CommSec has again claimed top spot in Canstar Cannex's annual online share trading report while State One Stockbroking's online trading platform, Amscot, made its debut.
CommSec has again claimed top spot in Canstar Cannex's annual online share trading report while State One Stockbroking's online trading platform, Amscot, made its debut.
The announcement is below:
Investors who trade shares online should be mindful of eroding their profits by paying for trading tools they don't really need.
The first basic D.I.Y. investors should look at, according to leading financial services research company CANSTAR CANNEX, is what type of investor they are.
"How often you trade, the average dollar amount of each trade and the level of risk you are prepared to carry makes a huge difference to the value you get from certain features offered by online trading platforms," CANSTAR CANNEX financial analyst Mitchell Watson said.
"For instance, an investor who does less than a dozen share trades a year at, say, $5,000 a time is likely to value a great educational service within a share broking account."
"On the other hand, a dynamic trading platform and charting software are essential for the active trader but a waste of money for those who invest only occasionally."
With online broking accounts now increasingly targeting specialised investor markets, CANSTAR CANNEX has made comparison easier for investors by rating online share trading accounts according to three profiles, Casual Investor, Active Investor and Trader.
CANSTAR CANNEX compared 37 online share trading platforms offered by 17 providers to name five star products in each investor profile.
"We classed Casual Investors as those who buy and sell shares occasionally, perhaps 10 times a year and use a long-term strategy to review their investment portfolio," Mr Watson said.
"The Active Investor buys and sells shares and derivatives more frequently, say, 8 per month, averaging $35,000 in value."
"At the top end of the market, we consider a Trader to be a person who buys and sells shares and derivatives at the rate of 40 a month, valued at around $15,000 per trade."
According to CANSTAR CANNEX, it's important to compare brokerage rates as well as settlement accounts to see what interest they pay on funds. While cost is an important factor in choosing an online trading platform, so too is the site's ease of use, the steps needed to complete a trade and any delay in receiving data on stock information.
"Brokerage fees do play a large part of your share trading experience so it pays to be vigilant on the amount you are paying," Mr Watson said.
"The brokerage will affect different users in different ways. For infrequent low-value trades, a higher fee will simply lengthen the amount of time required to break even."
"On the other hand, high-trade volume users will find that large brokerage will eat into their overall return."
A majority of platforms will tier their fees based on the size of the trade or the trade value.
According to CANSTAR CANNEX, for low-trade transactions ($0-$500), users could be looking to pay more than 5 per cent on each trade. This means that the investment will need to increase in value by 5 per cent before there is a true return received on the transaction.
The brokerage as a percentage of the trade plateaus after $30,000 at 0.11 per cent.
"There are providers in the market who will charge a fee depending on the volume of your transactions, that is the more trades the lower the fee," Mr Watson said.
"Alternatively, some platforms will use a greater of the two scenarios such as a flat fee or 0.11% of the trade value, depending on which one is greater."
Mr Watson suggested doing a cost-base comparison of providers before selecting a platform. He also warned that cheap brokerage without the necessary tools needed for individual trading requirements was of questionable value for money.
CANSTAR CANNEX compared 17 providers and 37 platforms for its second annual Online Share Trading report.
CommSec confirmed its place at the top of the Online Share Trading dais for the second year in a row.
CommSec's platform, Share Trades Internet Preferred, again performed strongly across two out of three investor profile categories.
"It was particularly outstanding in the Casual and Active Investor profiles which took it over the line to win the best value online trading platform in Australia," Mr Watson said.
"What sets CommSec apart is that it has really honed in on providing a true value proposition to customers and we congratulate CommSec on this back-to-back achievement."
Drilling down into the different investor profiles, CANSTAR CANNEX notes a number of familiar names from last year's five star list have risen to the top again in this latest comparison.
"This proves the consistency of their products which can only be a positive for consumers," Mr Watson said. Bell Direct's Silver platform and First Prudential Markets' FP Online once again shine for offering outstanding value to Casual investors.
Morrison Securities repeated its previous ranking, with htmlIRESS awarded five stars for Active Investors and WebIRESS again scoring five stars in the Trader profile.
Joining the elite list this year is Amscot Discount Stockbroking whose platform, AmscotOnlineValueRate, inched ahead on price. Along with First Prudential Markets, Amscot Discount Stockbroking proved outstanding in the Trader Profile.
