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发帖数: 639 | 1 THE BEAR MARKET IN STOCKS ENDED a year ago, but a lot of online traders and
investors apparently didn't get the memo. They cut back on equity
transactions in 2009 -- despite the 23.5% surge in the Standard & Poor's 500
-- and instead demanded more products and services. They got them. More
bonds, options, foreign exchange, commodities and mutual and exchange-traded
fund offerings; more social networks to combine their talents; more
education to wean themselves further from full-service brokerages and more
smartphone applications to stay in contact with their portfolios 24/7.
But more than anything, they've started to get a break on prices.
Commissions on stock transactions dropped at most big firms like Charles
Schwab, E*Trade and Fidelity. TD Ameritrade has -- so far -- kept itself out
of the fray, except for 30 days of free trading for new customers (through
June 30). Others took a similar route. E*Trade just announced that new
clients who deposit at least $2,000 will have commissions charged during
their first 60 days of trading rebated for up to 500 stock or options
transactions. Rather than imposing a time limit, OptionsHouse gives new
customers 100 free trades after they fund an account.
IN BARRON'S 15TH ANNUAL ranking of online brokers, we found no sign that the
pace of innovation was slowing down. New products are proliferating.
Investors can now work out complicated options straddles, place orders
virtually instantaneously and put their money to work in Singapore or
Germany while hedging their bets in dollars or euros or exchange-traded
funds.
Barron's Graphics
To make sense of all these new opportunities, online investors increasingly
rely on each other. When TradeKing launched its social-networking community
in 2005, we were, we have to admit, skeptical. But now, with traders and
investors talking things over on a variety of online stages, from Twitter to
closed groups, it's apparent that the communities are an established -- and
accepted -- part of the investing diorama.
"The social-media component for the active trader is something we're seeing
more and more," says James McGovern, a vice president at financial industry
research firm Corporate Insight. "Schwab has its community, as does Zecco,
TradeKing, Trade-Station and thinkorswim -- and that shows no sign of going
away. I imagine other firms that are thinking of doing it will go there."
Many investors who used to look to financial advisors for hand-holding now
seek knowledge elsewhere. TD Ameritrade and Scottrade last year beefed up
educational resources, always a strength for thinkorswim. Newcomer
tradeMonster hosted more than 200 Webinars and 30 live events. McGovern says
, "In tough market times, that's when people start looking for help, hitting
the books and going back to basics."
Of course, they're able to tap into these resources via a dizzying array of
new technology that now extends to mobile trading. Several brokers launched
sophisticated iPhone and BlackBerry applications that enable streaming real-
time quotes, and even complex options-order entry.
A number of online brokers improved their rankings over Barron's 2009 survey
by updating their Websites and making key features more accessible. In
preparing this ranking, we investigated the offerings, operations and
pricing of 22 online brokers this year, looking for the characteristics that
set each apart.
We evaluated these rivals across eight categories. Among them: the types of
tradable investments; the quality and ease-of-use of screeners that help you
choose stocks, options or funds; and the site's startup process, overall
functionality and potential for customization. We recently mentioned to
brokers that a reader had asked for an automated-trading journal, and to our
surprise, several added this feature in time for our review.
We also looked at how trades can be placed with each broker, such as whether
an order can be submitted from a graph or a mobile device. The quality of
education offerings and customer service were examined. In reviewing costs,
we considered not only stock and option commissions, but the interest rate
charged for margin debt and fees for other types of transactions and
activities.
Although Barron's names a No. 1 broker, that doesn't mean it's the right
pick for your style of investing, so we also name leaders in four other
categories -- long-term investing, options trading, international investing
and high-frequency trading. We also display the lowest- and highest-cost
brokers for those who trade a few times a month or several times a day.
Without further ado, then, here are the top online brokers of 2010. A table
(How Barron's Ranks 22 Leading Online Brokers) shows the numerical scores of
all 22 outfits. See reviews of all 22, plus additional data, at Barrons.com.
Thinkorswim (www.thinkorswim.com) once again dazzled, earning 4½
stars. Last year, we worried about the pace of innovation following the firm
's takeover by TD Ameritrade, but thinkorswim's president, Tom Sosnoff, put
those fears to rest. Sosnoff says that thinkorswim still operates as a
separate broker-dealer from TD Ameritrade, mainly because the two brokers
have different clearing operations.
