Because of the internet boom of the late 90’s and the huge role the internet plays in our everyday lives millions of investors have started moving to online brokers. Thanks to today’s technology, these online brokers are able to offer low commission trades (many less than $10 per trade) for the average Joe which can be completed in less than a minute.

There are over 100 well known discount online brokerage firms which offer online trading to anyone with internet access and funding. Included in the dozens of online firms are major brokerages such as Charles Schwab and Waterhouse who have launched separate branches dedicated to online trading. Additionally, new companies have pooped up whose sole purpose and functionality is online trading, among these are: Ameritrade and eTrade.

One common misconception when looking to start online trading is the idea that all online brokers are the same aside from their commission fees. This is quite the opposite. There are dozens of differences in online brokerages, and taking a look at these differences is crucial to running a successful and comfortable online portfolio. Some brokerages offer better research and analysis of investments than others do, while those others may have a better chance of getting you in on the ground level of that hot new IPO. The following are some important points which you should consider when choosing an online broker:

I. How much do you want to invest?
This is important in opening an account. Some online brokers have no minimum and no required deposit to open an account, meaning if you have $20 to spend then you can go ahead and feel free top open an account with them. On the other hand some online brokers require you start with at least $1k in your account when opening. This is always an important number to check before opening your online brokerage account.

II. Do you need to verbally communicate with a person?
Although some people are just fine taking care of everything on their own, some people need the security of actually hearing another person’s voice saying “OK, the transaction was completed successfully.” If this is important for you than check what the commission is (usually a bit higher) for making a trade via phone.

III. Can your broker handle heavy loads?
Look into your brokerage’s terms and policies. Sometimes on days with heavy market activity online brokerages become overwhelmed by the mass of transactions going on. Technology can’t always keep up with demand, so check to see if your brokerage offers discounts on orders placed via phone on heavy load days.

IV. Would you like your account to double as a bank?
Some brokerages offer checking, ATM and debit cards in conjunction with your trading account. This way you can open 1 account which doubles as your investments and your personal funding. Check to see if your brokerage offers any of these services.

V. Are you interested in buying stock on margin?
Buying stocks on margin is basically investing with money you don’t have, rather credit that your brokerage gives to you. Like borrowing money from any bank/establishment interest must be paid and the difference in the amount of interest that firms charge is astounding, check to see what you firm offers. Also many brokerages require a much higher minimum balance in order to create a strong margin account.

VI. Do you want to invest in bonds?
Only a small handful of online brokerages offer bond services. If this is a path you feel you’d like to take, you must check with your firm first.

VII. Are you interested in IPO’s?
Some online brokerages, mainly those connected with large investment banks, are able to get in quickly on the ground floor of IPO’s – if this is something that interests you than you may be better off going with an online broker tied to one of the larger investment banks. Suggested firms are: Wit Capital, DLJ Direct and Trade-Well.

VIII. Are you interested in Mutual funds?
A large number of online brokerages offer what are called mutual fund “supermarkets,” which are areas of the site dedicated to buying and selling mutual funds from different fund families. Before you sign up make sure your firm offers the funds you are interested in as the collections available vary from firm to firm.

All in all it is obvious that online investing is a thing of not only the present, but also the future. Being able to trade at anytime of the day from almost anywhere in the world without paying large commissions will always be appealing. Choosing that online broker to go with is the difficult choice, do not be fooled into signing up with a broker for $7 per trade if the $12 per trade broker fits you better – you will lose out in the long run.