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Review of best online stock brokers for trading stocks

Published 12/27/07 (Modified 3/2/12)
By MoneyBlueBook

Updated list of 10 best discount brokers

So, you are finally sold on the idea of signing up for an investment brokerage account so you can start making money by investing in the stock market. Or, perhaps you are already an experienced trader but at times still wonder what other brokerage options are out there? These days there are a lot of options out there but it can be sort of confusing trying to find the right online broker. There are many choices available, from full service premium brokerages to deep discount online brokers. Relying on authoritative financial and investment sites for guidance and opinion reviews isn't always definitive either since they occasionally have differing opinions. The best way to choose the best and right broker to handle your investments is to do a combination - by sticking with the popular ones that have been around for some time and have been sufficiently subjected to adequate scrutiny by the investing community, as well as go with the brokerages that have consistently appeared at the top of reputable rankings and researched reviews.

Know Thyself To Better Determine Brokerage Fit

Factors to consider when choosing the right online broker include the type of investment vehicle you intend to trade (stocks, bonds, mutual funds, indexes, options), the amount of your investment, the type and amount of research material you want, customer service, website design and layout, and trading reliability. It's important to know what type of investor you intend to be. Do you plan on being an active trader with numerous trades per week, or do you plan on being an index, mutual fund type investor who prefers to leave and then forget it. These things matter because many brokerages charge fees and commissions that differ depending on how much you invest and how frequently you trade.

Choosing Discount Brokers Over Full Service Brokerages

I am a hands on investor so I prefer to do things myself. This is not to say I want to handle every single minute detail, but I personally don't need the services of an expensive account adviser for investment decisions. That's why I prefer to go with more affordable online discount brokers over their more expensive full service cousins.

Full service brokers offer a much broader variety of financial products and provide a much wider array of investment advice and research than do discount brokers, but then they charge much higher fees for their services. They justify the much higher commission rates by offering a lot of investment advice and by providing active recommendations. However, keep in mind the advice they provide are usually just educated guesses. Frequently, much of the investment advice and research material can be found elsewhere for free and the educated guesses they provide doesn't always lead to the best investment decisions since no one can truly predict or time the market. It's primarily sales commission-based so they frequently have an incentive to solicit business and encourage active trading, which can occasionally cause suspect and even conflict of interest investment choices. Because of the excess premium you must pay for full service firms, I recommend sticking with discount brokers.

Due to continual competition, many discount brokers now also offer a decent wealth of financial research and investment material at your online fingertips. There are less frills than premium brokers like Merrill Lynch, Morgan Stanley, or Wells Fargo, but I think for most reasonably educated investors, the discount path is the way to go. The considerably lower fees will enable you to lose less money from unnecessary commissions and help you maximize your money.

There are many brokerage firms out there from expensive fancy pants full service brokerage firms to more affordable premium discount and deep discount brokers. Since I advocate sticking with much cheaper do-it-yourself online discount companies, I'm listing the best ones in my opinion. However, all of these discount broker choices would certainly benefit more experienced, seasoned investors as well. I'm also recommending a few popular more-premium brokers such as Fidelity and Vanguard that many like for the exceptional low cost funds they offer as part of their own transaction free network of mutual funds.

The Top 10 Best Online Discount Broker (Listed In No Particular Order)

1. Zecco - Zecco is a popular online broker choice among investors who want to enjoy free trades and not have to pay a fee for each equity transaction. Currently the commission cost is free for the first 10 trades per month if you maintain a minimum of at least $25,000 in total account equity (total balance of all cash and stock value). If you are unable to maintain the balance requirement, then each trade will require a $4.50 trading fee. Even with the fee, Zecco offers one of the lowest trading fees among all popular discount brokers. Also, there are no hidden inactivity fees, which is great for those who don't intend to trade too often. For more information, check out my review of Zecco, and my account trading experience with them.

2. TradeKing - TradeKing offers exceptionally low $4.95 equity trades, with no inactivity or maintenance fee, which is very good. The trading interface is pretty average but decent, and the online customer service chat feature is useful, although many brokers are starting to provide this function as well. For a more detailed breakdown of all that TradeKing has to offer in terms of combining low trading costs with premium online brokerage features, please read my TradeKing broker review.

