I hunted for the best online stock brokers offering cheap stock trades. Here are some of the more popular brokerages I’ve looked into.
I’ve always been quite interested in adding to my investment holdings and have been on the lookout for good online brokers. If you’re someone who’s been keeping the faith about the long term prospects of the stock market (typically 10 years or more), then this could very well be a good time to add to your equity positions.
To go cheap, I house my investments in a mix of both no load mutual fund companies and discount brokers. As a stock investor, you could go the mutual fund route with great names like Vanguard, Fidelity, Charles Schwab, and T. Rowe Price, but to add some flexibility to your portfolio at really affordable transaction rates, you may also be interested in signing up with an online discount broker. I did some research and compiled this list of low cost online stock brokers:
Best Online Stock Brokers Offering Cheap Stock Trades
1. TradeKing offers $4.95 per stock trade regardless of the size of your account balance. They have some helpful tools and calculators to help customers out with determining their target prices for trades. In addition, they’ve got good support for options trading such as seminars and tools, for those among you who dabble in options. TradeKing is also tops in customer service, with a live representative at the ready via phone, email or IM through their web site! They’re quite easy to reach. Some other extras they offer: a refund of your transfer charges up to $150 if you switch your account to them, and $50 for each friend or referral you send their way.
Also, TradeKing has won some great accolades from the personal finance community, having received the following awards and honors: Smart Money ranks TK as #1 in customer service in 2008, the best discount broker in its annual Broker Survey of US Brokers (twice in a row!) and the highest ranking of 4 stars in Barron’s 12th Annual Survey of Best Browser-Based Online Brokers. Here’s where to sign up.
2. OptionsHouse has very affordable commissions, only $2.95 per stock trade. Mutual fund trades are $9.95 (same as Zecco and Firstrade), they’re easy to reach over the phone, and they offer Live Chat via their site. They’ve also got a broker comparison table, which all online brokers like to show to put themselves in the best possible light. Their table shows that their trading commissions are better than many brokers’ (for regular trades) but they’re missing that nice community feature that’s available on sites like Zecco or TradeKing. But open an account with them and you’ll get your transfer fees reimbursed up to $100. Here’s where to sign up.
3. Zecco is one of those online brokerages which offers free trades for those who open an account with a minimum of $25,000 or who trade fairly actively. Maintain the $25,000 balance or make 25 trades per month and you’ll get 10 free trades each month. With a lower account balance, the trades are only $4.50 per transaction. For commissions on mutual funds that are not on the no-load list, Zecco charges $10 per trade.
Relative to other sites, where does Zecco lack the edge? Extra services such as getting the information you need for tax purposes, and their site’s user-friendliness quotient. They’ve been working on improvements to hopefully address weak points. For more active traders who are after the free trades, they may be worth a look. Here’s where to sign up.
4. Scottrade charges $7 per stock trade online, but will charge more for phone and broker assisted trades. These are great prices, but I actually appreciate their mutual fund fees even more! For mutual funds with an NTF designation (no load and no transaction fee), your transactions are completely free. However, no load funds that aren’t in the NTF program have a fee of $17 for each trade, whether you buy, sell or exchange. Something similar is applied to loaded funds and broker assisted transactions with mutual funds, so you’ll get the best deal by sticking to managing your portfolio online. From the feedback I’ve heard about Scottrade, they’re a well-established, highly popular broker that’s a great fit for the retail investor. Here’s where to sign up.
5. E*Trade isn’t the cheapest broker, relative to the others we’ve listed here, with rates ranging from $6.99 to $12.99 per trade (depending on your trading frequency), but they’re still pretty affordable. Some things to watch out for: if you need broker assistance, they’ll hit you with $45 a trade and an online commission. Then they’ve got pesky inactivity fees that can cost you $40 per quarter if you don’t trade regularly.
