Best Online Broker in Canada 2009 / 2010

Best Online Broker 2009 / 2010

I have written about the best online broker in Canada to use before and come to a different conclusion than the one I currently hold to be true; previously, I had made my decision based on reading the Globe and Mail's survey of online brokers. Their survey is great for the average investor—an investor who knows very little about the stock market and needs to have his or her hand held when walking down Bay Street or Wall Street.  I myself was very inexperienced with the ways of online brokers only a short time ago, but what I have learned over the past couple of years, by using a couple of the well know online brokers, is that price point, and execution are by far the most important criteria to differentiate the top of the pack from the bottom.

Let me be more specific by providing my experiences and then my decision for the top online broker in Canada.

My first experience with online brokers came via Qtrade.  According to the Globe and Mail they were and still are the best online broker in Canada.  I have to admit at first they did seem like a great online broker: my trading costs were much lower, the research platform is very good, and the customer service was very good.

Did I just say their customer service is very good? What I meant to say was their customer service is very good unless you need to dip below the $1000 minimum account balance.  I ran into a bit of a shocker when I asked to dip about $200 below the minimum account balance to pay a bill before my pay cheque came in the next day.  Because they would not let me move below the minimum balance in my account for a single day I decided to close all 3 of my accounts and look for a better online broker.

This time I did my own research. I reviewed a number of online brokers: Qtrade Investor, E*Trade Canada, TD Waterhouse, BMO InvestorLine, Credential Direct, RBC Direct Investing, ScotiaMcLeod Direct Investing, Questrade, Trade Freedom, Disnat, CIBC Investor’s Edge, National Bank Direct Investing, HSBC Invest Direct, eNorthern. Just in case you didn’t guess it, this is the 2009 list from the Globe and Mail from top to bottom of the online brokers in Canada.

You have to start somewhere right.  I did my research on each myself, but don’t worry I won’t bore you with the gruesome details here.  What I decided in the end was that #8 on the list of 14 was the best for me.

#8 is Questrade.  By a long shot Questrade has the lowest fees of all the online brokers and has the best sign up process—all documents can be filled out online and then all you need is an online banking transfer and an email of your Driver’s License and SIN Card.  The process was seamless.  The trading tools are identical to the other online brokers; they all use the same software and just reorganize a little. Also, they have a 10/10 in customer satisfaction.

Trade Costs: $4.95 minimum to a $9.95 maximum no matter how many shares you trade. It’s based on $0.01 per share up to the maximum. So If I trade 100, 200, 300, or 400 shares I pay $4.95. At 500 I pay $5, at 700 - $7, at 1,200,000 shares I pay $9.95 flat.

So where are they lacking? Let’s be honest here and just say, there research sucks. They don’t give you the keys to an onslaught of analyst reports like many of the other brokers; however, if you are at all serious about investing then you should be able to find this info very easily through the web since there are tons of sites that give that info away for free.

I have used Questrade's protrader platform with streaming live quotes and their webtrader addition.  I now use the web trader without streaming live quotes because they are extra unless you make over 20 trades a month.  As I am now considering myself more of a long term trader, the webtrader system seems very fine indeed.

Don’t just take my word for it though.  Just remember most of the online brokers are begging for your business so try and get something out of them. Questrade offers a $50 credit in free trades if you are referred and gives the referee $100 in free trades. The catch though is that you must use the credit within 3 months or it vanishes. Unless the person referring you trades a lot there is no way they are going to use their credit.  If you don’t know anyone that is currently trading with Questrade and you want a referral, post a comment with your name and email and I will send you a referral and not post the comment.