As a member of AAII and reader of Computerized

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1 Volume XXXII, No. 2 Tips for Thwarting Hackers Editor s Outlook At the beginning of March, Evernote, the popular online note-taking service, reported that it had fallen victim to a hack that exposed customer usernames, addresses associated with Evernote accounts and encrypted passwords. The company was quick to point out that passwords stored by Evernote are protected by one-way encryption, making them difficult, but not impossible, to decipher, and that they found no evidence that user content was affected or that sensitive financial information was stolen. However, the company did take the extraordinary step of resetting the passwords of roughly 50 million user accounts. Evernote isn t alone: It joins a list of companies including Apple, Microsoft, Twitter, The New York Times, The Wall Street Journal and The Washington Post that have all been targets of hackers in recent months. Closer to home, in the last month a couple of my friends have had their AOL accounts hacked and one even had her identity stolen. However, the cover story of the December 2012 issue of Wired really opened my eyes to how easy it is for a hacker to get a hold of sensitive information, no matter how robust your passwords are. I strongly suggest going to Wired.com and reading Mat Honan s account of being hacked last summer. As computers become more connected, the idea that passwords can safeguard our sensitive online information is becoming a fallacy. Is that going to keep me from banking online or managing my investment portfolio online? Definitely not. However, there are some steps you can take to make it harder for a hacker. First, and foremost, don t reuse your passwords if a hacker figures out one password, he owns all of your accounts. Second, don t use a short password. Longer passwords, made up of both upper- and lower-case letters as well as numbers and symbols are much stronger than shorter (continued on page 2) Comparison: Online Discount Brokers As a member of AAII and reader of Computerized Investing, chances are that you perform a significant amount of investing on your own. Though individual investors still call full-service brokers to place trades, many have now switched to fully using online discount brokerages. These online brokers have a number of advantages over traditional brokers, such as cost and convenience, and they are constantly evolving and improving. Most online discount brokerages charge $10 or less per trade, but there are some online deep discount brokerages that charge just a few dollars per trade. Since most online brokerages are similar in pricing, the difference between each lies in the features and research that they provide. Like last year, this year s online brokerage comparison provides an in-depth analysis of the features most individual investors use. I also point out some notable differences between the various brokers and highlight each broker s strengths and weaknesses. In addition, I provide a clear calculation of the difference in pricing between the commonly used online brokers and deep-discount brokers. Spreadsheet Corner Part three in the series on calculating bond volatility Updates NinjaTrader Interest.com...5 Thomson Reuters MetaStock TC2000 Version 12/ On the Internet AAII Broker Survey Tax Resources Online Each year, we aggregate member responses for the AAII Feature (continued on page 22) Tweaking the popular CAN SLIM screen Fundamental Focus Using the Sortino ratio to measure downside risk Technically Speaking The rate of change (ROC) momentum indicator...30

2 Online Discount Brokers rs By Z. Joe Lan, CFA (continued from page 1) Online Discount Broker Survey and detail the results on our website at Members who participate in the survey are asked to fill out a questionnaire regarding broker reliability and quality, along with individual questions concerning investor trading frequency, securities traded and portfolio size. The survey results for 2012 are shown in Table 1. The five brokers that our members used the most were Scottrade, Fidelity Investments, Charles Schwab, TD Ameritrade and Vanguard. Vanguard replaces E*Trade Financial this year as the fifth most widely used broker by AAII members. In fact, Vanguard saw a big jump in use this year, while E*Trade slid significantly. There is no obvious reason for the sudden decline in E*Trade s use by our members; however, in early 2012, E*Trade did admit that it had to shut down services due to an offshore cyber attack, which left some customers without access to their accounts for up to two weeks. Although no level of security is completely safe, the top online brokerages all use high-level encryption (typically bank-level encryption) that is extremely difficult to break. All online brokerages dedicate a portion of their websites to explaining the measures they use to protect your assets and transactions, and it is worth your time to find and read through this information. In addition, when choosing a broker, make sure it is insured by the Securities Investor Protection Corporation (SIPC). The SIPC insures up to $500,000 per brokerage customer, including a maximum of $250,000 for cash claims. To participate in our broker survey, visit and select Surveys from the Quick Links tab. The survey is open year-round, and we look forward to your input. What