The positives? They offer some support for those who need financial advice potentially rivaling what you’d expect from full-service brokerages, and they’ve got a wide range of investment selections in their product roster. They also rate well for solid tools and seminars for those folks who are interested in options trading. In fact, they may have the most diverse set of tools available of any online broker (check out their Power ETrade platform). Their customer service lags the other sites though, without a Live Chat or IM option, and relatively longer waits on the phone for a representative. I’d put them at par with Charles Schwab.
As far as honors go, Smart Money chose them as the #1 online broker for 2007 and 2008. They also get 4 stars from Barron’s Online Broker Survey, so they’re doing a lot of things right! Here’s where to sign up.
6. tradeMonster has entered the trading market as a fairly new online brokerage with roots in the options world. They offer a simple pricing structure for stocks — a flat $7.50 a trade. Mutual funds and bonds are $15.00 per trade (only upon purchase) with no fees upon sale. For options, the commissions are tiered, but appear to be relatively cheaper than the fees of other brokers, especially when more contracts are involved. Overall, they’re a much cheaper options broker than TradeKing or OptionsXpress if you intend to be a high volume options trader. Plus, they’ve already been honored by Barron’s with a 4 star rating despite being the new kid on the block. Here’s where to sign up.
Overall, these brokers are a good list to work with. I’ve done business with a few of them and have experienced good customer service with great commission rates.
- Stock trades: Free stock trades from Zecco, Cheap stock trades from TradeKing, Stock news and Investment info at INO TV Free, No cost Trend Analysis for stocks
- Earn top returns: FNBO Direct [1.90%], HSBC Direct [1.65%], WTDirect [1.76%], E*Trade Bank [0.95%], ING Direct [.25% to 1.65%]
- Cash bonus: Discover More [$50], American Express [$25], Lending Club [$25]
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Where do you get that Firstrade has had more fines than other firms? Firstrade’s site says they are Kiplinger’s Top Clean Hands firm. Doesn’t that mean they have had less fines than other firms?
Anon,
You are absolutely right. I stand totally corrected and made the appropriate change. I misinterpreted the information I garnered from Kiplinger and I am glad you pointed this out. Kiplinger rates Firstrade quite highly for its reputation. My bad, and my apologies for the error.
Great resource here for new investors. Interestingly I think the relatively cheap stock markets will bring a lot of investors back into the market towards the end of 2009 when markets stabalize. I use Zecco and Tradeking – because of their low rates and some promtional offers they have running. If you don’t want indepth research options and transaction costs are your main focus, then these are the brokers to go for.
Any specific reason you dropped out Sharebuilder? They charge about 10 dollars per stock trade.
Manshu,
Yes, there are a few other discount sites like Scottrade and Sharebuilder that offer cheap stock trades, and I should take a closer look at them. For the purposes of this article, I wanted to keep to those online brokers that were “cheapest” or were recognized or honored for some qualities. The ones here either offered free stock trades (even under certain conditions) or had very low commissions on regular stock trades. The only one that may not exactly qualify, based on those considerations, is E*Trade. But they have received some honors and I also wanted to include those brokers I carry an account with.
I also culled my information and based my coverage on some research, where I found that many resources (Kiplinger, Smart Money, Barron’s) were favoring these sites. Subsequently, I then included those online stock brokers which I’m already pretty familiar with as I already use them (or had used them) or because I’m considering signing up with them and funding them with my own money.
Thanks for asking! I’d love to hear more about what others have to say about their online brokers. I’d love to learn more about others’ experiences with those cheap ones in particular
.
Update: I had planned to update my list to include Sharebuilder, but unfortunately, I found their web site to be excruciatingly slow. Because of this issue, I feel that I will be unable to review their site sufficiently for inclusion in the list above.
I can’t imagine paying to buy mutual funds when there are so many free options out there, for years I’ve used T Rowe Price’s asset builder to invest small amounts for no load. I used Sharebuilder to buy some Vanguard ETFs, they often have promotions running if you’re a costco member. The $50+ bonus offsets a few trades, if you’re not planning to actively trade. I hadn’t heard of Firstrade before, I’ll have to check them out.
