Best Discount Stock Brokers with Lowest Trading Fees

One of the best ways to start investing is to use the services of an online discount broker. However, there are so many discount brokers that it can be difficult to determine which one is best. There is no universal “right” answer because which discount broker is right for you depends on your investing style and other considerations.

Top 10 Online Discount Stock Brokers

The following is a list of top discount brokers with the emphasis on low cost online stock trading. These brokers are particularly well-suited for active traders. The list is sorted from the lowest commission fee to the highest fee for stock and ETF trades. If the fees are the same, we take into consideration other factors and rank the better broker above. In addition to the fees, we also list other special offers and features when appropriate.

Since brokers can change their offers at any given time, it’s highly recommend that you visit the site and review the most recent information carefully.

List updated May 4, 2013.

Broker Notes
OptionsHouse
Open an account today and receive 100 commission-free trades. Multiple promotions available. Barron’s rated best for options traders for 2009 and 2010.

  • $3.95 for all online stock and ETF trades.
  • $5.00 for up to 5 contracts or $8.50 plus $0.15 per contract for all option trades.
  • $9.95 fee for mutual fund trades.
TradeKing
tradeking logo
TradeKing earned 4-Star Rating in Barron’s 2012 Online Broker Survey for the sixth year in a row.

  • $4.95 for all online stock and ETF trades.
  • $4.95 plus $0.65 per contract.
  • $9.95 fee for mutual fund trades.
Firstrade
Firstrade is currently offering 100 free trades for new accounts.

  • $6.95 for all online stock and ETF trades.
  • $6.95 plus $0.75 per contract for all option trades.
  • $9.95 for online mutual fund trades with over 11,000 mutual funds.
ShareBuilder
Share Builder
Buy stocks for $4 with Automatic Investing. Open an account today and receive $100 new account bonus.

  • $6.95 for all online stock and ETF trades.
  • $6.95 + $0.75 per contract for all option trades.
  • $19.95 fee for mutual fund trades. No Transaction Fee (NTF) program provides access to over 70 funds including the ING Mutual Funds.
Scottrade
Scottrade has over 500 local branch offices nationwide.

  • $7.00 for all online stock and ETF trades.
  • $7.00 plus $1.25 per contract for all option trades.
  • $17.00 fee for mutual fund trades. Over 14,500 funds available.
TradeMONSTER
Open a new tradeMONSTER account to trade commission free for 30 days.

  • $7.50 for all online stock and ETF trades.
  • $0.50 per contract. $12.50 minimum.
  • $15.00 fee for mutual fund purchases. Free to sell.
Fidelity
Fidelity boasts a robust mix of investments, tools and banking services.

  • $7.95 for all online stock and ETF trades.
  • $7.95 plus $0.75 per contract for all option trades.
  • $75 for online mutual fund trades. No transaction fee when trading over 1,400 Fidelity and non–Fidelity mutual funds.
Charles Schwab
Schwab has a well-rounded services and products portfolio, and offers more advice and research than many competitors.

  • $8.95 for all online stock and ETF trades. Free online trades for ETFs in Schwab ETF OneSource™.
  • $8.95 plus $0.75 per contract for all option trades.
  • $76 per buy and $0 per sell for online mutual fund trades. No transaction fee when trading thousands of no-load, no-transaction-fee Mutual Fund OneSource® funds.
OptionsXpress
OptionsXpress is a Charles Schwab company. It is rated Barron’s 4+ stars for 2002-2012. Open an account today and receive $100.

  • $8.95 for all online stock and ETF trades.
  • $1.25 per contract. $12.95 minimum.
  • $9.95 fee for mutual fund trades.
TD Ameritrade
Open an account today and trade free for 60 days, and get up to $600 based on your deposit amount.

  • $9.99 for all online stock and ETF trades.
  • $9.99 plus $0.75 per contract for all option trades.
  • $49.99 fee for mutual fund trades. No-transaction fee (NTF) funds available.
E*Trade
E-trade is strong in research and trading tools. Trade free for 60 days, plus get up to $600 for deposits of $10K or more.

