For the Do-It-Yourself Investor Part 1: Finding the right online brokerage

Lets be realistic. There are literally a ton of Online Brokerages out there on the world-wide web! This makes it difficult for the Do-It-Yourself Investor (abbreviated as DIY from here on!) to find the brokerage that is right for them. Different brokerages offer different prices on executed buy and sell orders. Others require you to deposit a certain amount into a new account before you begin trading or investing. So with all these options, it pays to shop around! When I first started doing this, I looked at certain brokerages, to get an idea of the commission cost and other little perks that each brokerage offered.


The first one I would like to look at is Scottrade. Scottrade offers $7 commission. Brokerage-assited fees are $27 on average. Scottrade also offers investors access to 850 No-Transaction Fee Mutual Funds, which is decent. For more info, go to www.scottrade.com


One that I personally like is Trade Station. Trade Station is a relatively new online brokerage that has some really nice features. Its Easy Language technology allows you to test your stock idea before you execute a trade. It allows you to see how well your trade would have performed if you bought it. I think this is useful if you want to learn how to spot bottoms (buying opportunities) and tops (selling opportunities). TradeStation also offers $2.50 Futures contracts and various priced Equity deals. For instance, 100 shares for $1, 500 shares for $5 and 1000 shares for $8. TradeStation also allows you to search for buy and sell opportunities in a unique automated way. You set in the parameters and you let TradeStation do the rest. More info can be found at www.tradestation.com


Ameritrade is another decent brokerage firm that you can use. Out of all the brokerage firms that I found, it has the "highest" low commission which is $10.99 per trade. Broker assisted trades can run you up to $24.99. Ameritrade also has a special priority service called Ameritrade Apex which gives you cutting edge investment tools and access to level 2 quotes and more. For more info, check out www.ameritrade.com

Fidelity Investments Active Trader Pro 2, is Fidelity's elite invesment service. Highlights include $8.00 flat commission for equities, 1-second trade execution guarantee, wireless trading and much more! Some trailing tools include conditional orders, trailing stops, technical filters and more. Fidelity also has a technical trading platform called Wealth-Lab Pro which allows you to design, build and test out your own customized trading strategies without the risk of losing your neck! One notable downside is that Fidelity charges $175 for broker assisted trades. For more info, check out www.fidelity.com
Note: To recieve $8.00 commission, you must have $1,000,000 or more in household assets at Fidelity, or at least $25,000 in assets plus 120 trades/year.

Charles Schwab is a very popular guy! When I first started out, I tried to brainstorm and think of different brokerages to check out to put some money into. Arguably one of the first names to pop into my mind was Schwab. So you see, this Schwab guy is very popular. You can think of Schwab as the start quarterback at your school. But what about brains? Is Schwab relly worth your time and money? Well for starters, the lowest commission you can recieve at Schwab is $9.95, which is not bad. But how do you achieve this status and keep it? Well, you need $1,000,000 or more in household assets (oh yeah, no problem, let me just pull it out of my a$$, cause you know, everyone and their mother has a million + bucks to throw around!). If Schwab assets are less than $1,000,000, then 30 or more trades per quarter (thats more like it!) One other complaint is that Schwab charges $4oo.00 for broker assisted fees! What are they nuts?! They better have some cream of the crop brokers over there if they are going to be charging me $400 for broker assisted trades! The only other good thing is that they have Street Smart Pro, which is a premium active trader program that allows you to execute custom and special buy and sell order, limits, stops, advanced level 2 quotes and other real-time features. For more info, go to, www.schwab.com

E-Trade is a popular online brokerage as well. This was the 2nd one to pop into my mind. E-trade is a decent platform, but it definatly has its down falls. For one, customer service just plain SUCKS! They have a decent Premium acitve trading program, called E-Trade Pro, that is decent. In reality it is very difficult to download and use. The only thing that E-Trade can boast, is $6.99 commission for trades, but thats only for traders (or idiots) who can pull off 500 trades a month! Yes, you read it right, 500 trades a month will get you $6.99 commission. Excuse me, but who heck is going to put in 500 trades a month?!? Thats pretty much, impossible and a horrible way to offer such a specially priced deal. So basically, they are saying, if you are stupid enough to do 500 trades x 6.99 = $3,495. Lol! Ok here it is, if you give E-Trade $3,495 (thats $6.99 x 500 trades) a month, then they will crown you an idiot and give you $6.99 commission for that month! Nahhh, no thanks, I'll take the $9 deal! You can check it out yourself at www.etrade.com

Note: The only thing that I could be interested in E-Trade is the fact that they have a Canadian version of their company (E-Trade Canada). I will try to contact them to see how I could go about and open up a Canadian account with them. This way we have a link to the TSX markets! This could be huge news!! I'll let you know more info as I recieve it!

The only other brokerage firm I could think of is Refco. Refco is a new online brokerage that allows you to trade futures, FOREX, stocks, options etc. It is something that may be worth checking out! The web address is www.refco.com --------Fuggetaboutit now!

Okay, lets forget about REFCO, okay? Lol. Thanks!





*All charts are courtesy of BigCharts.com, StockCharts.com and AOL Finance