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Find the Best Online Broker: FAQs, Definitions, Sources and More

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Sources

All data for this tool was provided by each brokerage listed; it was collected from their websites and by speaking with company representatives. All data is up to date as of Aug. 31, 2015.

Definitions

Stocks: Shares of stock represent partial ownership of a company’s assets and earnings.

Bonds: A fixed-income investment in which investors loan money to a corporation or government for a set period of time at a fixed or variable interest rate.

Mutual funds: Mutual funds pool money from many investors to invest in a large group of assets. Funds can focus on a single type of asset (such as bonds or money markets), a sector (technology stocks or foreign companies), a strategy (beaten-down companies with the potential for near-term growth) or a mix of assets that make up a particular index (the S&P 500, the Russell 2000 or the Dow Jones Industrial Average). Refer to this article for more information.

ETFs: Exchange-traded funds offer exposure to a group of assets (like a mutual fund), but are traded on an exchange (like a stock).

Options: Options are advanced investment instruments that let investors sell or purchase stock at a predetermined price within a specified period of time.

Futures: An advanced investment instrument that is used like an insurance policy against the risk of price movement on a particular asset in a portfolio. A futures contract obligates a buyer or seller to purchase or sell an asset at a future date and predetermined price.

Currency trading: Trading currency requires access to foreign exchange markets (often shortened to Forex or FX), a global network of banks, investment firms, hedge funds, and retail and commercial brokers and investors. On the foreign exchange, investors can buy, sell, exchange or speculate on the relative performance of currency tied to different economies.

Margin: Margin loans allow investors to borrow with interest from the brokerage to fund investments. This strategy increases risk and is not used by most retail investors.

Penny stocks: A penny stock is a publicly traded security with a low stock price (typically less than $5 per share) that is issued by very a small company or a company with a share price that has gone down because of uncertainty about the business. They are speculative in nature, and trading penny stocks may incur fees that are not listed in this tool. Refer to this article in order to learn more.

Real-time trades: Trades executed when requested, as opposed to being held with other orders by the brokerage and executed during a designated trading window.

Day traders: Traders who execute a high volume of trades in a short period are legally recognized as Pattern Day Traders with special account requirements. Please refer to this article in order to determine whether you qualify as a pattern day trader.

Assumptions

Approximate stock price: $20 per share

Approximate option price: $5 per contract

Wire transfers: We assumed that the user makes 3 outgoing wire transfers per year.

Automated orders by phone: We assumed that users selecting this option would place 1 order per month using this method.

Broker-assistance: We assumed that users selecting this option would make 1 broker-assisted trade per month.

Further information

Cost per stock trade: This value is typically based on a fixed price per trade, but for some brokerages is priced based on the size of the trade (number of shares or principal value).

Minimum initial balance: This value changes based on whether the user has indicated that they trade on margin. Most brokers require a higher minimum balance in order to open a margin account.

Cost breakdown: This details the fees and promotions that have been used to calculate your total monthly cost for a given brokerage.

Account details: Please refer to this section of the Best Online Broker tool for further details regarding the account and any relevant promotions.