Best Online Brokers | Get the Best Trading Account for You
In the age of the Internet, managing your finances has become easier than ever before.
This is especially true for investments—online brokers have been steadily increasing in popularity and availability over the past few years.
For example, a Deloitte study found that only 27 percent of American households applied advice from a broker when making investment decisions compared to 35 percent in years prior.
This change is attributed to a shift towards online brokers—and rightly so. With advanced platforms, increased trading control, real-time access, and a wide range of asset classes, it’s hard to resist the convenience of online brokers.
Advantages of Using Online Brokers
Whether you’re a newcomer or a seasoned pro, using an online broker to manage investments comes with a lot of unique benefits.
See the list below for a few reasons why traders might want to consider using an online broker.
Although some online brokers also operate brick-and-mortar locations, the vast majority of online brokers solely operate through online platforms.
With lower operational costs, many online brokers offer enhanced savings for traders, lowering or entirely eliminating costs from inactivity fees, trade commissions, and account minimums.
Lower costs are also a great method for online brokers to stay competitive against traditional brokers, effectively increasing their overall appeal.
Along with intuitive desktop platforms, the best online brokers will also provide mobile apps.
This allows traders to have on-the-go access to their accounts, trading and managing their investments wherever they are.
A combination of mobile and desktop access also provides a real-time analysis of financial performance, with many brokers providing supplemental access to graphs and reports.
3. Greater Control
The traditional trading model requires clients to contact brokers to place orders. Not only does this create potential for trading delays, but it also lessens the amount of control that a client has.
With online brokers, however, you have nearly limitless control over when and how each trade occurs. Even better, actions are instantaneous, eliminating the frustration that comes with waiting for a response from a broker.
4. Educational Resources
For new or inexperienced traders, many online brokers provide a wealth of educational resources to help clients make smart trading decisions.
These educational resources include articles, videos, and even online classes to keep traders up-to-date on the latest trading news and techniques.
Disadvantages of Using Online Brokers
While online brokers continue to improve services through intuitive, user-friendly platforms, convenient access, and lower fees, there are a few possible disadvantages to consider before signing up as a client.
1. Easy to Overinvest
The convenience, real-time access, and heightened client control offered by online brokers could potentially become a downfall for some users.
With access to thousands of stocks at their fingertips, inexperienced investors could quickly become caught up and find themselves overinvesting.
Avoiding costly mistakes like overinvesting can be done through spending time researching each stock before purchase. Clients can also create limit orders for their account to keep their investments in check.
In a similar fashion, some experts suggest that the fast-paced and convenient trading atmosphere could potentially create an addictive situation for some, much like online gambling.
2. Lack of Personal Relationships
One of the primary benefits of having a broker is the ability to create a long-term relationship with a trading expert.
While many online brokers will provide customer service emails and phone numbers, the inability to speak face-to-face with a broker could be a downfall for some.
3. Computer Mishaps
Because online brokers are entirely dependent upon online platforms, it stands to reason that this could create a few unique problems, one of which being a steady internet connection.
If you’re trying to make a trade without a reliable internet connection, you may find yourself accidentally hitting the wrong button and purchasing an incorrect stock—or even buying more shares than you intended.
Before you choose an online broker, make sure you have reviewed their policies for trade cancellations due to computer mishaps. It also doesn’t hurt to look through their customer service page to see how they can be reached—and during what hours—in case of an emergency.
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