3. E-trade - Bonus Offer: E-trade is currently offering free trades for 60 days. This special Etrade bonus offer is also available for new new IRA and Roth IRA accounts as well. If you haven't yet opened a retirement Roth IRA, this may be your best opportunity. Etrade has been around for some time and is quite popular due to the wealth of tools and research information the company provides to account holders. Etrade is one of the few full service discount brokers out there that also offers an integrated online bank as well - complete with Etrade bank savings and Etrade checking privileges. Its stock commission rate is tiered at a standard rate of $12.99 but drops the more frequently you trade and the higher the value of your accounts. Customer service has occasionally been spotty, but it's rapidly improving. If you're looking for an all-in-one broker/bank, Etrade's your best bet.

4. Scottrade - Scottrade offers actual brick and mortar branches throughout the country that some investors find useful. I personally don't find it necessary but many appreciate the convenience of having actual branches nearby that they can visit, a benefit not offered by many other online brokers. Its biggest downsides include providing much less research material for account holders and offering a much lower interest rate for its cash accounts than its competitors. However, there are many pluses as the company offers very good customer service and provides a wide selection of No Transaction Fee (NTF) funds. Its commission fees for equity and limit trades are exceptionally low at only $7 with no share limit, and there are no inactivity fees.

5. ShareBuilder / ING Direct - (Note: ShareBuilder is offering a free $50 bonus when you open a new account). ShareBuilder was recently acquired by ING Direct. This broker provides good tutorials for beginners and is a great choice for those new to investing. I suggest sticking with the Standard subscription account as it provides more features, but those who don't plan on trading too often may prefer the Basic account, which doesn't charge a fee at all. Sharebuilder also offers the very useful option of automatic investments as well as dollar based investing, which allows you to invest in a particular dollar amount you choose rather than by a particular number of shares. The dollar based investing feature is very handy for trading stocks with high individual share prices like Berkshire Hathaway A Shares (BRK-A), which was last trading at $138,500 per share!

6. Fidelity - I personally use Fidelity Investment as my primary individual stock and mutual fund account. Not only is the company's customer service top notch, I think its online trading website is clean and easy to use. I invest in many of Fidelity's high performing mutual funds and by having a brokerage account through Fidelity directly, I don't have to worry about transaction fees when I trade Fidelity funds. Standard stock trades are $19.95, but due to its tiered system, the fees are much lower depending on the total value of your assets. I highly recommend this brokerage firm.

7. Vanguard - Vanguard is more expensive in terms of fees as each online trade costs $25 or $0.025 per share (whichever is greater). However, because Vanguard's exceptionally low expense ratio mutual funds have performed so well, this company is great for people like me who want to invest in high performing diversified Vanguard funds without having to pay hefty fees through another broker.

8. Charles Schwab - Charles Schwab used to be a more expensive premium broker, but it seems to be matching itself up with its competition better these days by lowering and simplifying its commission tiers. The company offers an impressive wealth of research related information and fees are currently $8.95 per trade, with extra charges past 1000 shares. Schwab offers other financial features such as personal banking and credit cards, and its customer service has been decent and dependable.

9. TD Ameritrade - Ameritrade bought out Datek and merged with TD Waterhouse to finally become TD Ameritrade over the years. Among the features offered, one stands out - a predicable and single priced commission fee - a straightforward $9.99 for each market and limit trade. TD Ameritrade is not the best for mutual fund investing, but it's very good for individual stock trading. The stock streamer program is a nice feature, but I've found it to be occasionally buggy and not always working properly.

For More Online Broker Rankings and Review, Please Check Out:

  1. Smart Money's 2009 List Of The Best Stock Brokers
  2. Barron's
  3. J.D. Power &, Associates
  4. Kiplinger
  5. USA Today

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55 Responses to “Brokerage Account|Online Brokers review|Best Online Broker” 

  1. tbweber says:

    Zecco Warning! Zecco has announced they will change to $25,000 account balance to receive free trades or $4.50 commission per trade, sticking it to their current customers.

  2. traderjohn says:

    I just got that zecco notice too. Since opening that account I have had nothing but Negative surprises. I also have a Scottrade acct and Ameritrade acct. Mostly satisfied with both of these. Was looking at thinkorswim but now they are merging with Ameritrade, so will have to see what happens there. Also just yesterday had a gtc order at zecco that did not execute and it should have.