Though the platform has a wide variety of tools, there are no added fees
beyond commissions, which fall in the middle of the pack. Thinkorswim added
free access to Gainskeeper, a cost-basis and tax-accounting tool, last
November; it handles not only stock and options transactions but futures and
foreign exchange. You'll find live broadcasts from the S&P 500 pit as well
as Shadow Trader, and a live feed from CNBC.
One interesting new feature, rolled out in mid-January, is thinkOnDemand,
which uses online retailing giant Amazon.com's cloud technology. It's
analogous to Nasdaq's Market Replay feature but takes it several steps
further. ThinkOnDemand saves every price tick in every options contract
available as well as every listed equity and allows you to stream historical
data as though it's happening in real time. This permits customers to
practice their trading strategies against real data. Loading and buffering
the data can take 1-2 minutes; Sosnoff says most of the traders using this
feature launch it after the market closes to practice trading or to check on
how an order was filled. Charting functionality was added at the end of
February.
Another new thinkorswim feature is Prodigio, which offers drag-and-drop
trading-model tools with back-testing capabilities. Prodigio can run either
inside the thinkorswim platform, or it can be launched independently. A menu
on the left side of the screen allows access to tools such as trade actions
, type of data, logical operators, technical analysis studies, candlestick
patterns, and mathematical equations. Using the Java-based system, you
connect the selected tools to create your trading model. Once you've
developed a model that you want to use, you can connect it to your
thinkorswim account and generate orders. It's an amazing piece of technology
, but not for an amateur or the timid.
Thinkorswim offers great customer service and a wide array of educational
offerings. You can access the tools via its downloadable-software platform,
and most are also available on the Web. Many of these powers have been
pushed through to the thinkorswim platform for TD Ameritrade customers,
which we'll discuss later.
MB Trading (www.mbtrading.com), just a whisker behind thinkorswim in total
points, also earned 4½ stars. It got there by spiffing up the
platform that we so appreciated last year, renaming it MBT Desktop and
adding an excellent Web platform, MBT Web 2.0, to the mix. It also released
an upgraded software application, MBT Desktop Pro, which features an easily
customizable charting application. The charting functionality in the Pro
platform allows you to write your own custom indicators, and overlay those
on your chart.
Another feature, MBT World, is accessible from all of the firm's trading
platforms and includes a social-networking feature, plus Webinars about MBT
products and partner products, not to mention a Wiki with frequently asked
questions about MB Trading. Within the community feature is a link for
submitting ideas that customers can vote on.
One intriguing offering in the MBT suite is its alerts. You can write custom
-alert scripts with hundreds of possibilities, including technical and
fundamental indicators. When an alert goes off, you can reset the trigger
quickly and get back to your trading. You can also set up alerts so that the
details of what triggers them are hidden -- so you can trade or even sell
them to other MBT customers.
MBT's basket-trading functionality lets you create a group of orders and
execute them simultaneously. The group of trades can be closed as a basket,
or closed individually. The Advanced Options Strategist has 64 strategies
built in, and you can create your own. Each strategy is illustrated with a
graph and an explanation of the basics, as well as its risk/reward
characteristics. After you've selected an underlying stock and a strategy,
the tool figures out the appropriate way to implement the plan. You can set
different default-volume quantities for stocks, futures, and options orders.
Your order-entry screen will display these defaults, depending on what you'
re trading.
When we talked up the idea of a trading journal to log activity, MB Trading
came back with its new Lightwave platform. Lightwave's opening screen shows
trading pressure for every asset class you can trade at MB Trading, and
includes a variety of stock and options scanners. You can use any of the MB
Trading platforms with a single login, and switch among them as you please.
We would love to see the Lightwave features integrated into the Web and
Desktop applications.
"Our main objective is to continue to be a low-cost provider in all major
asset classes that offers solid customer support and software solutions for
everyone from beginners to advanced traders," president David Lipsett says.
MB Trading seems to be meeting its objective.
Below are the nine online brokers who earned a very respectable four stars,
together with both their pluses and minuses.
Interactive Brokers (www.interactivebrokers.com)
Pros: It still leads the pack in access to global markets, with access to
bourses in 17 countries on five continents, and cost-consciousness.
Consulting outfit Transaction Auditing Group showed that IB customers
enjoyed quite a bit of price improvement -- a 31-cent advantage per 100
shares and 21-cent advantage per options contract -- compared with the
industry average over the second half of 2009. Its trading platform, Traders
WorkStation, was enhanced with added portfolio analysis and risk-management
tools, plus expanded access to real-time streaming news. Short sellers can
tap a wide array of items, and customers can now trade in multiple
currencies as well. Education offerings are wide-ranging and well-written.
