There are a lot of trading brokers online where you can do trades. And you may have different reasons to choose them. I am not going to post what platforms are good or bad, but I am simply going to post questions to ask yourself when choosing a trading platform.
Questions to Ask when Selecting a Stock Trading Platform
What are the trading fees?
I did my first stock trade in 2012, as I got introduced about stock trading through my MBA class about corporate finance. It was not part of the subject to learn how to trade stocks, but just by hearing about the basics made me got started and I first signed up with eTrade mainly because it was what I had on top of my mind, probably due to many ads I saw that time on eTrade. Unaware of the trading fees and commissions eTrade would charge, after doing a little research, I noticed the fees were cheaper on Scottrade. Scottrade no longer exist as they were bought out by TD Ameritrade. As years pass by, I found out about TradeKing had even cheaper fees and went there. TradeKing no longer exist either as they were purchased by Ally. Then I learned Robinhood, when it first came out said they had no fees. I was surprised and doubted it at first, and I made a second trading account on Robinhood. Later on My Ally account was moved to TD Ameritrade for different reasons, but later on, they no longer charged fees per trade, so I moved my Robinhood funds to TD Ameritrade too. And today, TD Ameritrade no longer exist either since they were purchased by Charles Schwab.
I believe most stock brokers no longer charge fees, but still double check that, especially if you are outside of the US and other brokers may have different rules. And also it might be different in different country stock markets. But for most US-based broker companies for US-based customers trading in the New York Stock Exchange no longer have trading fees.
What are the balance requirements for margin accounts and advance options?
If you are trading stocks, check if they have any starting funds amount, and any balance to maintain. And if there is none, but you later on want to short trades, or do options, or even do day trades, their balance requirements may change. Depending on what you want to do, may have a different requirement and might be different from broker to broker.
I currently do advance option trades and since this runs multiple orders at the same time of the same stock, it is considered a day trade to them. And since the advanced trades are both trading long and short, it requires a margin account. I was able to start with TD Ameritrade with a few thousand dollars, but to do the advanced option trades, that require a margin account and day trading capabilities, my account value was needed to be $25,000 or higher at anytime I needed to do these advanced trades.
Do you trade more than stocks? Cryptocurrency or Forex?
Some people trade different things and not just stocks for different reasons. Sometimes if the stock market is down, some forex or crypto is up somewhere. And if the market is closed and you want to trade, sometimes these other currencies trade non-stop 24x7. I used to trade cryptocurrency a lot and I used different platforms from Coinbase, Binance, LedgerX, and more but when I used to be on Robinhood I found it convenient that I can do both stocks and crypto on the same platform. Although do no do crypto trading anymore, I have heard platforms like eToro and Interactive Brokers can do both Stocks and Forex. eToro can also do Crypto. So if you trade these other markets too, maybe being all in one platform is good since the transfer of funds between markets will be easier.
Since I only trade solely stocks these days, I primarily only use Schwab right now.
Do you do derivative trades? Like Options, Futures, Forwards and Swaps?
I trade options too of the US stock market. And I also used to trade options on cryptocurrency. I wasn't able to find an ideal platform for me where both are together and I do my option trades on Schwab since I prefer using the Think or Swim trading platform interface which basically came from TD Ameritrade. Then I used to trade crypto options on LedgerX, which at one point was purchased by FTX, then LedgerX separated from FTX when FTX filed bankruptcy, and LedgerX was then purchased by Miax Derivative Exchange. But all option trades in US crypto trading companies disappeared. So I basically let go of all my crypto trading since I really wanted to do options, specifically never ending covered calls. I moved all my crypto trading funds into stocks.
But if you do options, futures, forwards or swaps, check the trading platforms you wish to sign up on and see if they have this.
Do you use APIs for automation in trading?
Are you using tools for trading analysis and do they have automation in the tools that can do the trades for you? If they do, they need API access to the trading platforms. If you use a stock analysis tool and relies on it a lot and can submit and close trades for you, you might as well see the platforms that are supported by it.