  3. Bruce says:

    Just got that notice this mourning myself, I went on and pulled out my cash and will look elsewhere. I am going to look at Sogotrade.

  4. hank says:

    Looking for online trader that will absorb transfer charges from old trader

  5. lloyd says:

    I have looked all around for discount brokers SOGOTRADE IS THE BEST 3.00 TRADES
    no inactivety fees it basic for hell im a premium member an a get 1.50 trades for 10 a month really check them out tell them lloyd wolfford sent ok buy.........oh and no extra fo unlimited shares 5000 100000 whatever.they have done me right...

  6. Steven says:

    I wish that more of these discount brokers offered Digital Tokens for logging in.

  7. Chris Metzger says:

    SogoTrade is ok but lacking in features, research, or tools. And sometimes their site does not respond and place your requested trade - I have had to re-enter the info and try again. Plus there are no options or mutual funds - just stocks and ETFs. Their customer service is OK - they pickup and respond well enough but don't usually have a decent answer (mostly just generic info). OH - you cannot even subscribe to the Premium plan unless you have at least $2k in your account. I'm a small-timer so that's a disappointment (harder to make a profit sometimes when your cost is $3 on both ends and you don't have a whole lot to invest). All-in-all they are not bad. Tell them I sent you (Chris Metzger) and maybe I can get some free trades!

    BTW - I used to be with ShareBuilder before they were bought by ING and stayed with them after that. They SUCK - their prices are high for what you get and their customer service is AWFUL. Unless you're a newbie (which I was) you should steer clear of them. If you are new to investing then they would be a good choice - higher cost but you get a lot of tutorials and hand-holding (plus they have dollar-based investing). Just word to the wise.

  8. Joe says:

    I'm a newbie doing research to decide which online broker to join. Thanks for all the feedback as it is helpful.

    Having said that... and after doing research on several sites, it seems like I can find negative comments about EVERY online broker. So, which one do I go with? Is it a case of the lesser of several evils? I realize forums are a place for people to vent and you're likely to hear more negative than positive - but I'm now more confused than ever.

    Bottom line: If more than a couple of people say, "Don't go with company X" I cross them off my list. Every company has now been crossed off my list! LOL. HELP!

  9. young says:

    Has anyone heard of or tried Vector vest as a broker? I heard good things and am excited about giving it a try.

    Please advise or comment Thanks.

  10. Slong says:

    Avoid FirstTrade they are not responsive - a necessity for online trading - so they are a fish out of water.

  11. Sue says:

    Whatever you decide, avoid Schwab altogether! Do not even give them a chance because it will certainly cost you dearly.

    I have been w/ Schwab for about 16 years as an active investor and depositor. My accounts with them are 100% owned with strong positions in cash and paid equities. My accounts net worth are closed to 7 figures. I have an outstanding credit history.

    When I responded to their multiple emails about a credit card service, I was turnt out. They provided zero explanations even though they are required to do so in writing, by laws. Things simply just could not get resolved at a very basic level as almost everyone I spoke with possess minimal business-know hows and common intelligence to resolve simple business issues. It then get escalated very quickly to an internal group called Client Advocacy Team. This was where all the nastiness, incompetence, and brazen displays of abuse took place.

    The individual, who came on the line was clearly a bombastic Greenhorn and who was ready to demonstrate abhorrent incompetence with boorish statements like "the buck stops here", and "if the clients are not satisfied, they can take it outside of Schwab". Not only he could not form complete sentences but enjoyed his poor choices of word-usage like "emotion", "entitlement". He also exuded an incredibly thoughtless attitude unwise for anyone who works in the financial industry during this severe economic downturn. He
    Surely, this little boy who works at this Company's Client Advocacy Team is a slimy sample of the abusive people this company is consisted of, and the ways they treat their fund depositors. In fact, I was briefed by more than one of their working associates "NOT to do business with Schwab". When I first heard, I thought it was an inside joke. Looking back, the real joke is on anyone who continues to do bring their hard-earnt money to them. Other people I know have more horrific experiences w/ this Schwab firm, so mine was relatively more tolerable, but not forgiving one ---http://www.hasbrouck.org/blog/archives/001599.html

    I also have worked w/ Fidelity Inv. and find them to be more professional in the works they do. If they don't know something, they will try to find the answers for you. They have not resorted to abusive language and certainly have not been *stupid* like their competitors at Schwab to tell the depositors to basically "take it outside". Knock on woods!