The mobile applications are very usable and offer streaming data.
Cons: Although improved, TWS is still not an intuitive platform to use. The
learning curve is steep. This is a broker more geared toward professional
traders, so buy-and-hold investors should steer clear.
TradeStation (www.tradestation.com)
Pros: The go-to broker for those who develop their own trading systems,
though competition in this field is heating up. On top of all the modeling
functionality built into TradeStation's platform, the firm added ways to
test slippage (the difference between the expected price of a trade, and the
price at which it actually got executed) to their models. Slippage is a
major factor for those trading foreign exchange, as the spread changes
quickly in volatile markets. The ability to create your own parameters when
testing an idea is implemented well on this platform. A new feature is Radar
Screen, which is a real-time opportunity scanning tool. TradeStation
Support center offers a lot of educational information, and the recently
launched Strategy Network allows strategists to sell subscriptions to their
calculations. As TradeStation Vice President Janette Perez says, "You cannot
outgrow our platform." For new accounts opened by March 31, TradeStation
will waive monthly platform fees for four months.
Cons: It's a lot of technology, and not for the casual trader. A platform
fee of $99.95 per month is charged for those who trade below certain levels.
Bonds can only be traded with a live broker.
OptionsXpress (www.optionsxpress.com)
Pros: OptionsXpress underwent a site redesign that cleaned up navigation
considerably. The firm allows its customers to trade a wide variety of
financial products in a single account. The suite of tools has been
consolidated into "hubs," so that they're much easier to find and use. In
addition, optionsXpress rolled out a variety of streaming tools and data,
including streaming options chains and customizable charts. You can enter
and modify an order from a chart, which is a function many technical traders
want. The mobile application, OX Mobile, is well designed, with streaming
real-time data, charts, and watch lists, and stock, options, and futures
trading. CEO David Fisher says, "We found that customers are doing
significantly more trading through these phone-based apps than we thought
possible." Portfolio margining calculations help traders who hedge their
positions keep their margin costs down. You can see how much price
improvement you got on a particular order when you look at your order status
screen, which is a nice touch.
Cons: One of the few brokers left with tiered pricing; $14.95 per trade puts
them near the top of the stock commissions list.
Fidelity (www.fidelity.com)
Pros: Fidelity continues to offer a stable platform with a wide variety of
products that can be traded online. It made a number of changes to its
pricing structure last month, eliminating the tiered commission structure,
and offering 25 BlackRock exchange-traded funds at no fee. A nicely laid-out
and informative Stock Research Center was introduced last fall, along with
an international trading center that lets customers trade in 12 overseas
markets and eight currencies. The Fixed Income Investments center is an
excellent place to learn about, and choose, bonds for your portfolio. Active
Trader Pro (ATP), Fidelity's downloadable software platform, received
charting enhancements that include customization options. ATP also updated
its options features, and now includes an Option Pairing Summary, with the
ability to view options based on underlying security, strategy or expiration
. Overall this is a very deep offering with numerous portfolio analysis
tools.
Cons: The tools are divided across several platforms. To make the most of
Fidelity's offerings, you'll have to use both Active Trader Pro and the
Website.
TradeKing (www.tradeking.com)
Pros: The firm is still the king in integrated community resources on its
trading platform. Expanded education resources include a variety of Webinars
, an updated edition of the Options Playbook, 13 "all-star" trading bloggers
, and an area called "The Rookies Corner" in the online-learning center.
TradeKing also went into the fixed-income market with vigor, launching a
bond-screening tool and an interactive table of fixed-income investments
that shows users a snapshot of the entire marketplace, and what yields are
available in various time frames. Other enhanced tools include deeper quote
pages, more options data, and much-enhanced stock screeners. The new Trading
Dashboard brings the Trader Network community resources right into the
TradeKing platform, and is nicely customizable. You can set up a trading
journal at TradeKing through the Trader Network as well.
Cons: There is some portfolio analysis functionality that is not available
unless you use the Trader Network. You can't select a tax lot online when
closing a position.
