Online trading was made possible in the stock market after the stock market crash of 1987. This became the reason for the rise of online investment brokers. To have small orders executed, NASDAQ started the Small Order Execution System or SOES. From then on, online investment bankers have started to earn by using the Internet.
In the past, mainstream investment brokers were monopolizing investment data. Even in the mid-1990s, investors still had to do the investing the old-fashioned way, which is, calling the brokers' office for stock quotes, volume data, and other volatile information. Discount brokers were the one who actually used the Internet for online investments transactions. Today, investment brokers are offering sophisticated trading platforms through the Internet. Gone are the days of old fashioned stock investment processes.
The following are some of the online investment brokers in the business:
- Online stock brokers
- Online commodity brokers
- Online currency brokers
- Online foreign exchange brokers
Meanwhile, these are some of the well-known and reliable online investment brokers in the industry:
- E*TRADE. This firm is so far the most popular among all online investment brokerage firms in the industry. It imposes a reasonable commission per trade that goes from $6.99 to $12.99. Aside from brokerage, E*TRADE also offers other services like savings and checking accounts, credit cards and mortgages.
- Charles Schwab. The only difference between E*TRADE and Charles Schwab is the approach to customer service. While E*TRADE relies on the Internet even for customer service, Charles Schwab pushes for personal customer service. The firm also offers assistance in independent research and trading tools.
- Vanguard. This firm is known for their mutual funds and very low fees and not all are aware of their online investment brokerage service. Letting Vanguard manage your investments is advantageous if you have existing mutual funds under their firm. If this isn't the case, it will be better to avail the services of other brokerage firms as their commissions are considerably higher than their competitors.
- Sogo Trade. The firm offers a $1 or free trade for clients who avail of their savings account or mortgage service. The downside is that there is no additional feature like trading tools or independent research. Nevertheless, the firm's automatic investing feature makes up for what it lacks.
Choosing an online investment broker will greatly depend on your investing style, your needs, and your investment goals. Choose the online investment broker that will give you the right tools in investing and maximizing your returns.
Ever since online investment brokerage started, brokerage firms were compelled to reduce their commissions and fees. In fact, the practice that is being evident now is the loss of commissions and fees on individual transactions. Brokerage firms only earn through annual management fees that they impose on the total assets of their investor.
With the presence of online investment brokers, individual investors now have access to investment information that was impossible in the past. Individual investors are also made fully aware of the actual state of investments and do not need to fully rely on advices of stock brokers.