Several unique terms and phrases describe the features of services we review on this site, some easier to grasp than others. This list briefly defines terms relevant to Online Stock Trading.

Ratings

Fees/Commissions

Fees and commissions are important considerations when choosing an online stock trading service. Lower cost means more of your money goes into investments. Brokers with lower commissions and fees ranked higher in this review.

Investments Offered

Online brokers that offer various investment opportunities, including stocks, options, mutual funds, exchange traded funds (ETFs) and fixed income investments provide you with the opportunity to better diversify your portfolio. The broker should also offer different accounts to fit your needs, including individual retirement accounts (IRAs) and education savings plans.

Trading/Investment Features

Online stock trading services that offer practical tools, educational resources and real–time news, charts and quotes help the investor make split–second decisions and plan effective investment strategies.

Security

Security is of utmost importance when it comes to finances. The broker should provide a secure website to transfer sensitive information, offer some type of fraud protection and be a member of the Securities Investor Protection Corporation (SIPC).

Ease of Use

New investors and seasoned investors alike should find the website easy to navigate and the service user–friendly. Many brokers offer in–depth tutorials, documentation or one–on–one training to educate investors on how to use the trading platform or desktop and other services offered. Regardless of which online broker you choose, be prepared to spend some time studying and working with the different trading tools.

Support/Customer Service

The highest-ranked brokers provide first–class customer support so the client feels comfortable investing and can contact the broker with any question or concerns. Customer support is provided through local offices, telephone, email, live chat, online documentation, educational tutorials, FAQs and user forums.

Fees/Commissions

No Account Maintenance Fee

The broker does not charge an account maintenance fee of any kind.

Tiered Commission Structure

The commission for trades and option contract fees vary according to your account balance and how often you place orders.

Broker-Assisted Orders

The price for an order in which a professional broker provides assistance. Some services provide free advice and assistance.

Market Trades

The price of an order of a common market trade.

Limit Trades

The price of an order for a limit trade—an order to a broker to buy a security at or below a specified price or to sell it at or above a specified price.

Option Trades

The price of an order for an options trade.

Fee/Option Contract

An additional fee associated with each options contract.

Minimum Account Balance

The minimum amount you have to have in your account at all times—determined in monetary and or investments value. This is also the minimum amount you have to invest to open an account.

Margin Rates (Base Rate + %)

The interest rate that a broker charges for amounts borrowed for the purpose of buying on margin. Most rates are a percentage above the varying base rate. However, some brokers have a standard margin rate. These brokers are marked accordingly on the matrix with an asterisk.

Investments Offered

Stocks

An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits. Only a certain type of company called a corporation has stock. Also called equity or equity securities or corporate stock. (Investorguide)

Options

The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (the strike price) during a specified period of time. For stock options, the amount is usually 100 shares. Each option has a buyer, called the holder, and a seller, known as the writer. (Investorguide)

Mutual Funds

An open–ended fund operated by an investment company, which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money, they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. (Investorguide)

Exchange-Traded Funds

A fund that tracks an index, but can be traded like a stock. Exchange–traded funds (ETFs) always bundle together the securities that are in an index; they never track actively managed mutual fund portfolios. (Investorguide)

Retirement Accounts

Accounts used for the purpose of retirement that have a potentially higher yield and certain tax benefits depending on the type of account and include individual retirement accounts (IRAs) and Roth IRAs.

Trading/Investment Tools

Calculators

The online stock trading service provides financial calculators like an options calculator, profit/loss calculator or a probability calculator to help you make profitable trades.

Retirement Resources

The broker provides various resources that will help you plan your retirement like articles, online workshops or streaming video.

Alerts

The service provides alerts that notify you of an event according criteria that you set. For example, you may set an alert for a stock that reaches a certain price so you don’t have to continually monitor the stock.

Customizable Desktop

You are able to modify the desktop or trading platform with the graphs, news and other information that will best fit your trading strategies and provide you with the information you need.

