Online Brokers for Trading

When trying to select from a list of online brokers, the task may seem overwhelming. There are SO MANY of them out there these days that it's hard to make an informed decision as each one is unique and offers varying services.

When I started out trading/investing it took loads of time researching and sifting through all the reviews online. My goal here is to cut down you decision time - I have picked out the top candidates from my research so you don't have to go through the same grueling process. 

This is not a review site where I review every single broker out there. The whole point is that you don't waste time looking at brokers with crap reviews. Therefore, only the really good brokers make it to my list.

Firstly, do you know what asset class you want to trade? This is the first step in choosing an online broker as it will narrow down options available to you. Some of them specialize in certain asset classes while others offer the whole shebang. 

After several weeks of research on the various brokers out there, I ranked them based on specific factors. The factors most important to you will vary based on your goals, financial situation and your specific style. If you don’t have a style don’t worry, it will develop over time.


In the meantime, make a decision as to what criteria are most important to you - I have listed some of the most important ones below. I have also provided a quick snapshot of various online brokers below so that you may get an overview of what asset classes they offer.

Click on the individual broker names listed below to get further details.

Click on asset type  in the headings below to see detailed comparison of the brokers that offer trading of the selected security.  
For example, click "Futures" to get a comparison of the various futures brokers all in one easy to read chart. 

Stocks

Bonds

Options

Futures

Forex

Interactive Brokers

Tradestation

Think or Swim

MB Trading

Questrade

OptionsExpress

Mirus Futures

Global Futures

Oanda

Trader Tip: After opening an account with an online broker, make sure you have the trading desk phone number handy! If there is ever any complication with your computer/platform, you can quickly call and place a phone trade. You don't want to be stuck in a losing position that's turning bad quickly or miss a fantastic opportunity to make a ton of money.

Best is if you can establish a relationship with your broker - a lot easier with the smaller shops.

Online Brokers - Selection Criteria

When selecting online brokers, there are a few big things to consider. 

Below summarizes some of the main criteria you should address and decide which are most important to you. This could be cheap commissions, full service, or great execution, etc.

Many times you can't have it all but you can choose a broker that best meets your most important criterion and compromise on items not as critical to you.

That being said I have strived to provide a list of the top tier brokers out of the universe of hundreds to make the decision a lot easier. 


Asset Class

As mentioned previously, this criterion is the best one to start with as it eliminates any online broker that doesn't offer your asset class. For example, if you only want to trade forex, you only need to look at forex brokers or brokers that offer a full product offering inclusive of forex.


Commission/Fees

Commissions can slowly bleed a trader to death. A lot of beginner traders don't realize how impactful these are on your trading account.

You might say, "Oh whatever, the difference between commissions is only a few dollars." But think about this, if one broker offers $1 per trade, you can execute 5 full trades for $10 (by that I mean you buy and sell a position counting as one full trade). If another broker offers $10 commissions and you do the same, now you are paying $100 instead of $10...This adds up BIG TIME if you are not a long term investor that holds positions for several years. 

Important Note: Sometimes online brokers that have really low fees can have other fees that are not as apparent. I will do my best to highlight all such fees when reviewing these individual brokers to avoid surprises. 

Other fees: Fees that you should also consider are ones charged 1) on short positions for borrowing stock; 2) on cash that is borrowed on margin to buy stock.


Funding Your Account

In terms of funding, I not only mean the initial account minimum to get started, but also the minimum balance you must maintain for shorts/futures.

Depending on how much money you have to invest, this criterion may be important. Some online brokers have minimums of only $1 to open an account and others can have $10,000. 

Also, if you are shorting stock, or entering into futures contracts, different brokers will have different margin rates - meaning the amount of money they require you to keep in the account to be able to take on the trade.


Execution/Speed

This aspect will mainly be determined based on how often you plan on trading. Are you a day trader or one that puts on a trade once every few months?

If you put on trades that only last less than a couple of days or maybe hours then you need a broker whose execution is amazing. You don't want to have one where it takes forever to load a platform nor one that fills your orders with a less than optimal price (known as slippage). 

That being said, I think execution is important regardless of time frame. On big positions, if the broker has a lot of slippage you could lose hundreds of dollars upon just entering and exiting a position. 


Service Options

One point here is that some online brokers offer full service versus discount services. This website is geared to those that want an online discount broker. This means that you are someone who wants to do your own research and execute your own trades.

The second point is what other services does the broker offer to execute trades - for example can you execute them over the phone? (perhaps your computer is down and you need to execute ASAP)

Also, do they offer a mobile service where you can execute trades through an app on your smartphone? Obviously this would be very useful for anyone who needs to execute trades while on the go.


Reputation

You want to have a broker that is trusted, not one that most people have never heard about with a shady website.

One of the best ways to make sure the broker is not sketchy is to check that they are a member of a regulatory body. For example, in the U.S. that would be FINRA (Financial Industry Regulatory Authority) while in Canada it is IIROC (Investment Industry Regulatory Organization of Canada). 

Put simply, for a broker to be a "member' of one of the two bodies mentioned, it must follow strict capital requirements (have enough money/assets) to make sure they can withstand really bad case scenarios. 

Also, it is best if the broker is a SIPC/CIPF member (depending if they are a U.S./Canadian broker respectively). These organizations ensure your money/securities will be recovered up to a specified amount if the brokerage ever goes bankrupt. For SIPC in the States it is $500,000 and for CIPF in Canada it is $1MM (you will have to verify on their respective sites for the most current coverage).

You can quickly check if they are members of FINRA/IIROC.


Customer Service

Last but definitely not least, the importance of customer service. The level of service you care about is for you to decide but at the end of the day, ideally you want a firm that is responsive and helpful when you have issues/questions.

Typically there is a balance - if you have higher costs per trade you are offered better service than if you pay very cheap commissions.

If you aren't paying the broker much money for your trades then it's likely they also aren't spending money improving their customer support.  

You get what you pay for although there are exceptions as not everything is black and white. I will let you know if there are costly online brokers that don't offer great service (you won't be seeing a review on them on this site) or if there are cheap ones that offer amazing support (expect a review).


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