Best Online Discount Brokers

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Open a TradeKing account todayIf you visit the E*Trade homepage, you’ll see a big yellow star that names E*Trade the #1 premium broker of 2007 by Smart Money magazine and “Best of the Breed” in Money Magazine in August 2007. If you visit the Scottrade homepage, you see a blurb about a J.D. Power and Associates Award for “Highest in Investor Satisfaction with Online Services” award. And if you visit Zecco homepage, they don’t have any awards posted. Does that mean E*Trade is better than Scottrade and Scottrade is better than Zecco? Maybe, maybe not! So I wanted to match up all the awards and ratings and come up with my own ranking of the best online discount broker.

The List: I started with all the Premium and Discount brokers from Smart Money 2007 Brokerage Ratings page and then removed anyone with commissions greater than $10. That left me with E*Trade, Banc of America, TD Ameritrade, WellsTrade, Scottrade, Firstrade, WallStreet*E, SogoInvest, TradeKing and then I added TradeMONSTER, because they offer competitive pricing trades, and Sharebuilder, because they offer a unique discount purchasing program. I removed Banc of America, WellsTrade, and TD Ameritrade because they’re affiliated with larger banks, I wanted standalone brokers.

TradeMONSTER

TradeMONSTERTradeMONSTER offers competitive pricing for trading stocks, only $7.50 a trade up to 5,000 shares. On options, they also have very competitive rates, with a single leg optionst rade of 10 or 20 contracts costing you only $12.50. If you trade 50 contracts, the price only goes up to $25. On TradeMONSTER, you can trade anything you could imagine in the markets from your standard stocks and options to ETFs, mutual funds, and bonds. Take a look, I think you’ll be pleasantly surprised at the powerful tools they give to every account, regardless of how much you trade.

Click here to open an account at TradeMONSTER!

OptionsXpress

OptionsXpressOptionsXpress is always in the conversation whenever you talk about the best online stock brokers. Despite their name, OptionsXpress deals with much more than stock options and equity trading, or stock trading, is an area they excel in. With no minimums and no account fees, their current rates are $9.95 per equity trade. While that’s higher than TradeKing, it’s a price that puts it ahead of bigger names like E*Trade. OptionsXpress was named the #1 discount broker by Kiplinger’s in 2006 and they routine win accolades from Barron’s and Smart Money magazine.

Click here to open an account at OptionsXpress!

E*Trade

E*TradeE*Trade, one of the priciest of the online discount brokers, with a $9.99 trade commission, has won several awards in its own right. #1 premium broker of 2007 by Smart Money magazine and “Best of the Breed” in Money Magazine in August 2007. One startling ranking was one for Kiplinger’s in 2006, where E*Trade was rated 9th (the only other online discount broker on the list was Firstrade at #4 – #1 was optionsXpress but their trades cost $14.95).

Click here to open an account at E*Trade!

Sharebuilder

ShareBuilderSharebuilder isn’t really a discount broker in the traditional sense because you pay $4 a trade but it has to be done on a schedule, meaning the following Tuesday. So in a sense you can buy stock at a cheap price but you have less control over it. Sharebuilder was recently acquired by ING Direct and they’re also, currently, the only broker to offer promotion codes for free money.

Click here to open an account at Sharebuilder!

The Awards Sites

Below are links to the award pages I could find:

  • Update: Smart Money just released the results of their 2008 Brokerage Ratings.
  • Smart Money 2007 Brokerage Ratings – The rankings from 2007 listed TradeKing as the number one discount broker, their second in a row. The full ratings, in order from best to worst, were Scottrade, Firstrade, OptionsXpress, Muriel Siebert, WallStreet*E, SogoInvest.
  • 2006 Kiplingers Ratings – For a $50,000 account, the rankings were: optionsXpress, Muriel Siebert, Wells Fargo, Firstrade, Fidelity, Vanguard, TradeKing, Schwab, E*Trade, Scottrade, and TD Ameritrade.
  • For JD Power & Associates, I invite you to search on their site.

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34 Responses to “Best Online Discount Brokers”

  1. Can you share the rumblings you’ve heard about Zecco? I use them and have recommended them to countless people, but I’d like to be aware if other people are having problems.

  2. jim says:

    A lot of people leave comments on this article asking whether Zecco’s a scam… a lot of upset people. I know Cap has heard the same.

