Nowadays, there is a significant trend in brokerages which have pared down online-dealing costs to the bare minimums. Most people following this website and its screens won’t be day traders, and will not be concerned with obtaining the absolute minimums in trading commissions. My recommendation is that per trade commissions of up to $10 are OK, provided you keep overall trade commission costs to no more than 2-4% of your total deal size. There should be no need to pay more than $20 per trade. For example, Fidelity brokerage charges $19.95 per trade with no minimum number of trades per year. For most people Fidelity is not the best deal unless you have a significant portfolio and only make a handful of fairly large buys and sells each year.
Apart from Fidelity, we like to use different brokers for different accounts. One of our favourite brokerages is OptionsXpress – although primarily an options broker, their stock trading commission is $14.95 per trade, but most people can get that reduced to $9.95 per trade, including limit orders. The great thing about OX is that there are so many free tools, including Morningstar ratings and full-featured real-time streaming Prophet Charts.
Another favoured brokerage is Scottrade which is $7 per trade (excluding limit orders). They have real-time Dow Jones News and research.
Recently, we have been experimenting with using Sharebuilder for a Roth IRA. Using the $12 monthly plan, we can buy up to six different stocks once a month on any Tuesday; Sharebuilder pools customer money and makes market purchases. The good thing about Sharebuilder is that you can set up an automatic plan and have money taken from your checking account each month on a specified Tuesday to be invested in the stocks you have chosen. You select how much you want to spend on each stock — fractional shares are allowed with Sharebuilder.
Using this account, we buy only quality undervalued stocks, choosing 6 of the most undervalued until one or more of them are no longer showing up as undervalued on the screens, in which case they are swapped out with others. This way, we are always accumulating quality undervalued stocks at bargain prices. At $12 per month in fees, we need to invest at least $300 per month to keep the commission percentage within reasonable limits.
With brokerages, there is no one-size-fits-all but with some thought regarding your needs, the type of investing you do, and the costs you expect in terms of the amount of trading you will be doing you can find a pretty well fitting broker.
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I switched to MB trading for stocks or Thinkorswim for options. Barrons gave them “Sports Car for Traders” ranking. Trade commisions are $1 for 100 stocks in MB trading and in thinkorswim its $4.95 flat fee for unlimited stocks.
Where did you see that ToS is $4.95 flat per trade? On their site it says $9.95 flat or 0.015 per share with $5 minimum. However I guess $5 is as near as makes no difference to $4.95. Pretty good deal for most people trading less than 600 odd shares. Thanks for the update!