Online Broker Review – Who Passed And Who Didn’t
Ready to start trading online but don’t know which online broker is best? Here is my honest online broker review based on three online brokers I have used: Scottrade, Tradeking, and E-trade.
Online brokers (sometimes referred to as discount brokers) offer low fees to buy and sell. They are able to do this because they leave all the research as well as buying and selling up to you. Some don’t even have a physical office to visit.
The first one listed is my top choice for options, but not for stocks.
Broker Review: TradeKing
Of the three brokerages mentioned above, TradeKing is the lowest priced broker charging only $4.95 per trade. TradeKing is strictly an online broker, there are no offices or brokers that you can visit in person. You can use electronic transfers to put money in or to withdraw.
Although I like using them for trading stocks, I originally signed up for TradeKing because I wanted to trade options. You see, unlike stock trading where a broker only charges one fee no matter how much stock you buy (excluding penny stocks), with options, a broker charges by the contract.
Let me explain this. One option contract controls 100 shares of stock. So if you want to control 1,000 shares you need to buy 10 contracts. Since TradeKing has low fees, you can buy a lot of contracts and keep costs down.
Also, TradeKing has an excellent set of tools and educational material for trading options, the best of the three.
If you want to trade penny stocks, I suggest you avoid TradeKing. They won’t let you trade them by yourself (at the time of this writing they didn’t, things may have changed). You have to call in and speak with a broker which is a bit of an inconvenience.
Broker Review: Scottrade
Scottrade was the first broker I ever signed up with. The reason I chose them is because they have offices all throughout the US, and as a beginner, I actually wanted to go into an office and give my money to a real live person.
Scottrade charges $7 per trade and has an great platform for trading. The thing I like the best though is that when I make a BIG deposit, they don’t put a hold on it. They let me trade with it right away. TradeKing and other brokers make you wait up to 5 business days (although this may be because I’ve been with them for awhile and they know me).
Another plus for Scottrade, in case you don’t like to transfer money electronically, is that they give you a supply of free checks so you can withdraw funds or pay bills with your broker account (and they pay decent interest while your money sits there, something your bank won’t do).
As a special bonus for those reading this post, I’ve made an arrangement with Scottrade to give you free trades when you open a new account. To get your free trades, just enter this code when you sign up online or give it to the broker if you go into one of their local offices. The code is: NVOG6409.
Broker Review: Etrade
Now for the bad news. The worst broker I have encountered is Etrade. After opening an account with them the service was so bad, I never placed a trade and closed my account. I never placed any trades with them so I can’t comment on the speed or quality of their trading platform.
What I can tell you is that they do have offices, but I found the staff so incompetent at the office I opened my account at I didn’t want to do business with them. When I tried to get answers about my questions, their brokers couldn’t even tell me how to use their website and were unable to answer my questions on stock and option trading. Another negative is that they do charge one of the highest fees to place a trade, over $10. My advice, stay away from this one.
Those are the only three I have used. There are many more out there. I hope this gives you an idea where to start. Feel free to post your experiences with any brokers below.