  3. Jason R says:

    I use both Zecco, and TradeKing. Zecco for an investment club I am in, and Tradeking for my personal stuff (including an IRA). The service at Zecco is more or less non-existant. I had an issue with them where a company I owned shares in got bought for cash, and it took me about eight weeks to get the money in my account. It took about two days in my TradeKing account.

    Also, and this is much less important Zecco’s website is clunky.

  4. Jim says:

    I had an E*trade account a few years ago and I was very unsatisfied with their customer support. Maybe they’ve improved since then, or maybe not. Either way I won’t be returning to them.

    I’ve got a Scottrade account right now and they’ve been just fine. Plus they have local branch offices which is pretty handy sometimes. However I haven’t done much real trading with them thus far so my experience is limited. And their website isn’t the best design IMO. Overall I’m pretty happy so far.

    Jim

  5. The only one i’ve tried was E*Trade and it was pretty bad a$$ – at least for a few trades a year i needed it for. Trades went through smoothly, customer service was cool, and it met my tiny needs.

    Of course, this was a good 4-5 years back when I used to work for them (not in that dept. though) but i’d def. recommend them for a “beginner”. Everything is just so freakin’ easy to do.

  6. David says:

    Can someone help me out? Ive read alot about all the online brokers but people keep refering me to discount brokers like interactive brokers.
    I’m pretty new at this so when I downloaded the trial program it looked to complicated. Also I don’t expect to be glued to my moniter from 9:30 till 4:00.
    Does anyone have any suggestions as to which service I should use?

  7. John says:

    While I’ve heard that Zecco is working to improve customer service and performance problem, I’ve found the site to be much more interactive and social than any investing experience I’ve ever had through TD Ameritrade or Schwab. I think Zecco will only improve over time and with free trades and a vibrant online community it is already an amazing service.

  8. mapgirl says:

    David:

    Disclosure: I am an Etrade user.

    Given the experience of myself and my parents (who use TD Waterhouse), why is there trial software to download? You should be able to use most online brokers through a web browser with the appropriate standard plugins (like Flash, Java, whatever). I don’t think you should go with a broker who has proprietary software that installs on your machine. What if you are at work and want to make a mid-day trade on hot news? What if you aren’t allowed to install software on your machine? That’s crazy.

    ETrade isn’t the cheapest, but I’ve known about them since the VERY early days. (I knew someone who worked there when it first started.) Their service has fluctuated, but overall, I personally have had no complaints. Yes, they went through a crappy time during growing pains, but those have disappeared. I also trade online through another major mutual fund company where I have another account. All things being equal, ETrade is much better for stock trading.

    Lots of folks like Scottrade, Schwab, TD Waterhouse, but I am not a highly active trader so commission discounts don’t really bug me. I factor in commissions on my trades when evaluating any stock for my lazy person’s Buy-and-Hold strategy.

    Just my two cents. YMMV

  9. disappointed says:

    “I removed Banc of America, WellsTrade, and TD Ameritrade because they’re affiliated with larger banks, I wanted standalone brokers.”

    Thats a weird and unnecessary filter. To me, that sounds no less arbitrary than filtering out brokers whose CEO is over 6′ 0″.

    I would also suggest explaining what your looking for in a broker. This is one of the main reasons why different broker rating sites come to different conclusions.

    Also, you made mention of Firstrade several times, but you never did review it.

  10. Pete says:

    I tried to Open a Zecco account in January but gave up after two months of waiting around for them. The customer service is awful and no one seemed to care about losing my business. I didn’t find their email responses to be very professional either. Definitely off-putting but maybe just an isolated incident?

  11. Austin says:

    I have been doing some research on where to open my next account. I currently use Scottrade for both my IRA and a cash account. If you have enough money so that $7 trades don’t dent your returns I would highly recommend Scottrade. If however you are basically somewhat poor like myself I am not certain Scottrade can beat Zecco. Zecco has the 10 free trades and they offer a money market sweep account plus trades are only like 4.5 bucks after the 10 free ones. Clearly someone who is just starting to build their trading stake should clearly consider Zecco. Who cares if they don’t have good phone service? I hear they offer acceptable quick email support. I don’t need a lot of bells and whistles just low commissions, nice interest rates, and good executions which from what I can gather, Zecco does well. I will try to remember to post a follow up after I have actually evaluated them first hand though.

