Which Is the Best Broker for Options Trading?
Published on May 13, 2013
Published on May 13, 2013
Evolution of Internet has revolutionized how brokering services work. Gone are the days when you needed to pay prohibitively expensive broking charges to be in-an-out of a trade and had no access to technology or analytics. If you are a self-directed investor, these days you have plenty of choices to choose from.
Ms. Theresa W Carey of Barrons, recently published an excellent and very exhaustive review of Brokers. Without a doubt, Barron’s listing is one of the most complete and trustworthy list of brokers and I am very appreciative of this work which has been very useful over the years for my preliminary selection of online brokers. In this post, I shall share an active option trader’s perspective to choosing brokers.
Here is the list of brokers from Barrons arranges for various categories:
For other points i.e. Trading Technology, Usability, Mobile, Range of Offerings, Research amenities, Portfolio analysis and reports, customer service and education and costs you may read the original article. The overall list has 24 top-notch brokers ranked on the above 8 broad categories. From “Usability” perspective “tradeMONSTER” was the best, in “Technology” category TradeStation was the winner but overall champion was Interactive Broker.
From an Options Trader’s perspective, the Top 3 were 1) tradeMONSTER, 2) TD Ameritrade and 3) OptionsXpress.
I have been using online discount brokers for the past 15 years starting with Datek which was acquired by Ameritrade. Having used all Top 4 and Trade Station, I was surprised that Tradestation didn’t show-up in the Top 5 platform for option traders. I have been a strong supporter of ThinkOrSwim (as Tom used to listen to us, the real option traders and build features that were most useful for us) as well as tradeMonster. I like both and recommend both. However, I think OptionStation (from TradeStation) also deserves equal recognition. Albeit, a trader needs to decide for himself what’s best for him.
A platform’s need changes depending upon your trading experience, capital size and style of trading. Assuming usability, comprehensive charts, risk/rewards analytics, research reports, good scanners and reliable data feed as basic “points of entry (PoE)” for a good broker; here are 5 key “points of differences (PoD)” that differentiate an excellent broker from a good broker (More later).
Bottom-line, I suggest you read Barron’s excellent review for various details and add a trader’s perspective as listed in 5 points above. When you combine the two, I hope, you might be able to find best solution for your trading need. If you need my help, please feel free to write to me. I shall reply to you within 48hrs.
Please feel free to distribute this article (without changing contents) to your trading buddies and friends you care about. You might save them lot of trouble, frustration and money in future.
Profitable Trading, OP