Research, Stock Trading Tools Sharpen At Top Brokers

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Special Report: 2013 Best Online Brokers

Thanks to brokers, small investors now have data, ideas and trading tools at their fingertips that just a few years ago were the exclusive purview of professionals working out of Manhattan high-rises.

Brokers have developed their own products to satisfy a wide range of customer needs. Now it's up to investors to decide which brokers best meet their needs. The equity trading tools and research tools sections of IBD's 2013 Best Online Brokers study can help.

Investors were asked to rate their primary broker on the strength of their research tools and their equity trading tools.

Digging Into Data

Research tools are the screening and database functions on a broker's platform that help clients find stocks, mutual funds, ETFs or other investments to buy.

Equity trading tools, on the other hand, are the platform features that investors use to execute buys and sells, track portfolio changes and keep abreast of the financial markets.

Online research and trading platforms range from the highly complex and customizable for the full-time day or swing trader to the relatively simple interface for the occasional plunger.

Despite the high cost of developing these information tools and the competitive need to improve them, most brokers offer them free to customers who meet minimum criteria for account balances and trading activity.

TradeStation , TD Ameritrade ( AMTD ), Charles Schwab ( SCHW ) and Fidelity won kudos from their customers for their research tools and equity trading tools. All four made IBD's top five online broker lists for both types of tools.

Interactive Brokers made the top five in equity trading tools, while OptionsXpress made the best five list in the research tools category.

TradeStation caters to the very active investor and has a wide variety of downloadable tools to help find and execute trading opportunities and strategies. It licenses Recognia technical analysis software and makes it available as part of its Portfolio Maestro tool, allowing the user to back-test strategies and execute them automatically, taking the emotion out of trading.

Recognia automatically analyzes 65,000 stocks, ETFs, futures and foreign exchange instruments on 55 exchanges worldwide for common chart patterns and Elliott Wave patterns. It creates alerts with a headline, commentary and a price chart.

TradeStation boasts that its database offers more than 90 years of price and volume data and 27 years of intraday data.

RadarScreen is another part of TradeStation's product suite.

It gives the trader access to tons of quotes, charts and other data with a quick mouse click.

Stock lists can be quickly created based on price, time, volume, gaps, spikes and dips.

TD Ameritrade has a wider range of customers, and its offerings reflect that.

Some of its trading tools are customizable and offer lots of data to stock and option traders, but sometimes, they're complicated and require a steep learning curve.

That's why TD Ameritrade also offers TradeArchitect, a slimmed-down tool that doesn't require downloading a separate piece of software to be stored on the customer's computer. On TradeArchitect, investors can call up intraday, daily and weekly charts, execute trades and maintain watch lists.

Several years ago, TD Ameritrade bought Thinkorswim, a stand-alone platform for trading stocks and, especially, options.

Thinkorswim, which is available to all Ameritrade customers, competes with the more sophisticated offerings of brokers like TradeStation. One feature allows easy importing and exporting of watch lists.

Schwab, an early entrant in the online trading business, developed StreetSmart Pro and StreetSmart Edge products that keep traders aware of what's happening in the market and help execute strategies and trades. It's phasing out StreetSmart Pro, but StreetSmart Edge still has plenty of features to keep the active trader happy.

It offers charts, breaking news, level 2 quotes, and is flexible and customizable. It accommodates traders who use two monitors.

Many Schwab customers are new to investing, so its website offers lots of educational material that explains how to invest in stocks, ETFs, bonds and options using various strategies.

The Latest

At Interactive Brokers, which caters to a more sophisticated investor audience, the newest tool is Probability Lab, which helps customers translate their basic view on a stock into a menu of options trades. Investors can start with their own subjective view that a stock will likely trade within a certain band. Probability Lab will take that input and show combination trades that likely will have favorable outcomes under that probability distribution.

"We are different from other companies," said Steve Sanders, executive vice president of marketing and product development at Interactive Brokers. "Most other companies' sales teams lead, and programmers are on the bottom rung. Here programmers reign. And they're driven from our chairman, Thomas Peterffy."

Peterffy has experience in computer engineering and programming and, as the company puts it, "deep roots in the options industry."


How Top Broker Rankings Were Calculated In IBD Survey

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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