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Online Trading Platforms Review


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Assessing Online Trading Platforms | The Initial Step

TOnline Trading Platformshere are a wide variety of online trading platforms available to trade stocks and other financial instruments, such as futures and options.  The key question traders of all levels of experience need to ask themselves when considering which online trading platforms would serve them the best is:  how often do they trade?  Due to market demands, there is an online trading platform for every trading level, from casual traders that rarely trade, to regular traders that trade at least once per week, to active traders that trade at least once per day, to day traders that trade many times within a single trading session.  Defining one’s level of trading activity is critical when selecting a suitable online trading platform because the costs and service levels vary widely depending upon how a trading platform is designed and what kind of trader it is intended to be used by.

Assessing Online Trading Platforms | Determining What You Need

Once an online trader has determined their frequency of trading, they can compare the various online trading platforms that cater to their frequency of trading.  Some traders may wish to use more than one online trading platform, as they may engage in different frequencies of trading in separate accounts to engage in different trading strategies.  The key is to strike a balance between the commission costs and the level of services provided.

Platforms for Casual Traders That Rarely Trade

E-TradeCasual traders that trade approximately once per month will find the online trading platforms provided by name-brand online brokers, such as E-Trade, Scottrade, TDAmeritrade, and Fidelity Investments to be suitable for their occasional trading needs.  Casual stock traders include investors, position traders, and swing traders.  The one feature that is crucial for casual traders is strong research tools, since they are looking to make investing or trading decisions that require a great deal of due diligence and thought, as the investments or trades could take many weeks to years to play out.

Platforms for Regular Traders That Trade Once Per Week

Regular traders that trade approximately once per week will also find the online trading platforms provided by name-brand online brokers to be sufficient to meet their regular trading needs.  Regular stock traders include investors, position traders, swing traders, and news traders.  Regular traders also require strong research tools to assess where to establish and close out trades, and the condition of the underlying companies.  Regular traders should consider commission costs, since if they make about fifty trades per year, slight variances in commissions can make a difference in how much they make trading stocks over the course of a year.

Platforms for Active Traders That Trade As Often As Once Per Day

Active traders that trade at least once per day may find the online trading platforms provided by name-brand online brokers to be sufficient to meet their regular trading needs; however, at this frequency of trading, additional trading tools may be useful and commissions are very important, as slight differences can add up significantly over time.  Active traders may find the trading platforms provided by online brokers with robust trading platforms, such as MB Trading or SureTrader, will meet their needs for increased trading flexibility.  Active stock traders include position traders, swing traders, news traders, and momentum traders.  Active traders need trading platforms that allow for quick order execution, and may wish to opt for a trading platform that allows direct order routing to obtain the best fills when buying and selling stocks.

Platforms for Day Traders That Trade Many Times Each Trading Session

Day traders that trade many times during a trading session need a robust trading platform provided by online brokers, such as MB Trading or SureTrader.  At this level, control over trade routing and execution is extremely important, since day trades are often opened and closed within a matter of seconds and fill prices and fill speed are crucial to success.  Additionally, commission prices are very important since a day trader can rack up many thousands of trades per year, and a slight difference in commission can make a big difference in the annual cost of trading and ultimately trading profits.  Day traders include short-term swing traders and momentum traders.

Tips Regarding Choosing Penny Stock Online Trading Platforms

MB TradingIf you are inclined to trade penny stocks, there are considerations to keep in mind when choosing a penny stock online trading platform.  Specifically, the fact that certain online brokers do not allow trading in all penny stocks, which restricts trader’s ability to trade certain penny stocks.  As a general rule, penny stocks that cannot be cleared and deposited via the Depository Trust and Clearing Corporation (DTC) are banned by some online penny stock brokers, including some major ones, such as TDAmeritrade, due to the costs and liabilities associated with non-DTC eligible stocks.

The ability to route orders to specific market makers can be a useful feature to have in an online trading platform designed to trade penny stocks.  Other considerations include whether or not a penny stock broker allows penny stocks to be shorted via their platform and how many digits they allow penny stocks orders to use, as more digits allow greater order flexibility.

Casual and regular penny stock traders that do not trade penny stocks very often will find the online trading platforms offered by mainstream penny stock brokers, such as E-Trade, Scottrade, TDAmeritrade, and Fidelity Investments to be sufficient for their penny stock trading needs.  While these brokers may limit some penny stock transactions and not provide the trading flexibility of some of the second tier online brokers offer, their easy to use trading platforms and good customer service are well suited for casual and regular penny stock traders.

There are a wide variety of second tier online brokers that offer robust trading platforms for active traders and day traders that trade penny stocks.  These online brokers include companies such as MB Trading, Speedtrader, SureTrader, and Interactive Brokers.  Not only are their commissions generally lower than mainstream penny stock brokers (in some cases as much as 50% lower), but their online trading platforms also offer a much greater level of order control and features that are essential to successful active and day penny stock trading.  These features could include, direct order routing to penny stock market makers, the ability to short penny stocks, and the ability to obtain fast penny stock news updates.

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