2010 Online Broker Guide

It’s that time once again – time for the Penny Sleuth to run down this year’s list of the best stock brokers in the 2010 Online Broker Guide.

We know that picking an online broker is one of the toughest jobs for any investor – whether you’re new to the market or you’re a trading veteran, your broker is your window to the investment world… And more often than not, who you choose can have a big impact on how your investments fare.

Overwhelmingly, one of the most common questions we get here at the Sleuth is from investors who want to start buying penny stocks – or any stocks, for that matter – and want to know which online broker they should choose. Admittedly, recommending one specific broker is a tall order for us. With around 400,000 daily readers, the Penny Sleuth covers far too many investment styles to make a blanket broker recommendation. Instead, we’re providing you with the 2010 online broker review and a complete breakdown on the costs, benefits, and limitations on some of the most popular online stock brokers out there.

But you know that our focus is on small-cap stocks…

That’s why 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.

2010 Online Brokers Guide

E*Trade (1-800-387-2331)

The original online broker has made some notable improvements in the last year, including slashed trade commissions and account maintenance fees – a couple of price cuts that should sway more investors who want to take advantage of E*Trade’s excellent mobile platforms for iPhone and Blackberry.

Scottrade (1-800-619-7283)

Scottrade hasn’t changed much from last year – maybe because there wasn’t much to change. The company 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. Their Advantage membership ($12/mo) offers an attractive option for more active investors.

thinkorswim (1-866-839-1100)

thinkorswim may have higher account opening requirements than other brokers, but this award-winning company also offers more flexibility with access to futures and currency trading in addition to standard stocks and options. The company also provides its clients with advanced trading tools – like their terrific trading platform – at no charge, which is definitely a big benefit for more experienced investors.

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)

Another broker to drop its prices this year, Schwab is one of the largest discount brokerages in the world, but prides itself on providing full-service features to its clients. Also of note are Schwab’s new line of ETFs, which its brokerage clients can trade commission-free – an industry first.

TD Ameritrade (800-454-9272)

TD Ameritrade is one of the major brokerage players, but unlike the others, this firm is notably missing a minimum opening balance. This could be a good option for investors who are just getting started, though you will pay higher commissions on your trades than some of the competition offers.

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.

SogoTrade (212-668-8686)

SogoTrade is another unique broker that’s attempting to take on the traditional price structures of the larger discount brokerage firms. Check out SogoTrade’s special offers if you’re considering joining – they often give out 100 free trades for new accounts.

tradeMonster (1-877-598-3190)

While options trading is tradeMonster’s bread and butter, this modern broker also offers attractive pricing for stock investors. What’s special about this broker is the bevy of investor education articles designed for options traders, not just fundamental stock investors.

Don’t Let Your Online Broker Make You Broker in 2010

Picking the right Online Broker is incredibly important…it could mean the difference between making profits and missing an opportunity, that’s why we assembled the Penny Sleuth 2010 Online Broker Review.  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.

If you have had good experiences or horror stories with any of the brokers on our list 2010 online broker review, share them on the Penny Sleuth website…

Cheers,
Jonas Elmerraji
Managing Editor, Penny Sleuth

June 18, 2010

2010 Online Broker Guide was originally featured in the Penny Sleuth. Check out Wall Street’s 5 Most Profitable Penny Stock Patterns Report.

This story was originally featured on Penny Sleuth.

Read the original story at Penny Sleuth :: Jonas Elmerraji