Investors Look For AAII s Broker Survey also provides some insight on what our members are looking for in an online discount broker. The overwhelming majority responded that commissions are the primary factor when selecting a broker, with services and convenience placing second and third, respectively. As a secondary factor, responders mentioned convenience the most, with commissions and services placing second and third. Comparing the Brokers Each of our top online brokers has its own strengths and weaknesses, though their offerings are not far apart. Still, there are several important items to keep in mind when considering a broker. Trading Platform For do-it-yourself investors, the trading platform is an essential consideration. Most online brokers offer two separate trading platforms one for regular users and one for power users. It should be noted, however, that Vanguard does not have an active trading platform. Table 1. Ratings of Most Popular Brokers Among AAII Members Usage by Rating (Top Score = 4) 2012 Respondents Trade Execution Trade Trade Rank Broker (%) Price Speed Reliability Satisfaction 1 Scottrade Fidelity Investments Charles Schwab TD Ameritrade Vanguard Trading platforms for regular users are all relatively similar. Web-based platforms are used by each of the brokers in this comparison, and they can handle stocks, mutual funds, exchange-traded funds (ETFs), options and bonds. To execute a trade, users need to specify the action type, number of shares, ticker symbol, order type and order duration. Each broker allows you to place market and limit orders, and each usually also offers to handle stop, stop-limit and trailing stop orders. In addition, users can select whether the order is good until cancelled or only good until the end of the trading day. Where the brokers differ is in their trading platforms designed for power users. Power users are defined as investors who either have a large portfolio size or make a large number of trades in a period. These users are given access to a broader array of trading tools, such as real-time price quotes and volume data. In addition, most will offer more advanced investing tools, such as the ability to backtest or chart technical indicators. Cost per Trade AAII s broker survey provided a useful piece of insight members who use discount brokerages still mention commissions as the primary factor when choosing a broker. Therefore, it may be beneficial to take a moment to discuss the differences in cost between the various online discount brokers. Since most online brokerages offer trades for under $10, cost is no longer much of a concern. Recently, however, an increasing number of deep-discount brokerages with respectable features and capabilities have popped up. Though none of the deep-discount brokerages made it into the top five on the AAII member ranking, there is no doubt that these types of brokerages are viable options. In fact, one deep discounter, Interactive Brokers, places seventh in terms of popularity. 22 Computerized Investing

3 Investors making frequent smaller trades may want to consider these deep-discount brokerage services. For example, consider a service such as Interactive Brokers that charges $0.005 per share with a minimum of $1.00 per trade and maximum of 0.5% of trade value. In other words, this broker allows you to trade up to 200 shares of any stock for $1.00, which is especially useful for investors looking to start a portfolio of a large number of stocks with limited funds. For instance, an investor looking to invest $25,000 into AAII s Model Shadow Stock Portfolio might turn to an online discount brokerage such as Scottrade that charges $7 per trade. To keep the calculation simple, let us assume that the Model Shadow Stock Portfolio has 25 holdings (it currently holds 29). In order to invest equal amounts in 25 different stocks with $25,000, each holding must be $1,000. At $7 per trade, each buy and subsequent sell would equate to a 1.4% commission per trade. Using Interactive Brokers, each buy and sell would only be 0.2% (assuming each trade is 200 shares or less). Research Data and Tools The top online brokers all provide fundamental data and research tools to investors looking to perform due diligence before purchasing an investment holding. Their data is comprehensive and typically comes from trusted data sources, such as Morningstar and Thomson Reuters. The top online brokers all offer some form of charting with the ability to do simple technical analysis. At the very least, price and volume data is provided, and chart options typically include line, open-highlow-close and candlestick. The best brokers also offer the ability to plot several stocks on a single chart and to add technical indicators. One interesting feature to look for is the ability to chart company events, such as dividends and earnings, to see how the stock price has reacted to these events. Scottrade SmartText Financial statement data is also provided by all the brokers that are reviewed in this article. In addition, earnings data going back several periods, insider activity and consensus earnings estimates going forward are all offered. A myriad of investment tools are also available at the broker websites. The top brokers all offer some level of screening capabilities, as well as tools to help users examine their portfolios as a whole. The Top Brokers The top online discount