The online discount brokerage landscape is changing every year. Last year winner with $2.50 per trade may not be a winner for this year. Some other things to consider online brokerages are paper-based trade confirmation fee, monthly statement fee, wire transfer fee etc. Some investors or traders can avoid these fees by changing his or her account’s settings; some may need to contact the brokerage customer service for help.
With the 2009 bull market, investors are trying to get back into the market by finding more reliable investment research and new full brokerage services. Online discount brokers are now trying to lure any investor or active traders for new business by reducing their pricing or commission fees. For example, Charles Schwab slashed commissions by more than 30%, to $8.95 a trade earlier this year. Its competitor, Fidelity, which just a year ago charged about $19.95 for a single trade, quickly undercut Schwab with $7.95 commission per trade.
The online discount industry has taken its price wars to other product lines as well. Schwab cut fees on certain stock and bond funds offering, and even offered free trades for 11 exchange-traded funds (ETFs). Fidelity has countered by offering free trades on 25 ishares ETFs.
Of course, commissions have been falling and falling, and a few firms have provided free trades, with certain restrictions such as Zecco, Wells Trade and Merrill Edge. Yet it’s been several years since there was this much movement. It remains to be seen whether these new reduced pricing tactics will ultimately drive up business, the discount industry is already making some full-service firms nervous.
The following is the current top 5 online discount brokerages:
1. Lightspeed Trading
Lightspeed is one of the cheapest discount brokerage. With recently acquisition of Noble Trading, Lightspeed has offered a new Web Based Trading service also known as Lightspeed Web Trader. The minimum balance to open an account is only $1,000 for cash account and $2,000 for margin account. Lightspeed is well known by active trader or day trader with their fast execution through their Lightspeed Trader software platform. Investors or traders can buy or sell stock, etf, option, forex and future for trading. To trade stock, you only pay for $0.00395 per shares with $0.40 per 100 shares. The minimum is $0.40 per trade. For Option, there is no ticket fee to buy option; it only cost $0.50 per option contract. If you use Lightspeed Trader which is software based platform, the minimum balance requirement will be $10,000 per account.
2. Interactive Brokers
Interactive Brokers (IB) is another discount brokerage well known to active traders. Trader can buy and sell stocks, etfs, options, mutual funds, forex and future. IB also offers a low commission brokerage. To buy stock, it only cost $0.005 per share with $1.00 minimum per trade and a maximum of 0.5% of trade value. The fees structure is made to lower the commission fees for penny stock trader (i.e. less than $5.00 shares). Similar to Lightspeed, there is no ticket fee to buy option; it only cost $0.70 per option contract. The minimum balance to open an account is $10,000.
3. Just2trade
Just2trade offers a flat rate commission fee of $2.50 per trade. There is no limit on shares quantity. Trader or investor can trade stocks, etfs, options, and mutual funds. To trade option, it will cost $2.50 and $0.50 / contract. The minimum balance to open an account is only $2,500. You also can trade on pre market and after market hours for extra fees. Just2trade also offers a level 2 quoting for free using J2trader.
4. OptionsHouse
OptionsHouse is a brokerage with a flat rate commission fee of $2.95 per trade. It offers stock, etf, option, and mutual fund. There are 2 different commission structure of option trading, the first plan is for less active traders and the other is for active trader. The minimum balance to open an account is only $1,000. For less active trader, it will cost $5.00 for up to 5 contracts. Additional contract will cost $1.00 addition. While for active trader, it will cost $8.50 and $0.15 per contract.
5. eOption
eOption offers stocks, etfs, options, and mutual funds. eOption also offers a flat rate commission of $3.00 per trade. eOption is especially famous for complex option trader. EOption slogan is Exercise Your Option to Save. To trade stock, it only cost you $3.00 per trade. There is no limit of shares amount. To trade option, it will cost $3.00 and $0.10 per contract. There is no minimum balance to open an account.
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