  • $9.99 for all online stock and ETF trades.
  • $9.99 plus $0.75 per contract for all option trades.
  • $19.99 fee for mutual fund trades. No-load, no-transaction-fee funds are available.

Fees are lower for high volume traders.


How to Find the Best Stock Broker

Here are seven factors to consider when choosing a discount broker:

1. Breadth of Investment Products and Mutual Funds

This should be your first consideration when searching for a stock broker. Does the broker have the investment products you want to invest in? All discount brokers allow you to trade stocks, but they may not offer the exact mutual funds and/or other investment products that you want. If you have particular investments in mind, make sure your broker offers the product at a reasonable price.

This is the area where big firms like Fidelity, Charles Schwab, and TD Ameritrade really shine. For example, Fidelity has an impressive mix of more than 16,000 mutual funds — many of which don’t carry transaction fees.

2. Trade Commissions

If you plan to trade stock frequently, the list at the end of this article is perfect. For example, nobody can beat Just2Trade, a company offering $2.50 for both equity and mutual fund trades. However, the broker is only available to experienced investors. If you are a beginner, you might try OptionsHouse or TradeKing, both of which cost $4.95 per transaction, but include more comprehensive services and tools.

If you plan to invest mainly in mutual funds, look for a broker that offers a wide selection of mutual funds – especially funds with no loads and no transaction fees. Be especially careful of mutual funds that carry transaction fees; these are generally very expensive. For example, TD Ameritrade charges $50 for the privilege of buying and selling mutual funds.

3. Miscellaneous Fees

Some brokers charge a host of other fees, including maintenance fees, inactivity fees, check writing fees, and more. You don’t want all your gains to be wiped out by extra fees. Figure out what you want to do with your brokerage account, and find the one that lets you accomplish your goals for the least amount of money.

Discount brokers usually list their fee schedule online, such as this fee schedule from E-Trade. If you can’t find it online, you should be able to get a copy from the broker’s customer service department. Don’t sign up with a brokerage unless you understand all of the fees.

4. Research and Education Tools

Next, make sure you can find the right information for your trading needs. If you’re a technical trader, make sure you have access to technical analysis tools and up-to-date charts. If you’re a fundamental investor, make sure you have access to stock fundamental research tools. I mainly invest in mutual funds, so I love the free access to Morningstar Premium that comes with my status as a TD Ameritrade customer.

Other discount brokers with top-grade research tools include E*Trade and Charles Schwab. If you have an iPhone or an iPad, it’s also worth noting that Scottrade offers investor education podcasts that have ranked in the 20 most popular investment related podcasts on iTunes.

5. Online Trading Platform

This is another important factor to consider. You’ll interact mainly with the web interface, so make sure you’re comfortable. Based on research done by SmartMoney, Scottrade boasts the fastest trade execution time, followed by E-Trade. However, TD Ameritrade offers the most robust platform with 13 trading tools that include pre-market and aftermarket trading, news alerts about your stocks, and the ability to execute trades using your mobile device.

6. Banking Services

This may or may not be important to you. If you already have a bank account that can accommodate all of your banking needs, this is a non-factor. If you’re looking for a broker that also doubles as a bank, then this consideration is important.

For example, E-Trade offers complete banking services without added charges. This includes a competitive savings rate, free ATM/VISA debit card, the ability to pay bills online, make cash transfers, and accomplish just about any banking transaction you can think of.

(Get more information from our list of best banks and savings options.)

7. Customer Service

For me, this is very important. I like to have access to customer service 24/7 and occasional face to face discussions. If you want to be able to see someone face to face, the best bet is searching your neighborhood for an office. There are TD Ameritrade and Charles Schwab brokerage offices near where I live.

Another good idea is to give the discount brokers on your short list a call and shoot them an email. How fast are they responding? Are they knowledgeable? Are they courteous? This will help you narrow down the list before committing.

Investing Tools and Resources

In addition to the brokers listed above here are additional websites that might be of interest to you.

personal capital Personal Capital is a free online accounts aggregator, net worth and expense tracker, portfolio planner and analyzer all in one. It offers a comprehensive overview of your investment portfolio allowing you to make adjustments to lower your expenses and improve your asset allocation.
Betterment is a simpler way to invest. Instead of doing your own investing, all you have to do is just answer a few questions about who you are and Betterment will automatically invest the money for you. Sign up today and get a $25 new account bonus.