TradeMonster (www.trademonster.com)
Pro: This online broker has created a very useful and customizable platform,
especially for options traders. The recently launched TradeCycle
illustrates the steps a disciplined trader should follow when choosing a
trade. The folks at tradeMonster consider this cycle a key to proactive
investing. The steps all use key functions of the tradeMonster platform,
such as research tools, strategy-selection tools, ways to test strategies
and exit planning. The charting features are enhanced frequently, and
include streaming implied volatility for every expiration and strike price,
displayed against a 30-day average. Trade-Monster maintains its own
volatility database, which is a key component in choosing an appropriate
options strategy. TradeMonster also added a trading journal in time for this
review, which allows you to create an entry that captures the values for
several indices, plus the underlying price and implied volatility, at the
point an order is filled. You can attach notes to it and keep track of what
you were thinking when you got into that trade. TradeMonster added mobile
access in the last year as well. The firm has low margin rates.
Cons: Cannot select a tax lot when closing a position.
OptionsHouse (www.optionshouse.com)
Pros: The site is packed with tools for options traders, and it has added
some for stock traders, too. The core of the Options- House platform is its
risk viewer. President George Ruhana says, "We really want people to
understand the risk associated with their positions." He notes that a
customer may have a position that is suitable on the basis of his margin but
inappropriate for the size of his account. The potential effects of a
change in the market on your positions, and your overall portfolio, are
nicely laid out and understandable. Ruhana acknowledges that a lot of his
customers have accounts elsewhere, and bring assets to OptionsHouse for its
options-related tools and low stock commissions. Clients place approximately
100 trades per year. The firm launched a mobile-Web application in October
2009 that handles trades, order management, and portfolio management. An
iPhone-specific app is planned for later this year.
Cons: Very options-centric, as the name would suggest. A change in options
commissions from flat-rate to per-contract went into effect in December.
TD Ameritrade (www.tdameritrade.com)
Pros: This is one of the places you can still go for "one-stop shopping" and
is benefiting from its takeover of thinkorswim. The toolset available to TD
Ameritrade customers was much enhanced by the launch of thinkorswim from TD
Ameritrade last year. Anyone interested in higher-level options data,
research, and charting should be moving over to the thinkorswim platform. On
the Website, one of the key strengths of having a TD Ameritrade account is
the wide range of third-party research that's built into the platform and
easily available, from outfits like Credit Suisse, S&P, Market Edge, Ford
Equity, First Call, Vickers Insider Trading and Morningstar. The order entry
"snap ticket" was updated this year to include streaming quotes and mini-
charts. The Website built in a bit of community function by displaying the
symbols and news articles that have been most viewed by the client base that
day. We expect to see the technology continue to be enhanced with
thinkorswim tools. Single-stock futures, futures, and futures options will
be added in the next few months.
Cons: Not engaging in the "price wars," which is a mixed blessing. Stock
transactions remain at $9.99, and options fees are near the top of the list.
Many tools segregated on separate platforms.
E*Trade (www.etrade.com)
Pros: E*Trade is another one-stop shopping destination, and features
terrific mobile-trading applications. The broker has enhanced a number of
services, including fixed income, research, retirement planning, active
trader and advice-based tools. It's also implemented some navigation
improvements, allowing for greater site customization and focused on better
customer service. Mobile Pro for the iPhone is one of the best mobile-
trading apps we've seen, and includes streaming video and options quotes. As
the year goes on, E*Trade plans to improve its mobile applications further;
the firm is being rewarded by a huge increase in trades placed via mobile
devices. Portfolio margining is in beta test and should be available by
summer.
Cons: The Website could still use some streamlining, as navigation is
occasionally confusing. Too much segregation of toolkits on different
platforms.
What's still to come? More investment opportunities; more mobile
applications; more integration of various tools onto a single site; and more
education to support those intrepid investors who've sworn off full-service
brokers. Oh yes, there's likely to be some more price cutting as well.
ChoiceTrade (www.choicetrade.com) 3½ stars
Pros: Its recently-launched Web platform update, Flex Trading, is aimed at
less-experienced traders who still want a lot of tools. The application is
modular, encapsulated in widgets that you can move around and resize. Very
nicely designed trade ticket for stocks and options. Downloadable
application routes orders very efficiently. Low-end Web platform is rather
sparse; customers should bypass that in favor of the Flex app.
Cons: Minimal feature crossover from one platform to another. Pricing is
different for Web platform versus direct access.
