The online brokerage community has grown by leaps and bounds in the last few years, which is great for investors who like to participate in online stock trading. The competition has forced innovation, cheap online stock trades, and additional features such as educational and training centers, articles, videos, free webinars, chat rooms and forums, social networking, free tax software to track gains and losses, and more. Not all of these features are available at all discount brokerage firms, and some stock brokers offer better value than others.
Our goal is to show you some of the best values in the discount brokerage space, ans show you some of the top features they offer. We have focused on the more popular firms that consistently appear in the industry awards reviews, including those by SmartMoney and Kiplinger’s. This brokerage comparison chart will give you some basic information on pricing structures, and below the comparison chart are some unique features about each of these online brokerage firms. Hopefully you can use this information to find the discount online brokerage that is best for your needs.
Best Online Discount Brokerages
|Discount Brokerage Firm||Cost Per|
|TradeKing||$4.95||$4.95 + $0.65||TradeKing Review|
|OptionsHouse||$4.95||$4.95 + $0.50||OptionsHouse Review|
|TD Ameritrade||$9.99||$9.99 + $0.75||TD Ameritrade Review|
|Firstrade||$6.95||$6.95 + $0.75||Firstrade Review|
|Scottrade||$7.00||$7.00 + $1.25||Scottrade Review|
|E*Trade||$9.99||$9.99 + $0.75||E*Trade Review|
|OptionsXpress||$8.95||$12.95 minimum; $1.25 per contract, |
for more than 10 (active trader rates,
see site for other pricing).
|Capital One Investing|
|$6.95||$6.95 + $0.75||ShareBuilder Review|
Discount Brokerage Features
Each of these brokers has some features that set it apart from the others. Check out these overviews for more information.
TradeKing: TradeKing is a personal favorite of mine. They have a slick and easy to use interface, cheap stock trades, an exceptional learning center, free webinars, free access to Maxit Tax Manager to track your gains and losses, and more. TradeKing’s pricing structure is among the best in the business for discount stock trades, including for investors who prefer to trade options. TradeKing also offers to reimburse new customers up to $150 to transfer their assets to TradeKing. For more information, or to open a TradeKing account, visit http://www.tradeking.com/.
OptionsHouse. Options House offers the lowest prices for a standard online stock trade out of the brokerages listed in this review. A standard stock trade only costs $4.95 and options trades that are among the best in the industry (see OptionsHouse review for more details). OptionsHouse was rated #1 by Barron’s in user experience. This is a great brokerage for investors who are concerned with cost per trade. While options traders may be able to find a lower average cost based on their trading habits, OptionsHouse scores points for their user interface, software, and other features, making them a solid option for investors of all types. OptionsHouse boasts no maintenance fees, volume requirements, or monthly minimums. For more information or to open an account, visit: http://www.optionshouse.com/.
TD Ameritrade: TD Ameritrade is among the top-ranked online brokers, according to third party ratings by Barron’s and Kiplinger’s. Stock trades aren’t the cheapest at TD Ameritrade, but you get one of the industry’s top education and training platforms, and one of the top rated research platforms. Add in no account minimums, no monthly maintenance fees, and the ability to make trades online, on your mobile phone, or at one of over 100 physical locations, and you have a winning combination. For more information, or to open a TD Ameritrade account, visit https://www.tdameritrade.com/.
Firstrade: Founded in 1985, Firstrade.com has one of the longest legacies of the discount brokerage firms. Firstrade gives stock traders and investors low commissions, low margin rates and a three second execution guarantee. Firstrade offers regular brokerage accounts, retirement accounts, and Education Savings Accounts with no minimum initial deposit and no maintenance or inactivity fees. Firstrade has access to over 10,000 mutual funds and offers new customers up to 100 free trades. The standard rate is $6.95 per trade, making them one of the lowest priced options out there. For more information, or to open a Firstrade account, visit http://www.firstrade.com/.
