Trading Places: The Top Online Brokers

Going for Broker

If you think you can start trading as soon as you finish this article, think again. While some brokers, like DLJdirect and Suretrade, don't require a minimum deposit to open an account, most want at least $2000, and they don't take plastic. Allow at least five business days for your check to arrive and clear before your account gets started. The only exception: DLJdirect lets new customers trade as soon as their accounts are approved, usually within seconds of applying.

You'll probably need an hour or two to find and decipher the brokerage's minimum deposit requirements, fees, commissions, and account terms. Discover and DLJdirect were the best at providing this information; at E-Trade and Suretrade, we couldn't find it easily. But once our deposits had landed, trading was easy. In most cases, our initial order to buy shares of stock was filled in mere seconds--before we could even move from the confirmation screen to the order-status screen.

Of course, the more you trade, the more you pay in commissions. That's why low-cost Web brokers are attractive to investors who trade a lot. Instead of the typical $100 to $175 fee a traditional broker charges, you can pay anywhere from $8 per trade (Ameritrade and Suretrade) to $30 (Schwab). A limit order, which designates the maximum price you're willing to pay for a stock, might cost a few dollars extra. And with most online brokerages, placing trades by phone--via an automated system or by talking to a flesh-and-blood broker--will run you a bit more.

One great advantage of online trading is easy access to more reports and charts than you'll find in any discount broker's office. Though this information is available elsewhere on the Web for free, the best brokers merge it directly into your portfolio display--offering links to quotes, charts, and news of your holdings, so you can keep tabs on your investments. Charles Schwab, Discover Brokerage Direct, and DLJdirect are the best at integrating research into customers' portfolio views.

And keep in mind that though we only rated brokerages on their stock trading capabilities, you might also want to consider how a firm stands up when it comes to mutual funds, bonds, options, and other investments. If you're looking for a place to park your retirement funds, all of these firms offer IRA, Roth IRA, and other retirement accounts--just watch out for the annual fees that are frequently charged for these plans.