Muriel Siebert & Company (www.siebertnet.com) 3½ stars
Pros: Excellent fixed-income resources, backed by a conservative and
financially stable firm. Clients have access to numerous original bond
issues and receive personal attention when adding to their fixed-income
portfolios. Firm has very low margin fees. Muriel Siebert, president and CEO
, says, "Siebert has a special appeal to investors for whom peace of mind,
safety, security, a variety of alternatives for diversification and a choice
among multiple research and analytic tools mean more than paying the lowest
commissions."
Cons: Published pricing structure is very high though company officials
insist that fees are negotiable. Website navigation is difficult.
Lightspeed Trading (www.lightspeed.com) 3½ stars
Pros: Low fees for stock and option trading make this an attractive place
for very active traders. Range of offerings increased this year with the
addition of foreign-exchange and complex options, plus Lightspeed Spotlight,
an online social-networking community. Very fast trade executions and good
customer service.
Cons: No bonds or mutual funds, but that's not the customer they're trying
to attract. Must choose either Web or direct-access platform as customers
cannot switch back and forth at will.
Charles Schwab (www.schwab.com) 3 stars
Pros: A wide range of products that can be traded. StreetSmart Pro, Schwab's
direct access software platform, offers some terrific filtering tools and
the ability to enter conditional orders and some complex options. Schwab has
many offices around the country, a plus for those who want face-to-face
contact. Live-education events are well-run.
Cons: The Website is feeling dated, and navigation gets more difficult as
new features seem to be tacked on rather than incorporated into the
structure.
Scottrade (www.scottrade.com) 3 stars
Pros: Added a huge amount of educational resources, both online and in
branches. Nearly 450 offices around the country that provide customers with
a local resource for education and support. Rodger Riney, Scottrade's
founder and CEO says, "We have always focused on providing exceptional
customer service and feel it is important to have branch offices where our
customers live and work." Just added some international trading.
Cons: Separate platform (provided by OptionsHouse) for complex options
trading. Like several other brokers, there's no single place to go to make
use of all the firm's offerings.
Zecco (www.zecco.com) 3 stars
Pros: Much improved Website along with company focus on improving support.
Quote display, plus access to enhanced research, are much easier to use.
Zecco added options features in the last year. We also appreciate the
display of insider-trading activity on price charts. The Zecco community is
nicely integrated into the new Web platform, including the ability to share
screeners. First 10 stock trades per month are free for accounts with $25,
000 or more.
Cons: Can trade forex but it's a separate account. Unable to enter
conditional orders.
SogoTrade (www.sogotrade.com) 3 stars
Pros: Added options trading in the fall of 2009. The options platform
includes streaming real-time chains, multi-leg strategy chains, integrated
analytics, price modeling, risk/reward assessment, and education in
partnership with the Options Industry Council. Commissions are well below
average. SogoTrade has launched their Webinar education series and plans to
add to it as the year goes on.
Cons: Cannot trade mutual funds or bonds. No conditional orders.
Terra Nova (www.tnfg.com) 2½ stars
Pros: Offers the RealTick platform to customers, which was one of the
pioneers in providing streaming data and charts. RealTick has a lot of
competition now. InstaQuote platform offers a variety of order types and
options analytics.
Cons: The firm has no proprietary platforms and recently dropped one of its
third-party trading applications, forcing a migration of the remaining
customers to a different platform. All platforms carry fees of $100/month
and up, depending on trading level. There are better deals out there.
Just2Trade (www.just2trade.com) 2½ stars
Pros: Low commissions and margin fees. J2Trader added real-time streaming
quotes in 2009; streaming charts will be added by summer. Another addition
this year is a mutual- fund screener. Just2Trade has Maxit tax accounting
built in.
Cons: No complex options. J2Trader only allows 15 symbols per watchlist.
Trading application is very basic.
Firstrade (www.firstrade.com) 2½ stars
Pros: Developing a new trading application, which will be launched in late
spring. That's a good thing because the existing Website is tired and in
need of an update. Firstrade can be completely translated into Chinese, if
desired.
Cons: Current trading application is outdated. All reports show delayed data
rather than real-time.
Cobra Trading (www.cobratrading.com) 2½ stars
Pros: Cobra IQ and OmniPro platforms offer streaming quotes and charting.
Phones are answered quickly and customer service is polite. You can set up a
custom-commission schedule. Cobra brokers will help you locate securities
to sell short.
Cons: Limited screeners and search tools. Cobra's Web platform is extremely
limited and has almost no tools. Software platform fees are high in
comparison to other, more powerful, platforms. |
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