Help me pick an online brokerage

April 29, 2004 1:10 PM

Online brokers...there's about a zillion of the darn things. Any of the Mefi gang have experiences, good or bad, that they'd like to share to help me pick one? I'm not a day trader, I won't be doing huge amounts of transactions, but I'd like to be able to get away from the seriously high commission fees I'm paying for buy and sell orders through my current broker. (Especially since they do nothing but place the order...it's not like they offer advice or anything.)
posted by dejah420 to Work & Money (8 answers total)

I'm using TD Waterhouse. They are mostly online, and their online trading system is very complete, but they also have offices around the country where you can go talk to a real person if you need to (always nice). Their telephone customer service people are also quite pleasant (and not in India).

I don't know how much per-trade fees are yet, because they gave me 1st month free trading, and I haven't added money to the account since. I know they're higher than the pure online traders, but if you're not daytrading then I doubt it will be too bad.

Management fees are $25 a year per account, flat-rate.
posted by falconred at 1:48 PM on April 29, 2004

* $25 per year is for accounts under some minimum amount... like $10,000 or $25,000 or something.
posted by falconred at 1:50 PM on April 29, 2004

I'd second T.D. Waterhouse. They charge 16.95 per trade. Fast high quality trade execution. If you're moving a boatload of cash into an account, they give you mad Freq Flyer miles as well.

And of you ever become an "active trader" (more than 1--15 trades a month, the Options Express is without peer. Fact is, they rock for reqular trading also. You can set trailing stops. You can make set-it-and-forget-it trades (buy if price reaches X, and sell if it climbs to Y or falls below Z). As far as I know, no one else offers complex trades like that and it makes it real easy to use powerful trading strategies and still keep your day job.
posted by Fupped Duck at 3:08 PM on April 29, 2004

I like Scottrade. Cheapest market trades in the business ($7 market orders, $12 limit orders), hundreds of local offices, mutual funds with no added charges, and no inactivity or account maintenance fees. Yes, their money market rates stink, and you can't invest in money market mutual funds. The other drawback is that they don't do ACH between the bank and the brokerage house, although it's usually easier to drop the check off at their offices or write a check from the brokerage account to transfer money. It's a reputable firm, and they have good, but not great, execution, which shouldn't be much of a concern if you are a buy and holder.

OptionsXpress has the best commissions on options, bar none, and is reasonable in the commissions on stocks. They got top honors with Barron's last year.
posted by calwatch at 1:38 AM on April 30, 2004

The other end of the spectrum is also interesting. For people who don't trade a lot (and don't trade in situations where "2 second execution time" (?!) matters at all), there are brokerages that make investing cheap.

Buy and Hold and ShareBuilder are two big ones. I use B+H, so I'll tell you a bit about it.

• Cheap transaction costs - I think I pay $3.50 for the first two and then $2.00 each after that per month.
• Dollar Amount Purchases - Can't afford 10 shares? Can't afford even one? No matter, buy your stocks in dollar amounts starting at $20.
• Automatic Investing - Automatic direct withdrawls from your account on a monthly basis. Benefit is "dollar cost averaging" which over time generally helps you make money. It does so by being counter intuitive, it forces you to buy into a bear market.

Downsides are B+H has the worst website known to mankind (It's horrendous. Sharebuilder is udoubtably better in this regard, even though I've never seen their web app), it's a subscription service ($7 per month, trades or not), and they don't have every stock even of american companies, but especially foreign stocks. One cannot easily buy stocks that trade on the Helsinki exchange.

These downsides are much less important than the advantages, which are that it lets a piss poor graduate sudent like myself invest table scraps and make money. I rode eBay from $35 to $70 in 2001. And I made $100. That's life.
posted by zpousman at 7:42 AM on April 30, 2004

I've been with Scottrade for a long while and recommend them for the end-of-the-day/buy and hold investor. Calwatch summed it up nicely.
posted by Tacodog at 7:53 AM on April 30, 2004

Another vote for TDW. They have good research available.
posted by five fresh fish at 10:00 AM on April 30, 2004

Response by poster: Thanks for all the input gang!
posted by dejah420 at 7:25 AM on May 3, 2004