Scottrade: Scottrade has 25 years of experience and one of the best reputations in the brokerage industry. The $7 trades are right in the middle of the price range out of these online brokers, but Scottrade is the only discount brokerage on this list featuring brick and mortar offices where you can visit a broker for face to face meetings. No maintenance or inactivity fees, low stock trades, free online workshops, the Scottrade community, research and educational tools and tax tracking software make Scottrade a great fit for day traders and the casual investor alike. Scottrade will reimburse new customers up to $100 to transfer their holdings to Scottrade. For more information, or to open a Scottrade account, visit Scottrade’s website.
E*Trade: E*Trade is offers a full-service brokerage firm and an online bank which makes it easy to link accounts and transfer funds to and from. E*Trade has won numerous awards for both their brokerage services and their online savings accounts. While their trades are not the cheapest of the listed brokerages, they offer a wide array of services and features not found with many other online discount brokerages. New customers can get free stock trades for 60 days when they open a new account and fund it with a $10,000 minimum deposit within 60 days. For more information, or to open an E*Trade account, visit https://us.etrade.com/e/t/home.
OptionsXpress by Charles Schwab. OptionsXpress has a flat fee of $8.95 per trade for all standard US based stock trades. There is an Active Trader Rate for options which kicks in when you makes 35 or more option trades per quarter. OptionsXpress has no inactivity or maintenance fees regardless of how much you have in your account, and does not charge for streaming quotes or standard withdrawals. OptionsXpress offers free webinars, free trading tools, free advanced research and the option of a personal coaching program. For a limited time, you can also get a $1o0 sign up bonus when you open a new account and fund it with a minimum of $500 and make a minimum of 3 trades in the first 12 months
of enrollment. For more information, or to open an OptionsXpress account, visit http://www.optionsxpress.com/.
Capital One Investing (formerly ShareBuilder). Capital One Investing used to be known as ShareBuilder, which was part of the ING Direct brand that was purchased by Capital One after the financial crisis in 2008. Capital One rebranded the brokerage and made a few important changes, many of which appear to bring their trading platform more in line with the competition. Where ShareBuider was designed around low-cost automatic investments, Capital One Investing is a more traditional brokerage firm with low-cost real time trades, the ability to make options trades, and much more. You can invest with a small starting investment, as there are no minimum requirements to open an account, no inactivity fees, and no minimum trade requirements. Capital One Investing also offers an educational and training center and a variety of premium features. To top it off, you can easily link your Capital One 360 account to make money transfers in or out fast and easy. For more information, or to open a an account, visit www.capitaloneinvesting.com.
Which Investment Firm is Best?
As you can see by the above comparison chart, there is a wide range of prices and features with these brokerages, which should cover just about anyone. I recommend reading about how to evaluate online brokers and visiting these sites to determine which online discount brokerage is the best for your needs. We also have a list of prominent IRA providers.
Do You Have More Than One Brokerage Account?
Many investors have more than one brokerage account. There can be good reasons for this, including specialized trading needs, taking advantage of lower trading costs, utilizing premium features or services through a different broker, avoiding the expense or time involved with consolidating accounts, or other reasons.
Having multiple trading accounts can have benefits, but it can also complicate your finances. For example, it’s one more account to look at when calculating your net worth, one more set of investments to deal with when rebalancing your assets, more sets of tax forms, etc. I can’t help you with the taxes, but I can help you with the first two problems.
If you are dealing with multiple accounts, then it’s highly recommended to link your investment and other financial accounts to an account aggregator. These software programs will link all your assets to automatically show you your net worth and other valuable information. Some of them will even show you your asset allocation and make recommendations on how and where to rebalance your portfolio. We have a list of some free online tools to help you do this. But I’ll skip to the punch line and just recommend the one I use – Personal Capital.
Personal Capital is free, easy to use, and will help you understand your total financial picture, including your net worth, asset allocation, how much you pay in fees, and where you can rebalance to get your portfolio in shape. It’s 100% online and uses bank-level security features to track your investments.
Photo credit: Alex E. Proimos.