Cheap Online Broker | Cheapest Online Broker

Taking the time to look for a cheap online broker is a very important part of your success as a trader during an up and down stock market. New traders especially should weigh the cost factors more heavily as they compare online brokers in order to ensure that they are minimizing their trading costs. As for more experienced traders, they will often use two brokerage accounts, one for research and investment products and a cheap online broker to execute their trades.

The comparison chart below evaluates the cheapest online brokers for important cost factors and rates them on lowest overall cost. Once you select your online broker, setting up an online trading account involves:

1) Completing an online application (there is no cost to do this)
2) Depositing funds into your account - Now you are ready for trading!

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Online Broker	EXAMPLE COST: (for 25 trades per month)	Overall Rating	Trading Fees & Account Minimums	Additional Trading Fees
Overall Rating = 5 Stars OptionsHouse	$98.75	Very low overall trading costs Flat-rate pricing with no account minimum	$3.95 per trade ============= No Account Minimum (Fund your account with any amount)	None
Overall Rating = 4 Stars Zecco	$123.75	Low overall trading cost with $4.95 per trade pricing	$4.95 per trade ============= No Account Minimum (Fund your account with any amount)	Pricing for equities and ETFs priced under $1.00 per share will be $6.95 per trade
Overall Rating = 4 Stars TradeKing	$123.75	Low, flat-rate pricing and no account minimums	$4.95 per trade ============= No Account Minimum (Fund your account with any amount)	Add $0.01 per share for stocks priced $2.00 or less. $100 minimum per order in OTCBB and Pink Sheet stocks.
Overall Rating = 3.5 Stars Scottrade	$175.00	Moderate, flat-rate pricing, low account minimums and no added fees.	$7.00 per trade ============= $500 Account Minimum	For stocks priced under $1, add ½% of the principal value. Most foreign and pink sheet stocks must be traded with broker assistance for a $27 commission.
Overall Rating = 3 Stars Schwab	$223.75	Lowered their rates in 2010 with flat-rate pricing and no added fees.	$8.95 per trade ============= $1,000 Account Minimum	None
Overall Rating = 3 Stars E-Trade	$249.75	Tiered pricing may put all but high-volume traders at the high-cost end	Tiered from $9.99-$7.99 per trade ============= $2,000 Account Minimum	Commission based on number of trades per quarter and account balance.
Overall Rating = 3 Stars TD Ameritrade	$249.75	Higher end, flat-rate pricing with no added fees.	$9.99 per trade ============= $2,000 Account Minimum	None

About this Cheap Online Broker Comparison Chart

This Cheap Online Broker Comparison Chart looks at the most prominent online brokers from the perspective of a new trader or beginning trader. While there are many ways to compare online brokers, including availability of investment products, banking services or sophistication of its trading platform, a beginner especially should be concerned at first with cost factors and overall service quality ratings.

Cost Factors

In order to get a complete view of total cost when you compare online brokers, look at all factors including trading fees (the cost to the trader for executing a single trade, whether a "buy" or "sell" trade. This can be misleading at first because buying a stock and then later selling it involves two trades. So a broker with $5.00 per trade fee will cost you $10.00 to buy and sell. A broker with a $10.00 per trade fee will cost you $20.00. After you sell a stock is when you determine your profit or loss and these fees must be included in your accounting. When you compare online brokers, there are also some "additional" fees that are charged based on specific types of trades and these are outlined in the cheapest online broker comparison chart above. "Per Trade" fees may also vary depending upon the number or volume of trades executed over a defined time period, with lower fees charged as trading volume increases. A "Flat-Rate" broker is one that charges the same "per trade" fee regardless of the type of trade or the volume of trades executed over a defined time period.

"Minimum Balance" and "Required Funding Amounts" are not a cost to you, but they take money out of your pocket and are a factor to be considered. One broker may require a minimum balance be in your account in order to maintain it while another may have no minimum balance. When you are setting up your account, this could mean the difference between depositing $400 into your trading account because that is what you want to start with, or having to deposit $2,500 in your account. A beginning trader may not want to deposit that much into their account initially, so that can be an important decision criteria when selecting your trading broker. The broker comparison includes these costs for you to compare brokers with complete information.

Cheap Online Broker Star Rating

This review is primarily fact-based, reporting the brokers pricing schedule and fees policies and ratings given by the named publications. Based on the totality of the Cost Factors and the Quality Factors, a star rating is given to summarize that particular online broker's performance in that category relative to its competitors. The overall star rating can be used to directly compare brokers by combining the Cost and Quality Factor ratings, using equal weighting (50% given to each) to arrive at a summary rating that can be used to choose a broker you want to open a trading account with.

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