I just wanted to say that I just found your blog and I really like your writing. I will be coming back often to get more advice for sure.
I also need to re-evaluate my portfolio and adjust my investments accordingly. You mention some online resources I’ve never heard.
Thanks
Just thought I would throw my two cents worth in!–I have used THINK OR SWIM for over 2 years and find that around about $5 per trade, they are about the best out there! They often give me better fills on price and there speed is unmatched anywhere! There option trades also are the easiest and fastest direct access that I have found!–I can trade an option without looking up the symbol within about 2 seconds start to finish!–I understand that they were aquired by TDA so hope they wont change!–They are the best in my opinion!
zecco has been awsome but they are making their limit for 10 free trades a month to having a minimum of $25,000 – I will switch over to interactive brokers – only $1 a trade once zecco makes the switch march 1st 2009
I have been using Scottrade in the past 3 years and have not been happier with them . At $7 per trade is very cheap and love their customer service.
$7 per trade is cheap but I’d prefer it even cheaper if I can get away with it and still have great customer service. In that regard, I remain a TradeKing fan.
But yes, I have heard really awesome things about Scottrade — they’re recognized for being one of the top 100 best companies to work for in 2009 (they don’t do job layoffs)! Still, they’re 28% more costly per trade than TradeKing or Zecco.
I use Firstrade. $6.95 per trade is cheap. They gave me the $50 for referring to a friend even though I did not have the promotion code.
What’s the minimum fundng req for interactive broker, anyone know? Or link me, thxs!
It’s a good review. You missed ChoiceTrade @ $5. Also, why so much money in mutual funds?
Nice reviews – very helpful. Over at FiLife we offered some general advice on how to choose a broker. I’m going to add a link over to these reviews.
Thanks!
Kristen
Thanks for the nice collection. This is really good information. Some online stock brokers are known for their award winning customer service while others are known for inexpensive or even free stock trades. This review highlights some of the best stock brokers available based on trading fees. I like how this list is focused on cheap online stock trading for active traders, and it is sorted from the lowest commission cost to the highest. In addition, special offers and features for these discount brokers are listed to help.
Awesome post! Woohoo glad I found it. Will definitely be using these and bookmarking your page. Thank you! You are a life saver
Good reviews. I’m just learning to trade myself. I am can’t decide whether to go for zecco or trade king. I’ve read your reviews on them both and I think i’ll opt for zecco. The free trades are a deal maker for me.
I just opened an account with eztrader. It looks easy. but the stock market is unpredictable. Anyone have tips or pointers? Or can anyone refer me to a website with good info. Thank you.
This is a very helpful post. I go with Scottrade because I like the customer service. I agree that $7 is becoming too expensive. There is a lot of competition for the online stock broker business.
Good luck to all finding the lowest commissions.
I also need to re-evaluate my portfolio and adjust my investments accordingly. You mention some online resources I’ve never heard.
Thanks!
I like Scottrade as well, although TradeKing is a hot choice too, IMO.
Any specific reason you dropped out Sharebuilder? They charge about 10 dollars per stock trade.
@TMT,
I had Sharebuilder on my list but their site is so slow (and many people have complained about this, including myself)! I’ve even contacted Sharebuilder about their site performance, and they’ve been very helpful. Still I find the site slow and the tools are not as advanced as those you’ll find on E*Trade (top tools), TradeKing and Scottrade. Of course, Sharebuilder’s stock trades are fairly affordable at around $10 a trade. They’re a decent choice if you want an automated investment program using a broker.
I think they’re okay, but I prefer the tools and support of the other sites I have on the list above.
But if you’d like more info on Sharebuilder, you can check out my comprehensive review of Sharebuilder here.
I think Scottrade is a good broker for beginners, and you may be able to use special codes to get free trades with them.
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