brokers differ in what they offer beyond basic screening and simple portfolio tracking tools. I discuss the specific features of each below. Scottrade For the third year in a row, Scottrade placed at the top of our list for most frequently used online discount brokerage firm. However, this year Scottrade had company, tying with Fidelity for the top spot, with each broker taking 16.91% of the votes. The main Scottrade page lists the most vital information on your portfolio such as account value, funds available for trading, open and complete orders and current positions, plus a watchlist. A performance graph is also available that allows investors to see short-term performance. Scottrade provides a wealth of research information for account holders. Simply type a ticker symbol in the Detailed Quote box to pull up research information on individual stocks. The summary tab offers the latest company news and presents the upcoming dividend payment information. In the fundamental tab, data elements are broken down into several categories profitability, valuation, financial strength and management effectiveness, just to name a few. In addition, Scottrade presents median figures for company peers and the industry average for each of the data points offered. The broker also offers earnings data going back seven quarters and offers estimates for two upcoming quarters. Annual and quarterly financial statement data is provided for the past five periods. Scottrade offers some simple technical analysis capabilities. After clicking on the charts tab from the summary page, users can specify the type of investor they are longterm investor, medium-term investor, medium-term trader, short-term trad- 23

4 COMPARISON: ONLINE DISCOUNT BROKERS Online Discount Brokerage Firm Web Address Traditional Additional Order Types Trading Tools Order Routing (Automatic, User-Defined) Alerts (Price, Volume, News) Automatic Trade Triggers Active Trading Active Trading Platform (Cost) Tools Securities Traded Order Routing (Automatic, User-Defined) Alerts (Price, Volume, News) Demonstration of Use Stock Tools Quotes and Data Ratios Financials SEC Filings EPS Estimates Research Reports and Ratings News Industry Data Charts Technical Indicators Screening (Number of Companies/Fields) Historical Prices Mutual Fund Data Provider Tools and Data Ratings Risk Statistics Calendar Performance Annualized Performance Compare to Index/Category Fund Holdings Charts Technical Indicators Screening (Number of Funds/Fields) ETF Tools and Ratings Data Risk Statistics Calendar Performance Annualized Performance Holdings Technical Indicators Screening (Number of ETFs/Fields) Portfolio Quotes Tracking Tools Portfolio Analysis Tools Watchlists Dividend DRIP Offered Reinvestment Fractional Shares Plan Dividend Reinvestment Fee (Cost) Other Tools Mobile Trading Roth IRA Conversion Calculator Retirement Tools Online Banking Charles Schwab short sell, stop, stop-limit, trailing stop, day, good-till-canceled (via StreetSmart Pro) StreetSmart Pro 4.22 (free for active traders) stocks, ETFs, options ; user-defined (price, volume) (5 years; 5 quarters) (Reuters) (Schwab; various brokers) (Dow Jones, Acquire Media) (6,500+/75+) (1998+; daily) Morningstar (Morningstar) (beta, alpha, std dev, Sharpe, mean) YTD; 5 years; 1 quarter; 1 month (20,000+/25+) (Schwab report card; Morningstar) 1 quarter 1-, 3-, 5-year; inception (900+/50+) (asset type, sector) Fidelity Investments short sell, stop, stop-limit, trailing stop, day, good-till-canceled (price & news) Active Trader Pro (free for active traders) stocks, mutual funds, ETFs, options, user-defined (price) (5 years; 5 quarters) (StarMine SmartEstimate) (AGR Ratings; various brokers) (CNN Money, MarketWatch, Reuters) (9,000+/100+) Morningstar (Morningstar) (beta, R-sq, std dev) YTD; 1 quarter; 1 month 1-, 3-, 5-, 10-year (category only) (12) (beta, R-sq, std dev, Sharpe) 1 quarter 1-, 3-, 5-yr; inception (900+/20+) (asset type) ing or intraday trader and the price chart will be tailored to the chosen type, presenting the appropriate technical indicators. Scottrade also allows users to chart events, such as earnings and dividends. Users can compare one stock to other stocks and major indexes, as well as to market sectors, fixed income, commodities and currency rates, all on the same chart. A new feature integrated into Scottrade s technical analysis capabilities is SmartText, which explains the information shown on the charts in plain English. An example of Scottrade s SmartText is shown in the figure on page 23. Research reports are often of central importance for individual investors. Different brokers typically offer different research reports. Scottrade provides the full S&P Capital IQ Stock Report, Thomson Reuters StockReport+ and Second Opinion Weekly Report. The analyst views section shows S&P star ranking and Briefing.com rating changes for securities. A chart details the ratings changes and links to a PDF file giving the reason for the 24 Computerized Investing