I am a user of VectorVest, it is a stock analysis platform and I have been using it since 2016. At one point, I wanted to do my trades within the software itself, and at that time, TradeKing was one of the platforms it integrated with, and that was one of my reasons to use TradeKing. Today though, I prefer to use Schwab's TOS, even if I still have a VectorVest account and is no longer doing trades directly in the software. But if you are in that situation where you are using a software that does trades for you, then the platforms need to have some API access. If you are a programmer yourself, you can learn how to use programming languages like Python, make your own script, and do the trades for you using the broker platform APIs. Some people apply machine learning in their trades while using Python.
What level of analysis tools do they have?
Even if I am a fan of VectorVest which is a stock analysis platform and not a broker, it is also a nice benefit for the broker platform to have some good stock analysis tools built-in. This is where I like Think or Swim or TOS. TOS was a part of TD Ameritrade, but since that is now owned by Schwab, it would be a big mistake for Schwab to discontinue TOS. So I guess they realized that too, and with a Schwab account, you still get to use all the technical analysis tools TOS has to offer. Before I used TOS, and was on Scottrade, they had 2 platforms, one that had simple technical analysis tools and another that was more advanced that was a long time in beta mode. But since TD Ameritrade bought them, and TOS is better anyway, I stayed on TOS which is now basically a part of Schwab.
Do they offer any kind of value added training?
Back when I was still getting started in trading and was on Scottrade, they had many satellite offices, that had regular scheduled seminars. I attended a lot of them in-person in their local offices. Today I am using Schwab which basically absorbed TD Ameritrade and in effect, also Scottrade. Both of which had a lot of training resources, and they kept all of that and probably even improved upon it.
We can all learn the basics from many resources online, but there is always something new to learn. Thus I suggest look into the platforms that offer a lot of training resources.
Additionally, if you intend into trading options and needs to do advanced trades, they do not offer this right away to those without experience. And sometimes if the platforms offering option trades won't allow you to trade because of the lack of experience trading options, but their platform has trading resources, if you go through all of it and they see in your records you passed all the exams, they will eventually let you trade options.
Is it available in my country?
I am currently based in the US. But not everyone is based in the US and one thing I noticed with many of the platforms I sign up on, they ask for identification or US Social Security numbers or Tax IDs, etc. And when people outside of the US try to sign up without these requirements, they are not allowed to join in. But there are other platforms that are open for customers outside of the US that wants to trade in the US stock market. I have heard both eToro and IB allow this.
Summary of My Trading Platform Selection Over the Years
- Etrade
First platform I signed up on, probably because I was not aware of others and just relied on what I saw from ads at the time. - Scottrade
Did a transition to Scottrade after doing a bunch of Google searches and comparing commissions and fees per trade at the time. - TradeKing
I moved from Scottrade to TradeKing mainly because I became a VectorVest subscriber and they had the option to connect to various platforms to automate trades. TradeKing was one of them so I moved all by funds there. - Ally
I didn't move to Ally for any reason but mainly because they purchased TradeKing - Ally + Robinhood
I opened a second account on Robinhood when they first came out. Mainly because there was no commissions and trading fees. But I still kept Ally for the ability to trade within VectorVest and also the ability to do Option trades which were not available yet on Robinhood at the time. - TD Ameritrade + Robinhood
With the analysis tools and the better interface for option trades, I moved to TD Ameritrade and dropped Ally. But I kept Robinhood because of the no fees. - TD Ameritrade
TD Ameritrade, like many others, also started to have no fees per trade, so with the better analysis tools than Robinhood, I left Robinhood. Back then I was also doing crypto trading and Robinhood started to offer that too, but the analysis tools were better on platforms like Gdax (which is now CoinbasePro), and Binance (which is no longer offered in the US). - Schwab
No specific reason to move to Schwab, but just work up one day from an email saying that my TD Ameritrade account is now a Schwab account. I automatically checked if I still had access to Think or Swim and I did. Schwab kept it.
So far these are my reasons for switching platforms and where I am today. You may be in a different situation, has different priorities, or cannot simply use the platforms I am using for whatever limitation. But the questions above will help guide you in your selection of your preferred stock broker platform. Good luck in your selection.