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Online Brokerage Comparison: I Gave Up on Scottrade!

Posted By Guest Contributor On 07/24/2006 @ 4:07 pm In Investing | 78 Comments

This is a guest post authored by frugal at My1stMillionAt33 [3].

Before I tell you about my terrible experience with Scottrade, let me first compare several online brokerage firms in terms of commission costs:

  1. TradeKing [4]: Best for active traders. $4.95 per trade, even broker assisted trades, very cheap rate for option contract at $4.95 + $0.65 per contract. They’ve also won numerous awards from the likes of Barron’s, SmartMoney, etc. They were named Smart Money’s Best Discount Broker [5] many years in a row.
  2. Scottrade [6]: Best for casual traders and/or investors. $7 per trade. $0 for loaded mutual fund, but $17 for most other non-loaded mutual funds. Option contract at $7 + $1.25 per contract. Has offering on CD & fixed income bonds. Can only do the following option trades: buying put/call, or sell covered call.
  3. ETrade [7]: More expensive compared to both Ameritrade Izone and Scottrade, unless trading more than 1500 trades per quarter.
  4. Sharebuilder [8]: Good for long term investor. $4 for automatic investment, and can be as low as $1. Selling is $12 to $20 depending on the plan. The biggest downside is that you give up the control on the market timing for your buy order. Instead you will do time-averaging through automatic investment.
  5. BuyAndHold [9]: Best for asset allocator and long term investor. I will recommend this to anyone who is currently using Sharebuilders. I like their $14.99 per month for unlimited number of “window” trades which get routed 3 times a day. With $120 $180 a year, you can buy and build 1000 stock portfolio if you want (just kidding, but it’s true). I don’t think you can beat this deal, especially after http://www.freetrade.com/ (under Ameritrade) is gone.
  6. FirsTrade [10]: Even better than Scottrade. I’m sure everyone has lamented the reduction in the NTF program for mutual funds at Scottrade. Well, if you use FirsTrade, you can get it back. Yes, ALL mutual fund trades are FREE. And the stock trades are 5 cents cheaper at $6.95. Their pricing model is essentially the same as the old Scottrade. But they don’t have any physical branches.

Enough of cheap commissions, but if it is not reliable, it is pretty much useless. So back to my Scottrade bad experiences. My problems with them is that their internet servers are getting so unreliable, especially the first half hour right after the market opens, that it is no longer usable.

  1. One time I tried to day trade a stock, and I almost got sacked by Scottrade. I placed limit order, and I was barely able to cancel and modify my entry price in time because their servers kept non-responding.
  2. The second time, it was pretty much unforgiveable. I put in a limit order, and when I attempted to cancel the order, I simply cannot cancel it, even though it is still showing on my screen as open order. Somehow somewhere there is a server problem. Minutes later, my limit order became executable. I called up customer services, and they could not determine whether my order was filled or not. After an hour, my order got executed with a timestamp of an hour later. Scottrade claims that the timestamp is the reporting time, not the executed time, and my order was filled minutes later, instead of an hour later. Scottrade refused to correct anything, but simply blaimed everything on the delays of the market makers.
  3. Yesterday, again, stupid me, I was doing trades near market open. I am so certain that I cancelled my order. But I had some problem with their server again in the morning. After a couple of hours, I finally found out that my “un-cancelled” order got executed. They claimed that I never cancelled the order. They really have a big problem with this process. At the end of cancellation screen, there is never a confirmation number given out. I can never write down any # to prove that I have attempted to cancel my order. So after a long talk of repeating the same information over and over, and an eventual non-callback, it appears again that they will not do anything to my phantom trade becoming real and losing significant money in such a big down day.

I know that FirsTrade has its problems, especially with market quotes right after market starts. But at least there is never a problem with non-responding servers that give you a page-not-found error. Probably because they are smaller company. In any case, I am moving majority if not all of my money out of Scottrade. I’m so fed up with their parrot-talking customer non-service. I was planning to move my tradings to Ameritrade Izone, but after reading some comments at Dogs of the Dow [11], I’m a little hesitating now. If you have recent positive experience with Ameritrade or any online brokerages besides Scottrade, would you please suggest them to me? I don’t really know where I could find a reasonable priced and reliable brokerage now. I plan to use FirsTrade for now. Since I never tried their streamer, maybe FirsTrade streamer will not have quoting problem. I can always use the other online brokerage accounts for quote too, so it won’t be such a problem.

Thanks in advance for your online brokerage suggestions to me. Cheap commission is not everything. Without reliability, all (stock) bets are off. I’m planning to take my complaints to NASD [12]. By the way, I really miss the reliability offered by Datek, which was bought by Ameritrade. That was my first reason of moving to Ameritrade since I assume that the platform would be similarly reliable. And I hope you will find both FirsTrade [10] and BuyAndHold [9] useful.


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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/online-brokerage-comparison-i-gave-up-on-scottrade.html

[3] My1stMillionAt33: http://www.1stmillionat33.com

[4] TradeKing: http://www.bargaineering.com/articles/r/tradeking.php?tag=ScottradeGiveup

[5] Smart Money’s Best Discount Broker: http://www.bargaineering.com/articles/smartmoneys-2008-best-discount-brokers.html

[6] Scottrade: http://www.bargaineering.com/articles/r/scottrade.php?tag=ScottradeGiveup

[7] ETrade: http://www.bargaineering.com/articles/r/etrade-broker.php?tag=ScottradeGiveup

[8] Sharebuilder: http://www.bargaineering.com/articles/r/sharebuilder.php?tag=ScottradeGiveup

[9] BuyAndHold: http://www.buyandhold.com

[10] FirsTrade: http://www.firstrade.com

[11] Dogs of the Dow: http://www.dogsofthedow.com/ameritradefeed.htm

[12] NASD: http://www.nasd.com

Thank you for reading!