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. aua868s says:

    Jim..should you write a review about Schwab’s no commission on its ETFs?

  2. Mike says:

    You only need one broker. Charles Schwab. They are your one stop shop for all your investing needs.

  3. Kenny says:

    I’ve been trading with MB Trading and can’t say enough good things about them; ranging from their trading platform to their customer support and university. I’m so happy I finally made the move from the “TV ” brokers of the world. Although I still love the e-trade baby commercials. You owe it to yourself to give MB Trading a try.

  4. ELizzy-Canadian says:

    So, for Canadian retail investors, which discount broker, available in Canada, offers best MARGIN rate? I know of Prime (BMO Investorline), and I think InteractiveBrokers offers P-0.23% or some such, but latter may not be high-quality re customer service, usability, ease of use, financial stability. Can Anyone offer an/some experienced recommendation(s), please?

  5. Joe says:

    Interactive Brokers is the best online broker out there in terms of execution quality, commission, margin rates..They are also very well capitalized ( had ~ 1 billion in excess regulatory capital and the parent company is in business for 30+ years). They even give back rebates from exchanges to customers while most other brokers keep it to themselves or sell customer order flow..

  6. Door Gunner says:

    No one is mentioning LIQUIDITY… I buy a lot of micro-cap stocks, I like them because they are very volitile so the potential returns can be phenomenal sometimes as high as 2000% gains in a matter of days… the problem is being able to sell them once it’s time to sell… micro-cap stocks are cheep stocks, they offer the highest potential gains but with that come the risk of the highest potential for losses (deffenetly not for the squeamish investor, you actually have be somewhat suicidal to invest in these or at least enjoy loosing as much as you enjoy winning) anyway… the main problem with these is SELLING THEM once you buy them (Liquidity) because there’s not usually many other investors who have purchased them… so hence, when it comes tento sell them, you may just find that THERE’S NOBODY OUT THERE TO BUY THEM, so your stuck with them… unless… you have just happened to purchase them through a Brokerage House who actually BUYS the stocks that they offer through their firm. The only on-line broker out there (that I know of) that oppperates like that is ShareBuilder. They actually purchase the stocks that they offer (over 6000 different stocks) then offer them to you the investor, it allows you to buy percentages of a share or whole shares… but the real advantage is that when it comes time to sell them you’re selling them back to them, so there’s no LIQUIDITY issue for market value. Also, if the stock you have purchase suddenly becomes a Non-TDC stock they are large enough where they will cover the cost of issuing those trade certificates and. of pass that. ost on to you, which can be as high as $700 dollars per trade. “ZECCO” can’t do that… and as a result I’m STUCK with a sh!t load of stocks I have purchased through them that are no longer trading on the electronic exchanges.

  7. BrianC says:

    I’d also look into TD Ameritrade. Not the cheapest commissions, but the interface is pretty good, and the customer service is excellent. I also like their cash management services, such as free checks and rebates for ATM fees in the US.

  8. Anonymous says:

    Why are all of these reviews sooo old. You are stating the company’s that were listed to be the best in 2007 and 2008 but nothing newer than that. That was a long time ago in the real time world Please comment. Thank You


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