Brokerage Research

Today, I was searching for a discount brokerage firm to use and I found a few that I am interested in.  Most of these brokerage firms offer the same technologies of stock screeners, trade simulators, and ease of access to your funds.  They all claim to have great customer service and I am sure they do, but that isn’t really a determining factor for me.  The real difference in these firms is price per transaction.  It is truly amazing to me the variance in the amount one firm can charge in comparison to another firm.  It goes to show you how much overhead some of these firms are operate with.  Like everything else that was born online it is cheapest to go with a firm that got its start online versus a company that has brick and mortar offices to pay for.

The first firm that piqued my interest was Tradeking.com.  I have used this firm in the past and had a good experience.  Tradeking.com offers equity trades for $4.95 for the buy and $4.95 for the sell.  To open and close your position you pay $9.90.  $9.90 is a decent price to pay considering there are some sites that charge you $10 to open your position and another $10 to close your position.  Using Tradeking.com is like using a 50% off coupon to take on Mr. Market.  Since I am operating with limited funds I want to keep as much of my money as I can.

 

The next site I researched was OptionsHouse.com.  Again this firm was born online and offers an awesome fee structure.  An equity trade will cost you $4.75 to open your position and $4.75 to close it.  This is currently the cheapest site operating that I could find.  Another benefit to this site is that it has a solid fee structure for option trades.  I do have a little experience with options and would consider using them in the future.  Tradeking.com offers option trading as do most brokerage firms, but not at a price that Optionshouse.com can offer.

The last site I came across today was Robinhood.io.  This site, or should I say app, is not operational yet, but they are claiming to offer equity trades for the low price of $0.00.  That is not a typo; they are truly offering trades for $0.00.  Now, this doesn’t seem like a sustainable business model and history will show that zecco.com tried this and eventually had to start charging a fee for equity trades.  They plan to make their money from margin accounts and other fees not related to equity trades.  Robinhood.io is being developed for gen y’ers with limited funds (that’s me) and is only available as a mobile app.  I signed up to be part of the initial wave of investors to use their services.  I can say it seems to have a pretty impressive following as I was roughly the 102,000 person to sign up.  From what I have read the app should be available soon.  Hopefully they can come with through with their current fee structure.

With all of this information, I plan to use optionshouse.com unless the Robinhood.io app comes to fruition.  Like I stated earlier I don’t need anything special, my main concern is price and you can’t argue with free.  And if that doesn’t work out, $4.75 isn’t bad either.

Portfolio Statistics:

Cash: $400

Stock Investments: $0

Bond Investments: $0

Real Estate Investments: $0