Virtual Trading

The service has a feature that allows you to trade in a virtual market with virtual money. This market follows the real stock market and provides a situation where you can practice and test your trading strategies. You are able to see how much you would have gained or lost had you invested real money in a stock.

Level I Quotes

eal–time quotes of the best bid and ask prices for a given NASDAQ or over the counter Bulletin Board (OTCBB) stock. (Investorguide)

Level II Quotes

Real–time quotes of the bid and ask prices for each individual market maker for a given NASDAQ or OTCBB stock. Level II quotes enable investors to identify the market maker offering the lowest bid–ask spread.

Charts and Graphs

Tools that show trends and current positions of stocks, mutual funds and other securities.

Stock Search

The online stock trading service has a search box that allows you to search for stock information by ticker symbol—a system of letters used to uniquely identify a stock or mutual fund. Tickers with three letters are stocks traded on an exchange. Tickers with four letters are NASDAQ stocks. Tickers with five letters ending in x are mutual funds.

Automated Trading

The trading platform allows you to trade stocks automatically. For example, you could set an order to automatically sell or buy stock if it reaches a certain price by a set date. If the stock never reaches that price by the due date, the order is void.

Resources

Streaming News

The online broker provides news as soon as it hits the newswire so you can buy and sell stocks accordingly.

Newsletters

The broker provides a weekly or daily newsletter with advice on trading topics and investing.

Analyst Research/Reports

The online broker provides access to analyst research and reports. These are priceless tools when evaluating stocks and funds. Sometimes third–party companies create the reports.

Tax Information

The broker’s website offers information on tax laws and the effects investing will have on your taxes.

Live Online Workshops

Some online stock trading services provide their clients with access to live online seminars. Investment experts teach these seminars and they cover a broad spectrum of topics including stocks, options, mutual funds, strategies, retirement and more.

Podcasts

The service provides educational podcasts that you can download to your PC or mp3 player and listen to at your leisure. The podcasts cover an array of investing topics.

Blogs

The broker provides an area where clients can submit and access blogs. This allows investors to share information about strategies, other resources, their favorite investments and news.

Books

The service provides a list of recommended books on investing. Some services even sell the books.

Trade Execution

Internet Trading

You can trade securities via the Internet.

Wireless Trading

You have the option of trading securities through a wireless device like a cell phone or PDA.

Phone Trading

You can make orders over the phone using a touchtone system, talking to a live agent or through a voice recognition program.

5 Second Guarantee

The service guarantees to execute your order within five seconds or the order is free.

2 Second Guarantee

The online broker guarantees to execute your order within two seconds, or you don’t have to pay the commission.

1 Second Guarantee

The online stock trading service guarantees to execute your order within one second or the trade is free.

Security

SIPC Member

Securities Investor Protection Corporation. A non–profit membership corporation established by Congress which insures securities and cash in customer accounts up to $500,000 (up to $100,000 on cash) in the event of brokerage bankruptcy. The SIPC is funded by all of its member securities broker/dealers. While it insures the account in the event that a brokerage runs out of funds to cover its claims, it does not insure against investment losses. (Investorguide)

Secured Website

The broker offers a secure website during the transfer of important information. The “https” or a small lock in the corner of the browser indicates a secure website.

Fraud Protection

The broker protects against fraud so if you loose money due to fraud, the brokerage will reimburse your losses.

Help/Support

Number of Offices Nationwide

This is the number of brick and mortar offices the broker has nationwide. You can get advice and open accounts in person at a nearby location.

Telephone Support

The broker provides a phone number so you can contact an agent with questions or concerns.

Email Support

You can contact the brokerage by email.

Live Chat

The online stock trading service offers live chat so you can contact customer support instantly over the web.

Online Documentation

The broker provides online documentation that provides information about online trading and their services.

Virtual Tours/Tutorials

Virtual tours and tutorial introduce clients to trading platforms and educate investors about different tools and resources.

FAQ

The frequently asked questions (FAQs) page is a good place to find answers to common questions.

User Forums

The stock trading website has an area where clients can post and read questions, answers to questions and other comments.

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