Should You Switch Online Brokers?

If you currently have an active trading account but are considering switching to another broker, the broker comparison chart below will help you in your evaluation. The chart lists three important areas to consider including Commissions & Fees, Overall Service Quality Ratings and the current promotion (if any) the broker is offering.

Once you compare brokers and make a decision, setting up your online trading account is easy:
1) Complete an online application (there is no cost to do this) and
2) Deposit funds into your account to use for your trading.

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Online Broker	Trading Fees & Account Minimums	Current Promotions	Service Quality Recognitions
Overall Rating= 4.5 Stars OptionsHouse	$3.95 per trade ============= No Account Minimum (Fund your account with any amount)	Several to Choose from: 100 Commission-Free Trades (promotion code FREE100) ---- or ---- $100 Account Transfer Rebate (promotion code ACAT100REFUND) ---- or ---- Choose from 7 others Promotion Details	Barron's * Received Overall Rating of "4 Stars" in 2010 * Rated "Best" for options traders in 2009 and 2010. * Awarded four stars for Trade Experience, Research Amenities and Customer Service & Education
Overall Rating= 5 Stars TradeKing	$4.95 per trade* ============= No Account Minimum (Fund your account with any amount)	TradeKing will credit your account transfer fees up to $150 when completing an account transfer for $2,500 or more Promotion Details	SmartMoney WSJ Magazine * Rated # 5 discount broker in 2010 * Rated "Best" in Customer Service * Rated their #4 Overall Broker in 2009 Barron's "Top-Rated" among web-based brokers
Overall Rating= 4 Stars Scottrade	$7.00 per trade* ============= $500 Account Minimum**	Will Reimburse Account Transfer Fees Up to $100 Promotion Details	SmartMoney WSJ Magazine * Rated #6 discount broker in 2010 J.D. Power and Associates * Rated highest in Investor Satisfaction with Self-Directed Services" in 2008
Overall Rating= 4 Stars E-Trade	Tiered from $9.99-$7.99 per trade ============= $2,000 Account Minimum**	Trade Free for 60 Days Promotion Details	SmartMoney WSJ Magazine * Rated #2 discount broker in 2010 * Rated "Best" in Banking Services * Rated #1 Overall Broker in 2009 Barron's Received 4 out of 5 stars in the annual ranking of the best online brokers.
Overall Rating= 4 Stars Zecco	$4.50 per trade ============= No Account Minimum	Will reimburse account transfer fees up to $150, when you transfer an account with $15,000 or more in equity value. Promotion Details	SmartMoney WSJ Magazine * Rated #12 discount broker in 2010 * Rated three stars in "Mutual Funds" and "Investment Products" in 2010 Barron's Received 3 out of 5 stars in the annual ranking of the best online brokers.
Overall Rating= 4 Stars Schwab	$8.95 per trade ============= $1,000 Account Minimum	None	SmartMoney WSJ Magazine * Rated #4 discount broker in 2010 * Rated "Best" in Research J.D. Power and Associates * Rated highest in Investor Satisfaction with Self-Directed Services" in 2009
Overall Rating= 3.5 Stars TD Ameritrade	$9.99 per trade ============= $2,000 Account Minimum	Trade Commission Free for 90 Days Promotion Details	SmartMoney WSJ Magazine * Rated #3 discount broker in 2010 * Ranked "Best" in quality of trading tools in 2009

Information on Added Costs Per Trade

*    TradeKing - $4.95 per trade except add $0.01 per share for stocks priced $1.00 or less. $100 minimum per order
        in OTCBB and Pink Sheet stocks.
**   ETrade - Per Trade pricing tiered from $9.99 to $7.99 based on number of trades per quarter
*** Scottrade - $7.00 per trade except 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.

About this Online Broker Comparison Chart

This 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 brokers, including availability of investment products, banking services or sophistication of its trading platform, a beginner 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 brokers, there are also some "additional" fees that are charged based on specific types of trades and these are outlined in the 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.

Quality Factors

An online broker's service quality is also important when you compare brokers. There is a broad range of quality across these brokers, but it is hard to determine these without direct experience. This online broker review, therefore, relies on the broker comparison ratings given by established and highly regarded financial publications including SmartMoney - The Wall Street Journal Magazine, Barron's, J.D. Power and Associates. These publications conduct annual broker reviews rating the brokers across a variety of service factors including the quality of customer support.

Since these publications conduct these trading broker reviews each year, there is a year-over-year comparative capability. This means that you can not only use their rating for the current year, but you can also see how that rating has changed since previous years. This can give you a good idea of how that broker is trending and areas where they are improving their service.

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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