a bundle in commissions, too.)

What services do online brokerages offer?

Most online brokers offer more than straight order-entry. Online brokerages usually offer stock quotes, price charts, market news and other investment news, research reports and other tools.

Which tools you need depend on the type of investor or trader you are. If you’re a beginner, you may opt for brokers offering richer stock market education. If you trade penny stocks real-time streaming quotes, advanced charting and technical analysis tools might be more your cup of tea. Most importantly, watch your commissions and fees. It’s important to choose an online broker that offers the best value of tools, service, and education for a low, fair, easy-to-understand price.

Whatever your investing style, as you compare brokers online you’re sure to find a brokerage to match your needs.

What does your broker actually do?

Many investors don’t know much about why they need a broker or what other stock market players their brokerage firm interacts with to get their stock trade executed. Here are a few players you should be familiar with:

• Retail clients — are people like you, buying and selling stocks or options with their own money for personal profit. Retail investors place stock or options trades through a brokerage firm, like TradeKing.
• Broker / dealers — are facilitators. We accept orders on behalf of our clients, and then make sure they’re executed in the open market at the best available price.
• Stock exchanges — are places where specialists and other market makers fill stock and options orders. When people think stock market, they most often conjure up an image of a physical trading floor full of traders, like the New York Stock Exchange, but in fact today’s markets include other models, too. Those models range from Electronic Communications Networks, or ECNs, or negotiated, decentralized markets like the NASDAQ, in which market players buy and sell using the phone and Internet to interact.
• Institutional traders are professionals, buying and selling stocks and options in a much bigger scale than individual investors. Usually they trade with their firm’s money, not personal funds.
• Market makers are firms that are obligated to trade specific stocks and options on those stocks. Usually they’re assigned these securities by the stock exchanges. Market makers provide liquidity in the options or stock market for that particular security.

Consider TradeKing as Your Next Broker

If you’re looking for an online broker, put TradeKing on your short list. Not convinced? Check out our TD Ameritrade comparison to see how TradeKing compares to TD Ameritrade, E*TRADE, Scottrade and others. TradeKing is a nationally licensed online brokerage with a mission to help individual investors become smarter, more empowered stock and options traders. At TradeKing we offer the same fair and simple price to all our clients — just $4.95 per trade, plus 65 cents per option contract. You’ll trade at that price, no matter how often you trade, or how big or small your account may be.