Best Online Brokers: Which Fits Your Investing Style?

By Ken Shreve, Investor's Business Daily (11/29/2013)

If competition is good for the consumer, things are great for online investors. Big and small online brokerages continue to innovate to gain customers and retain existing users. Free stock trades and referral bonuses barely scratch the surface.

Investors can pick a broker with lots of online workshops and videos to help hone their investing skills, or one that lets them analyze markets and stock charts on the go with their cellphone or tablet or, perhaps soon, a Google Glass wearable computer.

The industry giants continue to win over all types of investors with a something-for-everyone approach. Yet some online brokers are thriving by serving a little something extra to niche markets.

Which broker will best meet a particular investor's needs?

IBD and its polling partner TechnoMetrica surveyed more than 10,000 investors to find out. The result is our second annual Best Online Brokers study, which identifies the top five brokers for each of 12 critical characteristics the factors that survey participants said were most important to them.

We also present the top five brokers in Overall Customer Experience, based on their performance in all 12 categories. Those top firms were Charles Schwab (SCHW), Fidelity, TD Ameritrade (AMTD), USAA Brokerage and TradeStation.

If those names sound familiar, it may be because four of the five best overall in our 2013 Best Online Brokers survey also made last year's top five. TD Ameritrade is the newcomer to the group, boosting its performance rankings vs. last year. (TD Ameritrade's Thinkorswim platform was treated as a separate brand in IBD's 2012 survey and ranked in the top five brokers overall.)

Each broker was rated only by its own customers. The rankings thus give other investors who might be shopping for a new broker unique insights into how the firms measure up in their clients' eyes.

Investors can study the specific strengths of the best overall firms to see how they fit their support needs and the way they invest in stocks and other securities. They can also review the 12 category lists to identify other brokers that might be a fit.

Are low costs the primary concern? Interactive Brokers, TradeKing, Vanguard Brokerage, Scottrade and Merrill Edge ranked highest in this area. Or is options trading important? OptionsXpress and Interactive ranked high on this list, as well as in some other categories. Or is broker responsiveness a concern when a question or problem comes up? If so, investors can take a look at the best online brokers for customer service, which include Scottrade and Vanguard Brokerage.

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