5 Scottrade short sell, stop, stop-limit, trailing stop, day, good-till-canceled, good-until-date ScottradeELITE (free for accounts of $25,000+) stocks, ETFs, options (price, news) real-time (manual refresh; streaming via Scottrader) (5 years; 4 quarters) (Reuters) (S&P, Reuters, Second Opinion Weekly) (BusinessWire, Dow Jones, PR Newswire) (9,000+/30+) Lipper (Lipper) YTD; 1 month; 1 quarter (20,000+/22) (Lipper) YTD; 1 month; 1 quarter (900+/18) (mutual funds only) (mutual funds only) change. A service that Scottrade added recently is personal banking. Scottrade now offers checking, savings and money market accounts as well as online bill pay service. In addition, since Scottrade does not have ATM machines, the company will reimburse you for fees you are charged when using ATMs. TD Ameritrade short sell, stop, stop-limit, day, good-till-canceled ; user-defined Trade Architect (free); thinkorswim (free) stocks, ETFs, options ; user-defined (price, volume) (5 years; 4 quarters) (Reuters) (various brokers) (MarketWatch, Marketwire, PR Newswire) (11,000+/45+) (1989+; daily) Morningstar (Morningstar) (beta, alpha, R-sq, std dev, Sharpe, mean) YTD; 4 years; 1 quarter; 1 month (20,000+/35+) (Morningstar) (beta, alpha, R-sq, std dev, Sharpe, mean) 4 years; 1 quarter (900+/40+) (asset type) Scottrade provides a robust knowledge center (one of the best) that offers educational articles on a range of personal finance needs. The broker offers a tax guide that is fairly comprehensive, providing new information yearly. In addition, retirement calculators, an IRA comparison and a life-events adviser can all be found in this area. Vanguard short sell, stop, stop-limit day, 60-day none n/a n/a n/a n/a delayed 20 minutes (4 years; 4 quarters) (Reuters) (various brokers) (Reuters, BusinessWire) (8,700/20+) 10 years; daily) Morningstar (Morningstar) YTD; 1 month (S&P, First Call Consensus, Thomson Reuters) (asset type) (funds only) Fidelity Investments After a few years in the number two spot, Fidelity tied with Scottrade in 2012 as AAII members most frequently used online discount broker. After logging into the Fidelity website, you are given a listing of your accounts, along with subtotals for each and a total portfolio value. Several tabs are available on the 25

6 Fidelity Investments main page. The portfolio positions tab breaks down your holdings and presents all the usual data for each, including per share and total cost basis and dollar and percentage change since purchase. Fidelity also offers BillPay, which, as the name suggests, enables you to pay bills directly from your Fidelity brokerage account. A quick overview of your portfolio is provided in the analysis tab. The page provides your asset allocation along with your top positions and a style and sector map. Data is broken down between stock and fixedincome holdings, providing a deeper analysis of your asset allocation. In the ratings sub-tab, Fidelity presents mutual fund ratings, equity summary scores and bond credit ratings for your current holdings. The research section provides a quick snapshot of the tools available to Fidelity users, such as a one-year chart and the latest news and analyst research reports. Reports are offered by First Call, Thomson Reuters, Standard & Poor s, Ned Davis, Jefferson Research and Zacks, just to name a few. This research page also provides a link to the alerts page, where users can sign up for a variety of portfolio alerts to assist in keeping on top of investments. Fidelity also provides advanced research functionality on individual stocks. Users can draw charts by hand and plot almost 50 different technical indicators directly on the price and volume graph. Events such as dividends, splits and earnings can be charted to see how the announcement of each affected the share price. You may also chart the Dow Jones industrial average, NASDAQ composite index or S&P 500 index and up to 25 other companies on the same chart. A separate technical analysis section presents short-, medium- and long-term technical signals for each company. Another useful feature Fidelity offers is the ability to compare up to five companies side by side. Users can choose to compare key statistics, dividends, valuation measures, performance and volatility data, growth figures, profitability ratios, cash and debt numbers, ownership and trading characteristics, and intraday price and volume data. Fidelity s news & insights area provides the most comprehensive news area of the brokerages that are reviewed in this article. The news section is divided into U.S. markets, U.S. economy & jobs, technology, international, company news, IPOs, mergers & acquisitions and investment ideas. A separate page of news videos is also offered. Furthermore, the news sources are top financial websites such as MarketWatch, CNN Money and Reuters. The insights section provides analysis on recent market trends and areas where you might find growth. Several tools on the site are worth highlighting. The Fidelity Income Strategy Evaluator is a useful retirement planning tool. The program asks you to input a general idea of your income and expenses in retirement, information about accounts held elsewhere that will be included as retirement assets and your current pretax income. The tool then provides an estimation of your monthly income based on your holdings. A suggested target income mix is provided that takes into consideration your needs and preferences. Furthermore, an idea of how your portfolio will perform in both bull and bear markets is displayed. A screening tool is also offered for stocks, preferred securities, ETFs and closed-end funds. Charles Schwab Charles Schwab implemented a completely new look and feel for its brokerage page since last year s review. The current home page is much cleaner, simply offering the value for each account and daily change. The 26 Computerized Investing

