Penny Sleuth’s 2009 Discount Broker Guide
Jun 23rd, 2009 | By Jonas Elmerraji | Category: Featured, Over the Counter Markets, Penny stocks, Pink sheet stocks
Picking a broker is one of the toughest things for new investors to do. As a result, we constantly get e-mails like this one from our readers here at the Penny Sleuth…
To: PennySleuth@agorafinancial.com
Subject: Brokerage
Do you have a particular brokerage firm you use to buy penny stocks? I have a Sharebuilder account and cannot buy the stocks you guys like because they do not sell them… Please let me know who would be a good broker.
Thanks,
T.
Singling out any particular broker is a tall order for us.
That’s because each investor has a unique set of circumstances and requirements, as well as a different trading philosophy. That said, we can help to break down which brokers make the most sense…
It’s true that some brokers (like Sharebuilder) won’t allow you to trade low-volume OTC stocks. Others charge extra fees if you want to buy or sell shares of small-caps. That’s why we’ve compiled this look at some of the most popular brokers out there – with a focus on how to maximize your investing profits and minimize commissions…
In this report, we’re taking a look at how some of the biggest brokers in the business treat small-cap investors. For our purposes, we’re assuming that your brokerage account will contain less than $25,000 and you’ll be making less than 30 trades each quarter.
We’ll also lay out how much it would cost in commissions to make a sample trade, buying 1000 shares of a fictitious NASDAQ listed small-cap that trades at $1.00.
E*Trade (1-800-387-2331)
The original online broker continues to be one of the most popular discount brokerage options today. The company also features mobile account access for iPhone and Blackberry users, and a number of free research tools on their website and trading platform.
Scottrade (1-800-619-7283)
Scottrade is a solid brokerage choice for smaller investors who want low fees and a small minimum opening balance. If you want to invest in stocks that trade under $1.00, keep in mind that Scottrade charges 0.5% of the principal value in addition to regular commissions.
That means that buying 1000 shares of a $0.90 stock will end up costing you $11.50 in commissions.
ShareBuilder (1-800-747-2537)
While ShareBuilder is a good brokerage choice for new investors with limited capital and experience, its available stocks are limited to those on the ShareBuilder Stocks List, which doesn’t include many penny stocks – especially those traded OTC.
thinkorswim (1-866-839-1100)
thinkorswim offers its clients with advanced trading tools – like their terrific trading platform – at no charge, which is definitely a big benefit for more experienced investors. Their relatively high minimum opening balance may be a stumbling block for investors with limited capital.
Interactive Brokers (1-877-442-2757)
Aimed primarily at highly experienced and professional investors, Interactive Brokers offers an impressive amount of buying power and the use of highly customizable trading platforms. If you don’t have investing experience under your belt, stay away from IB.
Charles Schwab (1-866-232-9890)
Schwab is one of the largest discount brokerages in the world, but prides itself on providing full-service features to its clients.
Zecco (1-877-700-7862)
While Zecco is a relative newcomer to the brokerage game, their low prices have been quickly attracting investors. If you maintain an account balance above $25,000 or more than 25 trades per month, your first 10 buy trades are free each month.
TradeKing (1-877-495-5464)
Unlike other brokers, TradeKing’s $4.95 commissions include broker-assisted trades, which often cost near $50. If you’re new to the investing game, and want a broker to help guide you through your trading decisions, TradeKing is a smart choice.
Don’t Let Your Broker Make You Broker
Picking the right broker is incredibly important…it could mean the difference between making profits and missing an opportunity. While our list of brokers doesn’t cover every firm out there, it should at least help you differentiate among the more popular options out there.
Stay tuned to the Penny Sleuth over the next couple of weeks – we’ll continue to answer your reader questions…
Cheers,
Jonas Elmerraji
June 23, 2009
The Penny Sleuth, presented by Agora Financial, features articles on penny stocks, options, small-cap stocks, pink sheet stocks and OTCBB coverage.
Sign-up for the FREE Penny Sleuth e-letter to get small-cap stock analysis and options strategies sent straight to your email inbox every trading day.
We Value Your Privacy
[...] Original post by Penny Sleuth [...]
[...] company received on June 16. In the letter addressed to Acting President, CFO and COO William J Penny Sleuth’s 2009 Discount Broker Guide – pennysleuth.com 06/23/2009 Picking a broker is one of the toughest things for new investors to do [...]
How come sogotrade was not discussed? They cost just $ 3 per trade, and they have a great trading platform. They order execution is pretty fast as well.
[...] Penny Sleuth’s 2009 Discount Broker Guide [...]
Hi Jonas! I always look out for your article since I subscribe to Penny Sleught. Thank you for this information.
Is TDAMERITRADE good for penny? How do you rate their service on small cap trading?
Cheers!
re; Rich Arotiba’s question about Ameritrade (one of my accounts is with them):
the trading site & 24hr customer serv are excellent, BUT the fly in the ointment is their refusal to process checks immediately (unlike Scottrade).
I took a Certified cashiers check to their office to act Quickly on a particular stock, they refused to treat it as cash for immediate trading!!! “all checks have a 5 day hold”. This is rip off. it cost me a lot of money, needless to say, I no longer add funds to that account.
Thank you for your site Jonas E,, RH.
[...] If you want to find the best bargain in brokerage, take a look at the Penny Sleuth’s 2009 Broker Guide. [...]
Hi, just red this-thought another tdameritrade comment ws in order. They take NO responsibility for gtc orders, their 24 hour phone service stinks-during market hours, wait is ofgten over 6 minutes-thats not acceptable for most traders, even slow for an investor, and their transfer department-in or out-is terrible. You took 5 days for a cashiers check-It took 16 days for me when i deposited a cashiers check in my account, tried to transfer funds into another tdameritrade account, couldnt, and the loss was so substantial, I closed all accounts, and they took over 1 month to get my funds and positions transfered. Not option positions, stocks. To say they stink in way to kind.
As a Canadian resident, most companies in Canada seriously overcharge. At one time I had an Ameritrade account. It was inactive for a while and when I went to resuccitate it (after TD bought Ameritrade), I was told I couldn’t and had to deal with TD Waterhouse (the Canadian brokerage arm). Their commission structure was a joke, as most Canadian brokerage firms are. I eventually opened an account with Interactive Brokers (with less than $10,000). This was 2 years ago and it was the smartest thing I could have done. Dirt cheap stock trades, option trades at $.70 per contract (min $1.), fast execution and great pricing (numerous orders were filled at a better price than entered). Deposits and withdrawals are electronic to/from your bank and only take a couple of days. If you are just placing your own orders and don’t need to talk to a broker (although you could phone in), then Interactive Brokers is the only logical choice. And no, although this might sound like a paid endorsement, unfortunately it is not.
Does anyone know of a broker with low rates that does not charge extra for penny stocks above 1000 share volumes? I keep seeing huge volumes in real cheap stocks, but there is no way those stocks are trading at conventional broker rates as .005 cents per share rate for penny stocks to buy and sell would exceed the actual price of some penny stocks.