Author: enhanced

Choosing An Online Stock Broker

Introduction

Choosing an online stock broker can be difficult and overwhelming at times. People new to stock trading and investing have many choices and options to consider. Finding the right online broker to meet your needs or requirements can be very rewarding and beneficial, for your portfolio and your peace of mind.

Here are some basic things you will need to consider when you look at difference online brokers. If you are not sure what these options and features are, you can speak to a representative of an online broker firm, or you can leave a comment and we’ll do our best to answer your questions.

Commissions

All brokers charge commissions fees. Commissions fees are the cost to buy and sell stocks. You are charged a commission fee twice: once when you buy a stock, and again when you sell that stock.

I believe all brokers charge higher commissions when you phone in orders and speak to a human being. Keep this in mind as these commissions are for orders placed online only.

  • Scottrade: $7 per trade
  • TD Ameritrade: $9.99 per trade
  • Interactive Brokers: varies, minimum $2
  • E*Trade: $19.99 per trade

Minimum Initial Deposit

The minimum initial deposit for online stock brokers ranges from $500 to over $10,000. For those with less initial trading capital, lower minimum deposits are generally the deciding factor.

If your account balance is less than this minimum, your broker may charge you a fee every month or every quarter. These fees usuall range between $10 to $20 per month or per quarter, but can be higher. Read the fine print if you plan on depositing the absolute minimum capital in to your account.

  • Scottrade: $500 minimum deposit
  • TD Ameritrade: $2000 minimum deposit
  • Interactive Brokers: $2000 minimum deposit
  • E*Trade: $1000 minimum deposit

Features

All online brokers have a set of features and tools included with your online trading account. The default set of tools include streaming charts and streaming data, which is usually in the form of an application called a streamer. Your streamer allows you to see the latest real time prices of stocks in your watch list or portfolio. Some streamers simplify the process to buy and sell stocks so you will not have to load up a separate web page to place your orders.

Most brokers also have additional features which are not included in the basic trading account. These additional features have additional costs. Level 2 data and real time streaming news generally fall in to this category and have additional monthly fees.

Popular features offered by online brokers include:

  • Streaming Charts
  • Streaming Data
  • Analysis Tools
  • Streaming Real Time News (may cost additional fee)
  • Level 2 Data (may cost additional fee)

Local Offices

Some online brokers have local branch offices some U.S. cities. Some traders and investors may want to sit down and talk to their local broker representatives. In this case, choosing an online broker with a branch office close to your home may be the deciding factor for you.

Scottrade has very many branch offices all across the US. TD Ameritrade also has branch offices in some cities and the number appears to be growing. I do not believe E*Trade has any branch offices.

My broker, TD Ameritrade, has an office in my city, but I have never visited them. A local branch office was not a deciding factor in my choice of an online broker.

Popular Online Stock Brokers

Here are the most popular and respected online stock brokers. This list may be incomplete or your favorite broker may not be included. These are the brokers I am either personally familiar with or have heard good things about from my trading and investing friends.

Rate Your Stock Broker

You can now rate your stock broker at the Trading Winner Stock Brokers page. Rate your broker and tell us what you think about them.

Fat Finger Syndrome Costs Tokyo Trader $18 Million

Fat Finger Syndrome Costs Tokyo Trader $18 million.

A stock trader in Tokyo has the “curse of the fat finger” – mistakenly selling over $18 million of web advertiser Adways through a typing error. The trader’s simple typo cost his firm, Tachibana Securities, $18 million.

Fat finger syndrome is accidentally pressing the wrong button when entering details on a computer keyboard.

“It is known as fat finger syndrome . the occasional tendency of stressed traders working in fast-moving electronic financial markets to press the wrong button on their keyboard and, in the process, lose their employer a mint ..” (The Guardian, 9th December 2005)

The trader had apparently intended to sell shares in another firm with a trading code similar to that of Adways but with a much lower share price.

The trader cancelled the order but only after 1,482 trades, just under 10% of Adways’ total, had been completed.

“It was an input error,” said Tachibana’s vice-president, Takahiro Tsuchiya. “The trader noticed the mistake immediately and cancelled, but it was too late to stop some of the shares from trading.” (The Guardian, 20th June 2006)

I personally have never had a problem with fat finger syndrome or the curse of the fat finger. I hope I never do. Most online brokers, such as TD Ameritrade, will not execute an order if you do not have the funds available in your account, which limits the possibility of fat finger syndrome from occurring in daytraders like most of us who trade online. However, working a large firm, these simple safeguards are not always in place – as we have seen today in Tokyo and many times in the past. This latest case of the curse of the fat finger should teach us all to verify and double check our order entry details. I know I do. No one wants be the next trader the curse of the fat finger strikes!

Related links:

Asia Indices Rally Strong Gains

Asia indicies are rallying and showing strong gains Friday following stellar gains in U.S. indices. on Thursday. All major Asian indices are posting gains, with all index prices gaining over +2% except one (Index: ^KLSE – Kuala Lumpur), and some indices gaining over +3%. The Asia market rally follows the NYSE and NASDAQ rally on Thursday’s trading in the US.

Here’s a quick summary of the Asia indicies and their gains today:

  • ^SSEA – Shanghai A-Share Index – 1,654.76 +2.64%
  • ^HSI – Hang Seng Index Index – 15,837.19 +2.61%
  • ^N225 – Japan NIKKEI 225 – 14,879.34 +2.82%
  • ^STI – SES Straits Times Index – 2,373.91 +3.10%
  • ^TWII – Taiwan TSEC Weighted Index – 6,575.77 +2.32%
  • ^KS11 – KSE KOSPI Composite Index – 1,262.19 +3.51%
  • ^KLSE – Kuala Lumpur – 893.50 +0.79%
  • ^BSESN – Bombay BSE Sensitive – 9,896.93 +3.69%

Related Links:

Bernankruptcy

Bernankruptcy: New trading term and definition.

Bernankruptcy \Ber”nank”rupt*cy\, n.

1. The state of being actually or legally bankrupt due to Fed Chairman Ben S. Bernanke’s Fed interest rate hikes.

2. The act or process of becoming a bankrupt, due to continuous Fed interest rate increases.

3. Complete loss; — followed by of. “Bernanke’s continual Fed rate hikes destroyed my portfolio, forcing me to declare ‘Bernakruptcy’.”

Thesaurus words for “bernankruptcy”:

bouncing check, breakage, breakdown, bust, collapse, crack-up, crash, crippling, damage, defeat, destruction, detriment, dilapidation, disablement, disrepair, encroachment, failure, futility, harm, hobbling, hurt, hurting, ill success, impairment, incapacitation, infringement, injury, inroad, insolvency, insufficient funds, kited check, losing game, loss, maiming, mayhem, mischief, mutilation, no go, nonaccomplishment, nonsuccess, overdraft, overdrawn account, receivership, ruination, ruinousness, sabotage, scathe, sickening, spoiling, successlessness, unsuccess, unsuccessfulness, uselessness, weakening