About the Author

By , on Jun 2, 2013
Pinyo
Pinyo is the owner of Moolanomy Personal Finance. He is a licensed Realtor specializing in residential homes in the Northern Virginia area. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, and financial literacy author.

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Leave Your Comment (16 Comments)

  1. James E. Haslip, Jr. says:

    Do not use OptionsHouse. I sent them a check which did not get there for over a week. I stopped payment on it after such a long time and then closed my account without ever funding. Now I am constantly receiving margin call notices for an account which was never funded. I have never used margins. Of course, I can not get into the closed account to find out what they are calling me on. It has been over a week since the margin call started. Who knows when the harassment will end?

  2. Jonathan says:

    I’ve heard a lot of people talking about scottrader, but I think that their fees are slightly higher than comparable platforms. I suppose that’s the trade off.

    • Pinyo says:

      It is the least expensive of the ones that has local presence where you can go talk to someone face to face.

  3. daveM says:

    I can easily agree with you about withdrawing funds from that broker. That action indicates that they are hard pressed for income and may be in trouble financially. Based on recent history brokers and hedge funds seem to gravitate easily to bankruptcy and an investor would not like to have his account frozen. Do not delay in moving your account.

  4. daveM says:

    Brokerage fees can be negotiable depending on account size and volume. Of course the broker is not going to disclose that he can cut his fees but you can shop around, especially if you are an active trader you can skim quite a bit off the fee. They can also exempt your account from fees if you stress that you are not going to stay with the fee structured account.

  5. BigJon says:

    avoid anyone who…
    charges a monthly fee.
    charges an inactivity fee.

    They will sting you when you least expect it with other ‘small print’ charges.

    Dont let the crooks get away with it. Pay for what you do/want/need, and thats all.

  6. Ron Power says:

    I use my RBC online account to trade. I do not do a lot of trades but they a for a fairly large amount of money. I pay a small fee because I am a “Good Customer”.

  7. Wayne says:

    Cutting back on those fees is an important investing strategy. Fees have a large impast on retirement savings. Thanks for sharing brokers with low fees.

  8. Floyd says:

    I was in ShareBuilder for one year and I’m happy with the results.

    • Hank Hedleberg says:

      Sharebuilder wasn’t what I was actually hoping it would be. I know it works well for some – it just wasn’t for me.

  9. Jessica Tammy says:

    Great list! I’m with eTrade, and they are great. I’ve also heard TradeKing has very low rates. Might be worth a mention too.

  10. D Johnson says:

    I like using Charles Schwab because I don’t want to manage my entire portfolio myself and they provide good money management options. I can also buy and sell on my own through their system, which I like to do as well. Overall, they have a good spectrum of options.

  11. hdj says:

    I used Scottrade for some time until I started to get too many stop-losses that were not prosessed at the correct time. Each one lost me money that I should not have lost. Then Scottrade did not process one of my stop-losses I had set up days before and lost me $2600.00. My inquiry to the Scottrade Manager of the office I did business with was that the guy that handled was having trouble getting buyers at that time. The stock was Ford stock with millions in volume. What a terrible lame excuse. They refused any settlement, leaving no choice but to look for a new broker.

    I would never recommend Scottrade to anyone, period. They show no consideration for anyone, particularly, when its your money and their mistake.

    • Bernz says:

      I have been using Scottrade for a minimum of 4 years now without any problem. My local Scottrade office have been very helpful in just about all the questions I may have for them. So far so good in fact I have transferred my IRA accounts from my bank to them just recently

  12. Sean says:

    Look guys, it’s best to go with the cheapest brokerage house on the net. At $2.50/trans, Just2Trade pretty much takes the cake. Any investor who needs a full-service house to supply research isn’t an investor at all.

  13. Anna Amed says:

    OPTIONHOUSE.com so far is the best. $3.95 Flat rate for stocks. no inactivity fees. Great platform. I love it. Options are also cheap. They had a flat rate but now no more.

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