Online Brokerage Firms
The most important factor to consider in choosing an online brokerage firm is how active a trader you are. If you are trading from the weekly charts, then data feed issues are not a big concern. If you are a pure “supply and demand” chartist like I am, an army of indicators is unnecessary. If you are a highly active day trader, you MUST have a direct access trading account with a reliable data feed.
Direct Access Trading accounts all offer important tools such as Level II Quotes, Time and Sales, multiple charting options, Alerts, automated order entry and exit options, Watch Lists, a closet full of Technical Indicators (MACD, CCI, Stochastics, Bollenger Bands, Moving Averages), and Market Indicators (Tick, Trin, Vix, New Highs, New Lows). You can monitor news, futures, market sectors, commodities, currencies, and bonds. The list goes on.
So which one is the best online stock trading platform? It seems that they all have or have had some issues. You can’t please all of the traders all of the time. There are four major areas of concern to active traders: reliability, pricing, customer service, and bells and whistles. I will cover a few platforms, most of which, I have had at some personal experience with. I will start with my favorite.
TradeStation
TradeStation has been my number one choice for direct access platforms for many years. I rarely if ever have data feed issues. Fees and commissions are among the most competitive in the industry. The software was once cutting edge, but has slowly lost ground to competitors. That said, I’m still a loyal customer because of the low commissions, reliable feed, and unlimited charting. It doesn’t crash my computer.
For those who like to test new indicators, Easy Language offers traders an easy to learn programming language to create and test new ideas for indicators. They have an extensive library of free indicators developed by other traders.
They have two commission rate structures, flat fee and per share. Flat fees range from $6.99 to $9.99 depending on the number of trades made during the month. The per share fees range from $1.00 per 100 shares to $8.00 per 1000 shares. The $99 monthly platform fee is waived when 5000 or more shares are traded per month.
RealTick
Real tick was developed by Townsend Analytics in the 1980′s. I used them exclusively for several years and was extremely pleased. As they became more popular with day traders, the reliability of their data feed suffered. Several years after I stopped using them, I spent a few weeks at a trading lab where RealTick was the platform and they were still having data feed issues. From comments I read in an online trading room, those issues continued. For current status on data feed issues, do your research before signing up.
On a positive note, RealTick is one of the most powerful direct access platforms available and is considered by many to be the standard for online trading. Quotes are available for stocks, bonds, futures, options, and currencies. RealTick is frequently upgraded. The monthly platform fee is waived on a prorated basis, based on how many trades are made. It is available through several different brokers and individual rates may vary.
eTrade
The trading platform is web based and must download files each time it is opened. It is not installed on your hard disk. Order execution is currently fast and reliable. Fills are good. It is a simple, easy to learn platform with only a few technical analysis tools. Current commissions range from $7.99 to $9.99. The Power eTrade Pro direct access platform is currently offered for free.
eTrade is reported to have good customer service and their tech support is responsive to questions. eTrade offers a broad range of services in one spot: trading, banking, and mortgage services. Some option traders may need more tools.
AmeriTrade
AmeriTrade has many long term happy customers, but they have had a few data feed problems at the time of this article. Data feed problems are unacceptable for day trading and at least very annoying to swing and position traders. These types of problems are typically solved once servers have been upgraded. I would look into any current data feed issues before signing up for a new account.
Most active traders who use AmeriTrade as their broker and data feed also use the free Quote Tracker charting platform which I have found to be more than adequate for my style of trading. This is a great option for low volume traders who can’t justify monthly platform fees. The downside is that AmeriTrade’s published commission and margin rates are among the highest in the industry, but some traders claim to have negotiated better rates.
Think or Swim
The Think or Swim trading platform has had many satisfied users over the years. Recently, TD Waterhouse has taken over. As with most trading platforms, there are a few potential issues to consider. The most common complaints are related to data feed problems. Next in line to that is customer service which has been slipping since the takeover. And lastly, some claim that the software is too demanding of computer resources.
I wouldn’t recommend using the platform at the open or during fast markets. Also, if you are an active day trader, commissions may be too high. Futures contract are $3.50 and stock commissions are .015 per share.
Interactive Brokers
Interactive Brokers has very competitive rates. The platform has a good reputation among active traders because of its execution speed. Some traders, however, have been complaining about slippage. Since I am not an Interactive Brokers user, I can’t tell you if the slippage is broker related or market related. Some claim it is broker related.
As with most direct access platforms each quotation system (futures, forex, etc) has its own subscription fee in addition to the platform fee.
eSignal
One of my mentors used eSignal while the rest us in his trading room used RealTick. While we were complaining of lost data feeds, he was getting filled. Today, eSignal is still at the top of the list for dependable data feeds, but not without an occasional glitch. The platform is multi monitor friendly and your work spaces can be saved for future use.
The level of support is still very good. Users are able to discuss problems, strategies and other topics in the forums where experienced users and moderators are available. eSignal currently offers 5 charting packages.