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Online Trading

Most discount brokers offer investment services such as stocks, options, mutual funds, treasury bonds & retirement accounts. Some have flat commissions as low as $4.95 per trade while others would charge as much as $19.99 for a trade. The key to find a good discount broker is to figure out your trading style as well as trading requirements. Some brokers have no minimum balance or inactivity fees while others would charge you a hefty fee for not trading. Remember, online discount brokers compete for your business and commission prices are at levels that are easily affordable. most people think that Patience, Discipline, Focus, and the right mental attitude is all you need to make money in stock market. However, a very few people focus on the trading expenses and all the headache that you'll have to deal with at tax time when you trade 2,000 times a year. This article is written with the intent to take a closer look at online discount brokers and what you should look for in a good discount broker. It is also meant to help you get answers to your online trading questions.

Here is a quick reference guide in evaluating online discount brokers and also a chart that compares existing discount brokers on various parameters. Please keep in mind that brokers change their offers with time so this information is subjected to change without notice in future and we recommend you review broker website before making a final decision.

Here are some of the products and services that you should look for when selecting a discount broker.

Ease of executing trades during pre market, post market and during normal market hours. Also pre and after market windows should at least cover 7a.m. - 9:15 a.m. and 4 p.m. to 6:30 p.m. There are online brokers out there with 4 to 4:30 p.m. as after market and that's pretty much useless since you can't benefit from the price movement from most earning calls. Powerful market research and trading tools should be offered at no additional cost. Most online discount brokers do not offer in-person financial advice so least they can do is to offer you the best market research tools available. Other trading tools such as real time NASDAQ level II quotes and real time charts should be available at no additional cost as well. Competitive and affordable pricing structure. As many active traders already know, a high trading commission can really hurt you in long run. Also, there shouldn't be any "fine print" when it comes to pricing. You'll find online discount brokers who would offer you a great price but only if your order is market and not limit. As an online investor, you're usually at the receiving end with a market order anyway since it gives so much slack to your brokerage in executing the trade. You would lose lot more with market order than in commissions so pay attention to pricing. Wireless trading platform. In today's world no one is sitting on a computer all day long for trading stocks. You want to be able to carry on with your daily activities and trade at the same time if opportunity exists. Internet enable cell phones have made it possible to trade on the go but if your broker doesn't offer this service, you're missing out big time. Customer Service is also a very important factor. Remember, you don't usually need to call the customer service since online trading is easy to do. However, the time you call them is probably the time you need them most and need them quick. How would you feel being "on hold" for 30 minutes when you need someone desperately? That's why customer service should also be your top priority.

Here is a comparison chart for some of the popular online discount brokers.

You have to execute certain number of trades per quarter to qualify for this rate.
Eligible households with $25,000 in assets and 120+ stock, bond, or options trades a year or with $1,000,000+ in assets, pay $8 for online stock trades. Certain restrictions apply. For commission schedule and complete details see Fidelity.com/commission.
* Price available with Sharebuilder Advantage only. See web site for full information.