7 accounts area provides all relevant information for the current holdings in your account, including balances, positions, performance and history. Additionally, the portfolio performance page shows a breakdown of your current portfolio and provides some tips: Your current asset allocation is compared to your target risk profile, and suggestions are made as to what you can do to bring your current asset allocation more in line with your target. Your target allocation can be changed by answering a quick questionnaire on your investing traits. Furthermore, you can see a breakdown of your portfolio s diversification and equity concentration. The quality section provides ratings for each of the holdings in the portfolio. Yellow exclamation points are displayed in potential problem areas. Otherwise, a green ok is displayed. Using Charles Schwab s Web-based platform to trade stocks is very simple, but in previous reviews, we noticed that the order page lacked price and volume information which, in our opinion, is vital to know, especially for smaller-cap stocks. During the year, though, Charles Schwab has rectified the omission and now the order page provides bid and ask prices, as well as volume. Transfers & payments is a separate section in the accounts area. This section allows users to transfer and wire funds, request checks, pay bills and add external accounts. You may also manage external accounts in this section, though we were unable to test this feature. The scope of the market research data available at Charles Schwab continues to be very international. Global research is provided by Credit Suisse and includes reports for various global industries. International performance data is available for a number of countries and regions. Charles Schwab also provides asset allocation guidelines for international investing. Furthermore, a number of high-quality research reports are available for domestic industries and sectors, including from notable Charles Schwab analysts such as Argus Research, JPMorgan, Briefing.com and Ned Davis. Charles Schwab also provides its own research reports. Charles Schwab offers a variety of methods for researching and choosing individual stocks, including a stock screener, company fundamental research data, expert advice and stock lists that show top-rated stocks by sector, asset class and Schwab Equity Ratings. The stock screen provides a universe of just over 6,500 domestic stocks and international stocks (as ADRs, or American depositary receipts). Charles Schwab provides screeners for both mutual funds and ETFs. Fundamental research on mutual funds and ETFs is extensive, rivaling that offered for stocks. Fund comparisons present mutual fund scorecards side by side. In addition, funds can be compared by performance and Morningstar ratings. The Schwab Mutual Fund Report Card, free for customers, is a two-page report that provides extensive research information for a mutual fund. Charts are comparable to the other top brokerage websites, allowing users to compare a firm against other companies, sectors and indexes going back 10 years. A twist that Schwab offers is the charting of fundamental indicators, such as rolling dividend yield, price-earnings ratio range and rolling earnings per share. Users can also draw trendlines and crosshairs by hand. In addition, Schwab also allows users to chart momentum, trend and volume indicators. TD Ameritrade The TD American main page remains the same as last year, with portfolio positions and account balances presented on the home page, along with your watchlist, order status, messages and the major domestic indexes. The positions heat graph 27

8 TD Ameritrade shows how your positions fared during the day in your overall portfolio. When purchasing shares, TD Ameritrade allows you to place conditional orders, which allows you to combine multiple orders. For example, you can set a condition where execution of the first order will prompt cancellation of the second order, or where execution of the first order prompts execution of the second order. TD Ameritrade is able to handle stock, ETF, options, bond, mutual fund, and even futures and forex (foreign exchange) trades. The brokerage also provides a wealth of investment research. The market overview section is separated into five distinct sections: U.S. markets, global markets, commodities, currencies and fixed income. A calendar is presented on the right-hand side of the page that shows economic events, dividends, splits, earnings, IPOs and ratings changes. Sector outlooks are provided by Standard & Poor s. TD Ameritrade offers analyst reports from Credit Suisse, TheStreet.com, Standard & Poor s, Ford Equity Research, MarketEdge and Jaywalk Consensus for individual stocks. Additionally, the broker offers ResearchTeam reports, which provide company ratings based on a combination of the reports offered by five third-party research teams. The technical analysis capabilities provided by TD Ameritrade are similar to those offered by the other top brokers, including a variety of charting types and upper and lower indicators. Users can compare companies and chart events such as earnings, dividends and splits. The valuation tab offered at TD Ameritrade is relatively unique. This area of the website allows users to compare