Trading Technology: This category represents the overall workflow for placing an order as well as the order-routing technology.
We evaluated the quality of the data available prior to placing an order with an emphasis on streaming real-time data. Real-time quotes are now standard prior to entering an order, so streaming data on the order entry ticket is preferred. We checked out the ways a trader is told that an order is executed, such as pop-up notices, an order-status update, and/or a text on a mobile device when the order fills.
We looked for prefilled order tickets when closing a position, which eliminates possible errors during the closing process. A “Close” button when looking at a portfolio report is preferred. We also evaluated the options order-entry process, as well as mutual-fund, bond, and (when available) futures, commodities and foreign-exchange order-entry screens. Methods for placing conditional orders, such as one-cancels-another or one-triggers-another, were checked.
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The availability of price-improvement strategies and smart-order routing technology (which finds the best bid or offer) is necessary to earn top ratings in this category. We asked whether a broker’s order-routing engine used a spray or sequential engine; spray routing contacts multiple venues simultaneously and is less inclined to execute orders via routes that offer payment for order flow. Brokers offering price improvement — a sale above the bid price, a buy below the offer — a fraction of a point depending on the portion of their transactions that benefited.
Top marks were earned by brokers who offered a wide array of order types, and emphasized price improvement when routing orders. The ability to place a trade from a graph earned a fraction of a point. In addition, we looked for ways to customize the trading experience, such as setting a default number of shares or contracts, to speed order entry. The order entry-and-execution process must flow easily from one step to the next, with streaming real-time information (including buying power and margin balance) available when needed.
Usability: A 5 here means the site or program was easy to use and well-designed, didn’t bog down when moving from screen to screen, and can be tailored to the user’s needs. We looked at how easy it is to get started on the platform or Website as a new customer. Constant availability of a trading ticket and easy access to research and account status data are key. Being able to easily switch from one area of the website or program to another is important. Customization options contribute to points that can be earned, allowing clients to tailor the broker’s offering to their needs. The ability to quickly generate an order ticket from research pages without having to enter the symbol manually is also an important part of earning high marks for usability.
Mobile: The availability and quality of mobile trading and account data are measured here, as well as education opportunities that you can take along for the ride. We looked for streaming real-time data, including charting and news. We looked for ways to trade stock and options on your tablet or smartphone; the ability to trade other asset classes is a plus. Cross-platform integration is vital; when you set up a watchlist on your desktop, it should be available on your mobile devices as well. We also considered the workflow for placing an order and managing an account. To earn a 5 in this category, a broker must offer streaming real-time data, the ability to place complex options transactions and conditional orders, and be able to share watchlists and trade ideas with the customer’s desktop or Web-based offering.
Range of Offerings: We awarded points for the diversity of investments that can be traded online, with partial points given for those that can only be traded offline. Since long and short stock-trading, as well as single-leg options orders are now standard, we don’t award points for those transactions. We asked brokers how many stocks, on average, their customers can sell short, and awarded up to a half-point based on their answer. Complex options trading, and the availability of mutual funds, bonds, futures, commodities, and international trading were also considered. A fraction of a point was given to brokers who have robo-advisory offerings. A 5 in this category means you can execute all of these transactions online. Some brokers offer certain asset classes via live broker only; those earned partial credit.
Research Amenities: This category measures the quality and accessibility of research, quotes and charting. We looked for research, news and charting linked to a customer’s portfolio and watch lists; the quality of third-party research and its integration with the rest of the site; and the availability of screeners, with special emphasis on options screeners. We take a long look at the available screeners, awarding points for the ability to customize a filter and generate precise and actionable results, such as adding to a watchlist or opening an order ticket. Brokers also won points for offering real-time streaming quotes at no additional cost, powerful charting capabilities, and Level II quotes. Partial credit was awarded for features that generated an extra fee.
Portfolio Analysis and Reports: The emphasis here is on clearly laid-out reports, updated in real time, showing current balances, positions and margin status. We looked for ways that investors and traders can monitor their own successes and failures, to help them make better trades in the future. Customizable portfolio-analysis reports, with links to news and research, as well as extensive transaction history, are most desirable. The ability to beta-weight one’s portfolio, or compare it to an index or customized indicator, earns additional points. Tax reporting also falls in this category. Full credit is given for reports that can be created on the broker’s Website, with no additional fees or data entry required. Partial credit is awarded to brokers that populate services such as GainsKeeper and Maxit (tax analysis and reporting programs) for an additional fee.
Customer Service, Education and Security: We sized up online help such as live-chat capability, user guides and frequently-asked-question files. Offline help was assessed by making calls to customer service, and weighing the brokers’ reports of the average time spent on hold when a customer calls in. We took a look at the education offerings, both online and live. The ability to visit a broker in person is taken into account here. When it comes to security issues, we looked at whether a broker offers two-factor authentication, and checked out security measurement statistics for the Websites by third-party evaluators. We also looked at the strength of the passwords each broker required, and whether password changes are forced from time to time. Use of biometric identification on mobile devices is also considered. Brokers who are able to weather surges in trading are rewarded in this category, especially those with capacity to handle all of their customers logging on simultaneously.
Costs: We looked at commissions for stock and options trades and margin interest rates, giving more points for lower costs. We scaled the points awarded so that the lowest costs in the group earned the maximum number of points, with fractions (and occasional zeros) given to the more expensive brokers. Stock and options commissions are the biggest determinants for scoring, but mutual-fund and other transaction fees are also considered. A 5 could be earned here by very low stock and mutual-fund commissions, $5 or less for 10 options contracts, margin interest rates below 3%, and no account-maintenance or data fees.