A discount broker is your way into the world of stock trading. A discount broker can not only execute stock trades, but is usually able to perform call and put options on your behalf at the lowest possible cost, thus saving you money which would have otherwise gone into commission had you used a full service account. Thus choosing a discount broker is a very important task and you need to be sure that you are well informed before you choose a broker for yourself. This article is aimed at comparing discount brokers and listing parameters which ought to be considered while making such a comparison.
The first the foremost thing that needs to be considered is what is the cost of executing a trade with the broker that you have chosen. The lower the cost, the higher is the profit. At TradeKing and Zecco, the lowest transaction fee that you need to pay is $4.95 whereas at Scottrade the lowest transaction fee is $7. This means that there are chances that TradeKing and Zecco are cheaper compared to Scottrade.
The amount of minimum balance that is required in your trading account is another criterion that has a profound effect on the choice of a stock broker. For people who do not have a lot of money to invest, a broker that has a lower minimum balance condition would be much better. Comparing minimum balance requirements at TradeKing, Zecco and Scottrade it has been found that while TradeKing and Zecco have no minimum balance requirements, Scottrade has a minimum balance requirement of $500.
Value Added Services
Value added services include services such mobile trading, direct withdrawal at custodian, knowledge sharing, direct registration system services, real time streaming quotes, real time news, annual account maintenance, etc. Most of these services are offered by TradeKing, Zecco and Scottrade. Zecco offers services such as free streaming quotes, advanced research, screening services, option research, trade anywhere to its clients. TradeKing on the other hand provides services such as list of actively traded stocks and options, insights from fellow traders, instant broker access, etc. Scottrade also offers various services such as streaming quotes, account maintenance, real time news, etc.
Discount brokers generally do not offer any kind of broker assistance with your trading account. But if you are interested in having a broker help you out on a trade or give you investment advice, then you need to pay a small fee. This fee is called broker assisted fee. Only TradeKing and Scottrade give option to their clients to have broker assisted trades in the market. For this service TradeKing charges $4.95 to its clients whereas Scottrade charges $27.
Customer Service is a very important factor that comes into play while selecting a discount online broker. This is due to the fact that no one wants to be left to fend for themselves whenever there is a problem, especially if that problem leads to you losing money. When it comes to comparing the kind of customer service response of the three brokers: TradeKing, Zecco and Scottrade, there is only one winner and that winner is TradeKing. TradeKing is known for its fast and courteous customer service that it well above the industry standard.
Trading tools play an important role especially if you have to analyze the market. These days almost all brokers offer a full suite of trading tools, from streaming quotes to screeners to their clients so that their clients can research and perform profitable trades on their own. Several different types of trading tools are also offered by TradeKing, Zecco and Scottrade to their clients. These enable clients to study the market in a better manner and execute informed trades.
According to a survey 16% of the investors say that the most valuable part of being a customer of an online brokerage is the access to research. Thus, most of the brokers out there offer a robust suite of news, data and education to help their clients. TradeKing has a special “Education” section to help clients understand the ins and outs of the market. Zecco on the other hand has a “Quotes and Research” center that focuses on news, commodities, currencies, US and global markets, etc. Scottrade is also known for its good quality research. They have a “Knowledge Center” that can help traders understand the market and take advice on what to invest in and what not to invest in.
These are some of the parameters that can be used for comparing discount brokers and the kind of services offered by them. Comparison is important so as to understand what is being offered by whom and who would be the best suited to your needs.