Published by Blain Reinkensmeyer. Tuesday, February 21st, For the coffee drinkers who must have their morning brew, cost can be reduced dramatically at the expense of quality and taste. This exact philosophy holds true for online trading with a discount broker, which we will now explore. To find the best online discount brokers for stock trading, we considered all the possible scenarios.
We also analyzed the actual net costs per month for casual investors who might make 10 stock trades each month or hyperactive traders who might place stock trades in one month. We also considered monthly minimums, platform fees, data fees, and other relevant costs. The Preferred Rewards program has other perks too such as bonus rewards on credit cards and discounted mortgage rates.
Merrill Edge was awarded 1 for Banking Services and 4 stars overall for Charles Schwab was rated 4. Extensive research tools, market reports, and in-house commentary alongside consistent customer service and banking services makes Charles Schwab a great full-service brokerage. Trade on over market centers in 24 countries. The broker charges no fees for exercising and assignments, and the margin rates are far lower than the nearest competitor. We also analyzed the actual net costs per month for casual investors who might make 10 options trades each month of one contract each or active options traders who might place 50 options trades each month with 5 or more contracts each.
Low Fees and Free Market Data. Options traders will appreciate OptionStation Pro, a built-in tool within a platform. Not only that, but OptionsHouse's platform was awarded 1 Web Based Platform and provides a slew of options tools useful for options traders of all styles. Trading cheaply is fairly straight forward, however investors should be careful when deciding on a final broker.
The regular prices paid for stock and option trades are not the only cost factor that matters. There are a variety of other important factors that can effect the net cost per trade when trading stocks and options online. Here's a list of the most important: Are there tiered commission rates? Most brokers offer flat-fee stock trading. Some brokers though, especially active trading focused brokers, offer per-share trading.
Both have their pros and cons; it really depends on the order size you trade, on average. For example, placing share orders, on average, would make a per-share broker expensive compared to a flat-fee broker. What is the order execution quality?
Whether the broker clears itself or with a third-party, as well as the broker's policy on payment order flow, are two simple examples of factors that impacts execution quality. For a full breakdown, see our Guide to Order Execution. What options are available for order routing? Are there extra charges for market data access or platform access?
Some brokers will charge extra for access to market data such as level II quotes and international exchanges.
This is very common with active trader focused brokers such as Interactive Brokers, Lightspeed, and TradeStation. Furthermore, these brokers can sometimes charge monthly data fees or platform fees that can only be waived if a certain commission spend threshold is met. Misc fees - Annual fees and closure fees tied to a retirement account such as an IRA, broker-assisted trading fees, mutual fund trading fees, short-term redemption fees, phone order fees, and similar all add up.
What miscellaneous fees are charges? Annual fees tied to a retirement account, broker-assisted trading fees, mutual fund trading fees, short-term redemption fees, phone order fees, and similar all add up. If you like trading these types of securities, read our guide to the best brokers for penny stock trading. Investors can ignore these trading fees as they are the same for each regulated online brokerage and amount to no more than a few pennies per trade.
The take-away here is this: How many trades do you place per month, on average? What is your typical order size? Do you buy and sell options? Do you frequently trade on margin? Do you trade ETFs or mutual funds? These are all great questions to ask yourself. Because, just like the brokers that shine for niche reasons, the opposite is also very true. Interactive Brokers offers the lowest margin rates, but if you trade with only cash, then this is negligible.
There are countless examples, all with their pros and cons. Use the trading costs calculator here on the site, read our detailed commissions notes for each broker, then compare your top picks using the compare tool to make a final decision. In the end, it is about finding that happy medium where quality and price come together to offer you the most appetizing choice.
If you believe any data listed above is inaccurate, please contact us using the link at the bottom of this page. For options orders, an options regulatory fee per contract may apply.