  12. A-l says:

    I am a Zecco user and I love it. In October, there website was down for a day, and they offered everyone free trades for the whole month. I took advantage and made over 200 trades. October was a very volatile month to be doing this. I think Zecco is the best with the free trades for someone small like me who has under $25k. If I had over $25k I might consider WellsTrade. I wonder if when my account grows to $25k if I can just transfer over to WellsTrade my 50+ stocks in my acct. I’ve built in the past months.

    As for Zecco, I use Buy – Limit and set the quantity and price, and when the market drops to that price, it triggers my buy. Then I set a Sell – Limit and set it higher, and when it triggers it sells at that price. It executes very well and is beyond easy to do. Setting up the account was a tiny bit challenging and might have taken a week or two but was worth it. Making free ACH transfers to my savings account is easy, I have withdrawn money as well so they are legit. I would recommend using Zecco. It’s SIPC insured so even if they go under if you have less than $100k in stocks you will keep them. I think Zecco will grow/survive though and other brokers will have to counter by reducing fees.

  13. Hippo says:

    Dude, you are waaaaay off-line about Zecco, I just joined and I like ‘em! Free trades (at least 10 anyways), better rates across the board than most, great customer service (WAAAAY better than etrade), and the community is pretty cool.

  14. regular joe says:

    Has anyone heard of MB Trading? Has anyone had any experience with them?

  15. becky says:

    I use firstrade. It’s similar to scortrade except cheaper. I usually contact them via e-mail and I go quick replies. Plus I got cash rewards for referring to friends, every time I refer to a friend I get $50 credit to my account. Its fun.

  16. Fatubus says:

    I use MB trading and also Interactive Brokers. They are both good and MB trading allows you to use software from quotetracker which is good for charts.

  17. Wolf says:

    Everyone seems to think $7-$10 a trade is ok.
    Does anyone use a broker that charges by the shares traded?

    To me paying 10 bucks to buy a stock and 10 bucks to sell it…seems a little heavy. My trading has been with futures…and a normal fee there is about 4 dollars…that’s in and out. Not 4 to get in and 4 to sell it.So 20 seems a little extreme for a full round turn.

    Anyone paying by the shares traded..please post you broker. Thanks.

  18. former Etrade client says:

    I was an Etrade (now Scotia Itrade in Canada) customer and I have droppen them like a hot potato. Their customer service is pathetic, they are expensive and their research tools are inadequate while their optional platforms are expensive. In short Itrade is terrible compared to other discount brokers. DO NOT USE THEM. Go elsewhere, do your research, pay less and save your money. This bank is notorious for high fees and inadequate customer support.

  19. Fatubus says:

    MB Trading charges around $1 a trade

  20. aquaswim47 says:

    Personally, I love Zecco. I believe they are a great broker, but you should start out with a broker like Scottrade, first. What I love about Scottrade is if you move your money from them, it costs you nothing. The customer service on Zecco is decent if you know what you’re doing and you can learn the ropes.

    Another option is to start off with a small amount of money at Charles Schwwab. You can invest in mutual funds there. At Zecco, you can invest in ETFs and individual stocks. If you devote 85% into mutual funds and broad-based ETFs and only 5-15% into stocks or sector ETFs, you should be in great shape.

    Long-term investing is the way to go. Novice traders shouldn’t be trading 10 times per month and neither should people with inadequate capital. Your trading costs should stay under 1%. Buying index funds are a great way to get a market return (whether good or bad) and to minimize expenses.

  21. DaveLiang says:

    Sogotrade is great at $3 (unlimited shares)

  22. john says:

    For me – Think or Swim has a great platform and excellent customer service. Their charts are the best

  23. SavingEverything says:

    For me, I consider the following best online discount brokers and options brokerage houses: InteractiveBrokers, LightSpeed, TradeStation, TradeKing, SogoTrade, OptionsHouse, OptionsXpress, thinkorswim (now part of TD Ameritrade), FirsTrade, TradeMonster, ScotTrade, ShareBuilder, Zecco, , e-Trade, , Fidelity, Schwab, Vanguard, TDAmeritrade? Penson Financials seem to provide online brokerages tools, services to be a broker, as well as RidgeClearing, Genesis Securities.

  24. stockmanmarc says:

    Interactive Brokers has one of the lowest commissions in the industry. However keep- in- mind that they do not offer some of the bells n whistles as do a Fidelity, Schwab and TD Ameritrade but if you are looking for fast executions at a low cost they are hard to beat.

  25. BrianC says:

    I’m a fan of Optionsxpress–excellent customer service all around. Well worth the price for frequent traders. For those who only occasionally trade, I’d go with Tradeking.


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