the valuation measures, profitability ratios, dividend ratings, growth rates, effectiveness gauges and financial strength figures for a company against its industry, the overall market or competitors. In addition to screeners for stocks, mutual funds and ETFs, TD Ameritrade also offers an options screener. The options screener is simple, but allows you to specify search criteria such as the strategy type (covered call and calendar spread are the only two options), whether the strategy is in-the-money, downside protection values and days-to-expiration. If you are a frequent options trader, it may be worth taking a look at this feature. TD Ameritrade offers one of the best sets of trading tools available on the Web. In addition to its regular trading platform, which caters to serious fundamental investors, the website offers Trade Architect, aimed at active investors, and thinkorswim, which targets sophisticated active investors. Trade Architect is a Webbased trading platform. It offers several advantages over the regular trading platform, such as visual position profit/loss analysis and streaming Dow Jones and CNBC news. The thinkorswim trading platform needs to be installed on your computer. However, it offers the ability to trade complex options, futures and forex. You are also able to perform paper trades. Beyond trading tools, TD Ameritrade also offers several investment tools designed to assist investors in building and maintaining a suitable portfolio. Portfolio Planner helps you set up a target asset allocation, but the tool goes one step further and aids in choosing securities in each particular asset class. In addition, the site offers WealthRuler, a simulation engine for retirement planning. A user enters their retirement timeline which includes current age, when they plan on retiring and projected retirement period current assets, future cash flows and tax information. WealthRuler then runs a series of simulations to determine whether the user s retirement goals are likely to be met. 28 Computerized Investing

9 Vanguard Vanguard is a complete newcomer on our list of top brokers. In fact, E*Trade fell to a distant sixth; only 4.95% of AAII survey responders use E* Trade, compared to 7.63% for Vanguard. Like the other top brokerages, Vanguard displays account information on the main page, including account balances, recent transactions, asset mix and personal performance. The main page also provides a target asset mix suggested for people in different age groups (typically more conservative for older investors). Vanguard s fee schedule varies depending on the value of assets held at the firm. For investors with less than $50,000, the first 25 trades per year are charged $7, and the fee for subsequent trades is $20. For accounts valued at $50,000 to $500,000, all trades cost $7. Accounts valued at $500,000 to $1 million are entitled to $2 trades and accounts over $1 million receive 25 free trades a year with all subsequent trades charged $2. The brokerage generates a comprehensive portfolio analysis that presents asset allocation, stock and bond analysis, and costs, taxes and manager risk. In addition to the target asset allocation recommended by Vanguard based on age, the site also uses a questionnaire to generate a more personal target asset allocation. For individual securities, Vanguard offers a decent amount of data. Company analyst reports are provided by Standard & Poor s, First Call Consensus and Thomson Reuters. Financial statement items are presented for the previous four quarters and years. Going forward, Vanguard provides earnings estimates for the next two quarters and next two fiscal years. The stock screening tool, however, is very simple and investors who frequently rely on stock screens should probably look elsewhere. One of the main advantages of Vanguard having a Vanguard brokerage account is being able to invest in Vanguard ETF funds without commission (most Vanguard mutual funds are no-load but charge a commission). Vanguard mutual funds typically have low expense ratios, so purchasing these funds through a Vanguard brokerage account keeps the costs at a minimum. Vanguard has a variety of funds to choose from that allows investors to easily diversify their portfolio internationally and across all market capitalizations. Conclusion Online discount brokerages have been popular with individual investors now for a number of years, due to their low commissions and the convenience they provide. The top Z. Joe Lan, CFA is assistant financial analyst at AAII. five online brokers reviewed here offer similar features. When it comes down to it, the choice may depend on individual preference for research reports, tools or customer service. Keep in mind that if you are unhappy with your broker, switching brokerages is simple. Typically, you can call your new brokerage service and they will complete the switch for you. However, it is likely that you will be unable to trade for a few days during this process. Recently, AAII s Broker Survey has also shown an increase in members trading at deep-discount brokers, ones that charge just a dollar or two for trades. For most individual investors, the added savings per trade may not be worth switching to a new brokerage services. However, for those looking to invest a limited amount of funds into a portfolio of many stocks, these deep-discount brokerages may be preferred. 29