Online trading allows an individual to act upon their own investment decisions and provides the ability to immediately divert funds into a full spectrum of investment types. It is most likely the case that those preferring a traditional broker service are uncomfortable with the notion of investing over the internet or prefer the availability of professional consultation and recommendation to achieve individual financial objectives.
Lower Online Trading Fees
Traditional brokers will charge a hefty schedule of fees based on growth and profit. They also often charge term fees for continued service. An online broker has minimal commissions and usually only charges one term, or transaction fee equating to a tiny fraction of potential gains. The average online broker in 2013 charged less that $10.00 for access to daily, immediate trading. In most cases, this represents less than a 4% fee on proven gains. Some online brokers charge even less than $7 per trade.
Wider Stock Versatility
Traditional broker services allow only trading within realms of the economy that an individual broker is licensed to trade. This can severely limit the novice's ability to invest in whatever vehicles they choose. An online brokerage service gives access to all investors so they can research mainstream stocks, mutual funds, bonds, IPOs, Forex accounts and a huge variety of investments known as "penny stocks". For a tiny fee and a little research, the average stock investor can trade daily for respectable gains to their diversified portfolio. It is also common that the more accessible and affordable the online broker, the more customer services they will offer. Traditional brokers charge consultation rates for each session. Online brokers freely give their number for questions to be answered by anyone using their service.
What to look for in an Online Service?
Great resources for finding the intimate performance details of certain online broker services are available on a quarterly basis through analysis groups like Kiplinger's, Barron's, Forbes and newer advisers like The Street. The most well known online brokerage companies include Scottrade, e-trade and TD Ameritrade to name a few.
When looking for a good online broker, you should research the company. Do they offer human help and monitoring in all types of investments? Look for the freedom to invest in any type of stock and in any volume. Also, be sure to check the brokerage's IB, or Internal Buying reports. Like all investment firms, online brokers must report to the Securities and Exchange Commission. See which online broker services, year after year, have employees who are confident in their own strategies. Of course, a long track record is also important. The longer a service has been successfully trading is a great indicator of how well they serve the individual investor.
