Internet Stock Brokers & Trading

Question

I am a business major in college with a background of the stock market. I have been playing around with stocks for years using programs such as up-down.com (having fake money to invest and learn). I now have $800 and some years of knowledge to play around with in the stock market.

I don't know to much about internet stock brokers but I have two question:

1) I'm looking for a cheap internet broker.. which would you suggest?

2) When they list say 5.99 per trade would it be worth getting a broker?

*(I only have $800 and if the stock I invest in is say 20.00 then the amount of fees I will be paying doesn't seem right compared to a more expensive stock... less shares & fees).

Answer 1

All major brokerage firms provide their clients with on-line services, including trading platforms, latest market & financial news and research.

Customer need to select the site that is best for them.  Traders have requirements in a site, while investors have other requirements.  

Although most sites are geared to general securities and commodities, however customers may have special needs for the types of products they trade, and the markets in which they trade.

It seems that the most popular firms for on-line investing all of which provide excellent platforms and services are; Scottrade; Chas.Schwab; TDAmeritrade; Fidelity; E-Trade and Thinkorswim

Cheap is not always the best. Select a major which are among the most popular.

If you have to worry about a $5.99 per trade, you really shouldn't be investing until you have more capital.  But if you trading/investing properly charges/fees should not be a factor.

All brokerage firms have progressive commission/fee schedules, that is the smaller the transaction, the larger the percentage you have in charges.

It cost the firm more to trade and clear a small tranacation that it does a larger one, so they past the cost back to the client.

Sorry, I know this is not what you wanted to hear, but it is reality.

Go for it, start investing with whatever you have, make some money and you'll find the commission/fees are meaningless.

Answer 2

I think you are a little confused about how internet stockbrokers charge commission.  Most online brokers charge a flat fee rate, meaning the rate specified will be the cost per transaction.  This means that no matter how many shares of stock I buy, the commission rate will remain the same.  Therefore, the fees for an expensive stock would be the same as the fees for a cheaper stock.

I currently use Firstrade ( http://www.firstrade.com/ ).  They are cheaper than big name brokers such as Scottrade, Etrade, Ameritrade, and Schwab.  Their website is very easy to use, making it great for beginners.  I've been with them for quite awhile now.  I would definitely recommend you to check them out.

There are cheaper brokers out there, but when you chose a broker, you have to look at more than just the commission rates.  What's the use of a cheap broker, if their website is slow or very hard to use?

Answer 3

The onlike brokers like TD Ameritrade and Scottrade indeed charge their low advertized rates without additional charges, and yes, their fees can apply to a few shares or thousands, as hard as that sounds. It isn't fair--but it is great for the small dude like yourself.

Possibly their oddlot fees might be a bit higher but I don't think so.

Answer 4

I recommend Scottrade.com.  Their commission fees are only $7.00 per trade and their customer service is outstanding.