James Boric continues his Reviews of Online Brokers.

On Dec. 7, I provided you with a list of 10 of the most popular online brokers on the market. The idea was to show you what options you have as a small-cap investor when it comes to choosing the right broker — so you can maximize your returns on every single investment you make.

Since sending you my list two weeks ago, I received dozens of e-mails from you fellow Sleuths. Some of you thanked me for taking the time to do this research for you. (I liked those e-mails!). Some of you called me an idiot for leaving your favorites broker off the list. (I chuckled at those!) And some of you simply took the time to share personal experiences you had with a number of these brokers. (Those were my favorites.)

I thank you for all of your mail. It was helpful — even the ones that called me nasty names. Bad or good, your feedback is crucial. If you want to see something covered in Sleuth, let me know. Chances are, I will be glad to research or write about it — especially if it can help you become a better investor. So I encourage you to keep the e-mails flowing. I DO READ THEM!! E-mail me anytime. My address is thesleuth@agorafinancial.com.

In today’s Sleuth, I will update that broker list even further. I will add some of the brokers that I left off last time around — ones that you informed me of personally. And when appropriate, I will publish some of the comments you sent in. Your personal experiences are far more valuable than any information I can find on a Web site or by talking to a customer service representative. So look for your comments below!

OK, let’s get to it. Here are five more online brokers to add to you list…

Online Broker Reviews: optionsXpress

1) optionsXpress: optionsXpress charges $14.95 for market or limit orders of 1,000 shares or less. (If you trade enough, the fee per order actually falls to $9.95 for 1,000 shares). For orders above 1,000 shares, you pay 1.5 cents per share. There is no minimum balance to start up an account with optionsXpress, unless you plan to trade on margin. (To open a margin account, you must deposit a minimum of $2,000).

To trade penny or Over-the-Counter shares, the fee structure is the same. You pay $14.95 for the first 1,000 shares. And the maximum you can be charged (assuming you buy a lot more than 1,000 shares) is 4% of the total trade.

optionsXpress’ contact info: phone: (888) 280-8020, Web address: http://www.optionsxpress.com/.

Reader Comment About optionsXpress:

“I read your article on brokers and I have to ask why optionsXpress wasn’t listed? I have a Schwab account and I trade very little with it but the $50 per year. I think it’s OK for me, because of the tools it offers. I’ve had Ameritrade, and it sucks. OX may not be deep discount, but it doesn’t take that many trades to get the $9.95 rate. It has excellent tools and education, and you can open an account with no minimum trade — anything but commodities. So I’m really surprised you didn’t mention it. Just my opinion. Thank you.”

2) Interactive Brokers: IB’s commission structure was a bit hairier than most. But it’s worth thumbing through. A lot of Sleuth readers wrote in to me saying this was their favorite broker. So here’s the deal:

They charge $1 to trade 100 or less shares. If you buy more than 100 shares, the commission is $0.005 per share. So if you wanted to buy 1,000 shares, it would cost you $5.

There is a minimum account balance of $2,000 to start an account with IB. And if you are a day trader, you’ll have to pony up $25,000.

The only additional fee you may have to pay is a $10 monthly inactivity fee. (That is waived if you spend enough on commissions and research). To look over the ins and outs of IB’s fee and commission structure, check out this link:

http://www.interactivebrokers.com/en/accounts/fees/minimumDeposits.php?ib_entity=llc#commission

To trade penny and OTCBB stocks, IB charges 0.2% of the total price of the trade. So if you buy 2,000 shares of a 50 cent stock, the commission will be $2.

Interactive Brokers’ contact info: phone: (877) 442-2757, Web address: http://www.interactivebrokers.com/.

Reader Comments About IB:

“I just read your article on Internet Brokers. I have been using Interactive Brokers for a few years now, and its brokerage is only $1 per 100 shares, and also $1 per option contract. Considerably cheaper than any of the brokerage firms in your story.” — R.B.