  12. SavvyInvestorette says:

    The new bonus offer of 100 commission-free trades from Etrade looks pretty enticing. Those out there who aren't Etrade customers yet ought to take a test run of the online broker bank...it's not a bad choice.

    As the blogger indicates, those looking for a one stop shopping bank and broker source will do well with E-Trade. They're not the best in any one bank or broker function, but they do almost everything pretty well. Jack of all trades, but master of none, so to speak...

    I have my Roth IRA invested with them and do all of my online banking, checking, savings, CD's, and even recently...credit card accounting with them. Sometimes it's good to put all of your eggs in one basket for convenience sake. Fear not...it also appears the Etrade mortgage backed security crisis is behind them. They were really struggling with mortgage issues at Etrade 1-2 years ago but it appears things are looking up for the brighter. Just giving my 3 cents.

  13. Jen says:

    If you intend to open a new Scott Trade account, you can get three free Scottrade online trades (worth $21). Enter the code TRYP3208 in the box after selecting "referred by friend/received a promo code" on the application page.

  14. Yavin says:

    Zecco is only offering free 10 trades every month now if you can maintain at least $25,000 a month or make at least 25 trades a month. Else it's $4.50 per trade (still very cheap in my opinion. Zecco is a terribly stripped down deep discount online brokerage company, but if you're in the market for a cheapo solution to your trading and investing news, Zecco is it. It's hard to beat free in this market. But TradeKing comes pretty close with its $4.95 trades. TradeKing doesn't offer free trades, but its overall cheap transaction rates and better customer service features+trading tools makes it super competitive as discount online brokers go.

  15. Seabass says:

    TradeKing is a good broker. Low trading fees and great customer service support. I wish they'd offer lower fees for mutual funds of certain providers though...but other than that they are great. My recommendation --- use TradeKing for your individual stock, index, ETF, and mutual funds trading needs...but go directly to sites like Vanguard and Fidelity if you want to purchase and invest in their branded mutual funds.

  16. Former Etrade customer says:

    I am also an Etrade customer with a bad experience. Etrade absolutely sucks in the customer service department. They regularly lock up accounts because they have a habit of LOSING personal documents send by mail to their offices. Their representatives have been caught lying to clients on the phone (monitored and recorder phone conversations) and have failed repeatedly to follow up on client's requests. They have locked up funds due to their own incompetence and lost investors millions of dollars without accountability. In short, Etrade is pathetic.

    Here is my advise. Do NOT go into business with Etrade. Do your research on other discount brokers. Save your money and your sanity.

  17. Broker Chaser says:

    Hey looks like Smart Money's 2009 survey list of the best online brokers has been released. From top to bottom, according to SmartMoney, here are the review rankings:

    1. Etrade,
    2) Fidelity
    3) Charles Schwab
    4) TradeKing
    5) TD Ameritrade
    6) Muriel Siebert
    7) Scottrade
    8) FirstTrade
    9) Options Express
    10) Bank of America

    I agree with the ranked ones at the top...Etrade is pretty top notch despite the naysayers on this blog forum. Schwab and Fidelity are always decent. TradeKing deserves its high brokerage ranking as well. Main surprise is Bank of America...I had no idea they even had a brokerage department...ha!

  18. Kevin Bailey says:

    TD Ameritrade charges EXTRA fess on sell trades! THEY ADVERTISE " STRIGHT FORWARD PRICING $9.99 PER TRADE, NO HIDDEN FEES!"

    These guys hide these fees, the only place you can find them is to go into reports, pull up your cost basis for any sale trade and you will see this charges in the far right hand column, the column header even states "FEE"


    Additionally they have sever proplems filling trades, lost 2 trades in 30 days, I am no longer with them.

  19. Jack Bronstein says:

    I think this is not updated. No Interactive Brokers in your short list?
    You gotta be kidding.

    Happy trading.

  20. drsolo says:

    I have an account with Scottrade and no problems. But I have been looking at stocks on global markets, specifically Hong Kong.
    *Schwab .. $100 per trade or 0.5% whichever is GREATER plus Hong Kong markup 1.5%
    E-trade... $38 per trade + HK cost of $7.75
    NobelTrading ... $19.95 (must be over the phone) + ?? HK

    Anybody got anything better? thanks

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