Best Online Discount Brokers (Updated!)
Tip It!Not long ago, I asked readers to list the best online discount brokers. The results are now in, so I thought I’d compile the results here, for your edification. What follows is a list of the best online brokers.
» Scottrade (Click to Apply)
Scottrade has received rave reviews from numerous readers. They feature low commissions ($7/trade), no inactivity or account maintenance fees, and a low minimum deposit. In 2008, J.D. Power named them “Highest in Investor Satisfaction with Self-Directed Services.” On top of everything else, they cover up to $100 in transfer fees if you already have an account elsewhere.
» OptionsHouse (Click to Apply)
OptionsHouse offers rock-bottom commissions, including a flat rate $2.95/stock trade. In 2009, Barron’s named them the “#1 in Trade Experience” for options traders. As above, they cover up to $100 in transfer fees if you already have an account elsewhere, and they have a referral program where you can get paid $50 for each friend you refer to them.
» Zecco (Click to Apply)
It was a close race, but Zecco came out on top. Zecco is best known for it’s free stock trades. This makes it particularly powerful if you’d like to invest in ETFs instead of mutual funds, but don’t want to pay the commissions. If you don’t qualify for free trades, or if you use up your allotment, their base commission rate is a rock-bottom $4.50/trade.
» TradeKing (Click to Apply)
TradeKing was the only other online broker with multiple votes. They feature low commissions ($4.95/trade) and a wealth of investing tools. TradeKing was also rated the best online broker by Barron’s, and their customer service was rated #1 by SmartMoney.
» E*Trade (Click to Apply)
E*Trade is an uber-convenient online broker. In addition to their brokerage services, they also offer a high-yield savings account. E*Trade was also rated as the best overall broker by SmartMoney magazine, and “best of breed” by Money magazine. Their commissions are a bit higher, starting at $6.99/trade, but they have a very efficient online trading interface as well as numerous trading tools.
» Sharebuilder (Click to Apply)
Cheap, convenient, and backed by ING Direct. What more could you ask for in and online discount broker? Sharebuilder has no account minimum, no inactivity fees, and you can invest any amount (i.e., they can handle fractional shares). It’s not free, but it’s darn close in that it only costs $4/trade.
Published on April 28th, 2008 - 24 Comments
Filed under: Online
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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24 Responses to “Best Online Discount Brokers (Updated!)”
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April 28th, 2008 at 1:21 pm
I have been with sharebuilder for a while and was very excited to see that ING bought them, but I will be opening a zecco account soon. You just can’t beat free trades and their layout doesn’t look bad either…
April 28th, 2008 at 3:40 pm
You should try out TradeKing!
April 28th, 2008 at 5:52 pm
Woohoo – go Zecco! Thanks everyone for helping us come out on top.
-Tony (Zecco Product Manager)
April 28th, 2008 at 7:49 pm
I’m a huge fan of ING, so naturally I’m drawn to ShareBuilder. In my book there’s a lot to be said about customer service…
April 29th, 2008 at 8:07 am
Sorry I missed the survey. I use Think or Swim and love it. Great charting tools and low fees (especially on options).
April 30th, 2008 at 8:46 pm
Go zecco,i think zecco is the best so far , cos of free trade and very good customer serivices!
May 1st, 2008 at 6:57 am
I have accounts with both Zecco and E*TRADE. While I use Zecco for purchasing individual stocks, all of my mutual funds (mostly in IRAs) are at E*TRADE, and I do all of my research there. I’m willing to put up with some frustration to get free trades, but E*TRADE’s research and analysis tools (which you can get by opening an very good savings or checking account) beat anything else I’ve seen.
May 23rd, 2008 at 1:02 am
Only one issue with your results – you failed to publish how many votes were cast and how were they distributed among the brokers.
June 4th, 2008 at 3:28 pm
I have been using Sharebuilder too! however, looking at Zecco with the great prices I will be opening a new zecco account.
June 5th, 2008 at 4:28 pm
The Carnival of Creative Investing is up!
http://idealinvestment.blogspo.....up_05.html
November 6th, 2008 at 10:06 am
I used sogotrade and the site itself is not bad for price you pay but their margin department SUCKS esp guy name James – he acts like sogo is giving you a favor to trade with them and needs to learn MANNERS!! I have closed my account and would never go back. Occasionally site gets slow but not bad. Their CS and Margin Dept makes you say NO to sogo.
November 23rd, 2008 at 12:24 pm
I hear really good things about Zecco so I’m going to try opening an account. Another website hated ShareBuilder and thought E*Trade’s fees were high so I am staying away from them. They recommend Scottrade, TD Ameritrade and Schwab.
December 15th, 2008 at 11:32 pm
I have been using TradeKing for a few years and have had no complaint until now. I am trying to find another discount broker since they shut down my acct.
I contract growing poultry for Pilgrim’s Pride. Due to some bad timing, Pilgrim bought a competitor and grain and fuel went north and poultry meat prices went south shortly after. Eventually Pilgrim’s filed for chapter 11, but everything is business as usual and prices are getting better.
