Cheapest Online Trading


In Cheapest Online Trading I discussed the three most important factors to consider when looking for a stock trading site and the best way to control trading costs:

  1. cost to open and maintain an account
  2. cost of trading
  3. opportunity costs

 

Bearing these three cost ingredients in mind, this page will review a variety of brokerages.  Note: this page won’t be able to make a partnership decision for you – your specific business needs will dictate which of these brokerages are best for you.  If you need any assistance moving through the decision making process, I suggest you enter your first name and email (to the left) and read through “Make Your Own Trading Plan”, in which a number of the pieces involved in creating a solid trading plan are covered.

Two more notes: 1) aside from my personal experience with these companies, I have no affiliation with them, and 2) everything here is true as of the time of my writing this article.  Be sure to perform your own due diligence when evaluating them.

E*Tradehttp://www.etrade.com

Cost to open and maintain account:

  • no minimum $ to open account (and under some conditions new accounts get a period of free trades)
  • no inactivity fees – meaning, you don’t have to pay E*Trade just for the honor of keeping your money in an account with them if your trading style doesn’t have a hair trigger.

Cost to trade:

  • Stocks/ETFs = $12.99 per trade, options = $12.99 + $0.75/contract
  • When comparing E*Trade to other brokerages, their trading costs are NOT the cheapest.  If you are only trading (as opposed to opening a checking account or other non-brokerage activity with them), it would be difficult to see how E*Trade would serve the goal of reducing your business costs.

Opportunity costs:

  • Execution performance:
  • At the time of this writing, E*Trade offers the ability to buy and sell stocks, ETFs, options on stocks/ETFs, and forex.

 

Interactive Brokershttp://www.interactivebrokers.com

Cost to open and maintain account:

  • $10,000 minimum to open a trading account
  • Accounts under $2,000 are subject to additional fees (currently $20 / month).

Cost to trade:

  • Stock/ETF = $0.01/share ($1.00 min), Options = $.70 /contract ($1.00 min), futures and forex = both variable.

Opportunity costs:

  • Interactive Brokers has one of the best execution systems on the market, catering to professionals
  • Outside of forex options, there is very little you can not trade through this broker
  • For traders wishing to explore trade automation, IB offers a sophisticated API.  Can even use Excel spreadsheet as automating platform.
  • Mobile platform available.

 

OptionsXpresshttp://www.optionsxpress.com

Cost to open and maintain account:

  • No account minimum

Cost to trade:

  • Stocks/ETFs = $14.95 /trade (< 9 trades per quarter), $9.95/trade (>= 9 trades per quarter); Options=$1.50/contract ($14.95 minimum per trade); Futures=$6.99/contract
  • There are some volume based discounts

Opportunity costs:

  • While OptionsXpress offers many very good trading tools for stocks, ETFs, futures and options, it does NOT offer the ability to trade currencies.  If you are focused on trading options, that’s no big problem, but so many traders today include forex trading as a staple that this could be a point of concern.
  • Mobile trading platform available.

 

Disclaimer: this site is provided for informational and educational purposes only.  No claim to offer specific trading advice is offered.