TradeMONSTER is a relatively new online discount broker in an industry that hasn’t seen a new entrant in a few years. I believe TradeMonster’s strategy is to offer relatively low pricing (not rock bottom) and a powerful suite of browser-based analysis tools. TradeMonster is owned by optionMonster, a financial media company that publishes market news and commentary on options and stock trading. If you’ve ever watched CNBC then you’ll recognize a bunch of the faces behind optionMonster (Jon ‘DRJ’ Najarian and Guy Adami are on Fast Money).

The aspect of TradeMonster that really jumped out at me is the first thing I’m going to review – paper trading.

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I’m not sure how much it costs to execute a stock trade but it doesn’t appear to be all that much. When I first opened up my first brokerage account, it was with Vanguard. Vanguard has two main types of investor accounts, one where you invest in their family of mutual funds and one where you can invest in stocks, bonds, ETFs, etc. When I opened up my Roth IRA as a teenager, I did it with Vanguard and paid a then staggering $20 a trade. Twenty bucks! Nowadays, you can buy and sell a stock twice with TradeKing and still have twenty cents left over to get some Bazooka Bubble Gum. That’s a cheap stock trade right there.

So what defines cheap? Ultimately it comes down the dollar amount because you’d have a difficult time arguing that $12.99 is cheaper than $4.95. However, I think that just looking at the cost of the stock trade may be a mistake. Certain brokers charge you less but they offer you less in terms of tools, service, or both. Sometimes you have to review all the factors to make your decision.

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When Zecco first appeared on the discount broker scene, everyone celebrated their $0 stock trade commissions. I know it caught my attention, there are very few things that beat free. Even when reports of customer service woes rolled in, I still thought their offer was the best of the bunch. If you are paying $0 per stock trade, you can’t expect them to have an army of customer service reps there to answer your every call. You get what you pay for and you pay nothing.

Then I learned about TradeKing, which charges $4.95 a trade. $4.95 isn’t free but it’s certainly cheaper than E*Trade, where I was paying $9.99 a trade. Not only were the trades cheap, but TradeKing had been winning best customer service awards and best discount broker awards for years. So when Zecco stopped offering no-strings attached free trades, I knew we needed to compare the two straight up to get a better idea of which one was tops.

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A few years ago, when the housing market was sizzling hot, everyone and their mother talked about how their home was a fantastic investment. They talked about how a home that sold ten years ago had quadrupled in value over the last five and cursed themselves for not buying more. I knew someone who owned four rental properties, all bought on ARMs, and was making a “killing” on the rents and appreciation. I knew someone else who was looking at his paper riches and marveling at how wonderful homeownership was.

Then the housing market stalled. ARMs reset. People were in rough shape. Those who overextended learned something the prudent have always understood, as much as your home is a great place, it’s not an investment.

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Did you know that National Friendship Day was August 3nd? Since 1935, Congress declared the first Sunday in August to be National Friendship Day.

I didn’t, but that’s because my friends never told me! (I just lobbed a softball, someone crush it out of the park already…)

Well, my friends at TradeKing (har har, I think they just like my money) just sent me an email telling me about a promotion where if you refer a friend to TradeKing, both of you get $50.

Here are the important details of the $50 referral promotion:

• It must be a new account opened between July 31st and August 31st,
• The referred friend has to fund their account with at least $1,000 within 30 days,
• The referred friend has to execute at least one trade (trades are $4.95 a piece) within 180 days of opening the account,
• The funds must remain in the account for at least 180 days.

Is this a good deal? If you don’t have a TradeKing account and have been thinking about it, now’s a good time to do it. If you just want the money, trades are $4.95 a piece so you’re talking a round-trip cost of $9.90, plus your trade is at risk in the market, for a promo of $40.10 on a $1,000 six-month deposit (puts the interest APY, if you like to think in those terms, at ~8%+ APY).

Want in? Shoot me an email with this contact form and I’ll send you a referral. (or directly email me at: )

For years, I’ve heard good things about Scottrade (mostly from people defending Scottrade in this guest post) but never tried them. I mostly use E*Trade because of their high yield savings account and TradeKing because of their low commissions. Since I don’t have that much to invest, it doesn’t really benefit me to open up all these broker accounts just to put a few dollars here or there.

However, since Scottrade doesn’t have any account maintenance fees and a low minimum ($500), I thought I’d give them a look to see what the fuss was about.

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These brokers are excellent for stock equity trades as well!

As you may have read in my review of The Options Playbook, I’ve started to get interested in trading stock options. As has been the case with everything I try, I do a lot of research first and then I dive right in. As my dad always said, you learn in the classroom or you learn on the street. Learning on the street is always more expensive. I prefer the classroom.

In my limited knowledge of options, it appears that there are two main discriminators: price and tools. For price, it’s a matter of comparing the cost per trade and per contract. For tools, it’s having the ability to quickly make complicated trades without having to jump through too many hoops. In my review of the Options Playbook, I talk about two types of “plays.” The more complicated plays involve several “legs,” or options trades, that hedge each other and the better options brokers let you setup those plays with one screen. In fact, most brokers make that transaction easy because it results in more trades, which means more profit, so it’s almost not even worth comparing brokers based on that (remember, I’m a total novice in this so I may be wrong).

So, it may just come down to price.

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Stock options is something that has always both intrigued me and confused me.

Fortunately, I’ve become friends with some people over at TradeKing and one of them sent me a copy of The Option’s Playbook, written by their Senior Options Analyst Brian Overby . It’s a print version of their entire options education center, available to registered users of TradeKing (sign up for free by clicking here).

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