I tried to buy 30,000 shares at .17. TradeKing would not let me do it online. So I called and a supervisor told me he did not feel comfortable making the trade for me. He thought I had made some bad stock purchases and should not use IRA money to buy a penny stock. Pilgrim’s was a fortune 500 company with a high stock price of around $30 on top of this they are the largest poultry producer in the country if not the world. They are far from a penny stock company.
Anyway he refused to make the trade for me. I called back later and someone else made the trade for me. The supervisor found out and made the other broker call me and inform me the trade did go thru but “unfortunatly your account has been closed to any further buying” only selling my positions and transfering my accts to another broker.
As of today I am up over 400% in about 2 weeks.
February 5th, 2009 at 12:31 am
Zecco is no longer a free lunch for those investors just starting out in the world. They will require $25 K to get free trades or 25 trades a month on March 1 2009! Hardly a steal anymore for people with under $10 k assets who are buy and hold future types, though the stock market is a steal right now. If anyone is very disappointed (like me) about this sudden loss of free trades, please talk with Zecco representatives so we can get this overturned. I hate paying transaction fees, especially in this market, and they still get some (small) interest on my unused money, so what’s the problem here?
February 6th, 2009 at 5:16 pm
Who is the best broker for day trading(10 to 20 daily trades)?
Can anybody beat the TradeStation $0.01/share traded?
March 12th, 2009 at 5:03 am
The brokers mentioned by Nickel are not serviced to daytrader
just for retail private investor
I think sogotrade is best for price,but their services need improved.
March 14th, 2009 at 6:32 pm
Forget TradeKing if this applies to you!
Foreign citizens with a US Tax ID number and legally living in the USA may open a TradeKing account with the exception of citizens from the following countries: Australia, Austria, Belarus, Canada, Cote d’Ivoire (Ivory Coast), Cuba, France, Germany, Hong Kong, Italy, Iran, Iraq, Japan, Liberia, Libya, Malaysia, Myanmar (Burma), Netherlands, Nigeria, North Korea, Saudi Arabia, Singapore, Taiwan, Sudan, Syria, United Kingdom, Zimbabwe.
April 30th, 2009 at 9:15 pm
I have been with Zecco for a few years now and I have not had any problems with them other than their ever changing pricing structure… I remember when I was getting 40 free trades a month… those were the days… now its 10 free if you have $25k or trade 25 times a month.
May 26th, 2009 at 4:39 pm
I live in the UK and started recently with TDWaterhouse. If your thinking of using them I would advice to pay your wiring transaction fees and use an American broker particularly if you are interested in penny stocks.
June 22nd, 2009 at 5:42 pm
No offense, but the list looks incomplete. Have you tried Interactive Brokers? I made a research recently, and I think you may find useful:
http://thesmalltrader.com/choo.....ll-trader/
Good luck.
July 1st, 2009 at 8:46 pm
Try Scottrade, I understand this site is about saving money, however with Scottrade you get 7 dollar equity trades and no inactivity fees. Also no fee IRA’s and no load no transaction fee mutual funds. Customer service is great, any problems I just go to my local branch. Reasearch, I get access to live quotes, screeners, news and reaserch reports. I love it!!
November 4th, 2009 at 3:21 pm
Never had a problem with Choicetrade and I don’t foresee any of these discount brokers winning over that account. What would the advantages be to switch to Tradeking or Zecco?
May 4th, 2010 at 2:16 pm
I prefer TDAM and ZECCO for playing the small caps (OTCBB and PINKS) due to fewer restrictions. I think ETRADE is shady BUT they do offer global market trading so it is a MUST have for TRUE international investors. Scottrade does not impress me because most brokerages will lower commisions for you if you trade enough. TDAM gives me $5 trades. For research I suggest using FINVIZ and stockcharts and for smallcaps I love the free reports at http://www.microcapreports.com/
November 11th, 2010 at 6:26 pm
Your statement in your comments about ShareBuilder could be misleading. I have been using them for a couple of years, along with ING Direct for my online bank. I am changing to thinkorswim.com because of their rates, trading platforms available, and customer service. They were bought by TD Ameritrade, but so far, so good, based on what I’ve read. Zecco might be a possibility for me, too. I actually signed up for TradeKing, but I never funded my account. I use Linux instead of Windows or Mac, and thinkorswim’s thinkDesk will run on ANY computer and has some awesome features.
https://www.sharebuilder.com/sharebuilder/home/article_PSSTR002.aspx
If you select the “Basic” automatic investment plan, you pay $4 per “investment”, pre-arranged, only on Tuesdays, either weekly or monthly. A real-time trade will cost you $9.95.
If you select the “Advantage” plan, you get the “advantage” of 12 pre-arranged investments (which could bring your trades down to $1 each, until you factor in the $12 monthly fee for the plan. A real-time trade will cost you $7.95 under this plan.
There are some good things about ShareBuilder, but you have to evaluate it for your particular investing and/or trading style and needs. I have outgrown it and have become a more active investor and trader. Don’t forget to research the tax implications, too. IRA or HSA investing might make more sense. Good luck!