“Interesting that Interactive Brokers was missed in your discussion of recommended online brokers. Have a look and compare its fee schedule to the ones you mentioned below. You just might be pleasantly surprised. You can find all the info you need at www.interactivebrokers.com. And I’ve personally been using it very successfully for the past two years, with total satisfaction. And NO, I am not related in any way — just a satisfied customer of Interactive Brokers.” — E.L.

3) Lowtrades: Lowtrades is another good little discount broker to take a look at. If you make as many as 401 trades a month, its commission is as low as $2.99 per buy and sell. But if you aren’t that active, here’s the skinny:

If you make between 1-50 trades a month, Lowtrades charges a $5 commission (for both market and limit orders). If you make between 51-100 trades a month, the commission drops to $4.75 a pop. And the more you trade, the lower the commissions become.

For us penny stock investors, commissions are $5 per buy and sell order.

If you decide to open an account with Lowtrades, there is no minimum account balance unless you open a margin or a day traders’ account.

Lowtrades’ contact info: phone: (800) 597-8767 or (202) 466-6890. Web site: http://www.lowtrades.com/.

Reader Comment About Lowtrades

“Two more online brokers that charge only $5 per trade. No minimum balance for cash accounts. I use Lowtrades right now, but may move to Choicetrade in the future.” — R.C.

Online Broker Reviews: ChoiceTrade

4) ChoiceTrade: ChoiceTrade has a pretty darn simple commission structure. It’s $5 for everything! It charges $5 per buy and sell order — market or limit. And it’s only $5 for OTCBB and penny stocks.

ChoiceTrade doesn’t have a minimum required balance to open an account — unless you plan on trading on margin or opening a day trader’s account.

If you aren’t an active trader/investor, ChoiceTrade may be a nice fit for you. There is no inactivity or quarterly fee if you don’t make a bazillion trades a month.

ChoiceTrade’s contact info: phone: (877) 731-9114 or (732) 214-2660. Web site: http://www.choicetrade.com/.

Editor’s Note about ChoiceTrade: In Barron’s 2005 broker survey, ChoiceTrade received 4 out of 5 stars!

5) MB Trading: MB Trading is another low-cost broker to keep an eye on. If you buy or sell 500 shares or less, it will cost you a penny per share. So if you trade 500 shares, your commission will be $5. If you trade more than 500 shares at one time, you are charged a half a cent for every share above 500. So if you buy 1,000 shares, your commission will be $7.50.

For penny and OTCBB stocks, MB Trading charges $8.95 per transaction — for unlimited shares.

There is a $2,000 minimum account balance with MB Trading. And if you trade on margin or day trade, the minimum requirements go up to as much as $25,000.

As long as you maintain your account, there is no monthly or inactivity fee to worry about.

MB Trading contact info: phone: (866) 628-3001. Web site: http://www.mbtrading.com/.

Editor’s Note about MB Trading: Barron’s gave MB Trading a 4.5 star rating in its broker survey.

Reader Comment About MB Trading:

“Hi! James. I thought you might want to know another online broker that beats them all that you mentioned. I moved from a higher-charging online broker to this one recently, and I’m happy with it. It charges only $1 per 100 shares per trade both online and by phone through a live broker! And the real-time chart by QuoteTracker is free if you are a client of this online broker. However, there are also other real-time chart companies offered, but they are not free. The name of this online broker is MB Trading.” — R.P.

Merry Christmas, and Happy New Year! I can’t wait to see what 2006 will bring.

Happy holidays to you and yours!

James Boric
December 22, 2005

James Boric

James Boric began his finance career by successfully picking winning stocks. With time and experience, James realized his goal- to figure out how an average, everyday investor with little capital could become wealthy. The trick, he discovered, was to look to the quickest moving, most exciting and lucrative group of stocks in Wall Street history — small-caps.

Special Report: HOW YOU COULD TURN $200 INTO $1.2 MILLION!

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