Many investors and active traders are still not aware of the highly rated deep discount brokerages in the U.S. that come with a very cheap cost of buying or selling stocks and/or ETFs in a flat rate pricing and as low as 1$ for every trade in a pay-per-share pricing plan. Since the introduction of stock trading at only $30 per trade by Charles Schwab, stock trading commissions have dropped down a lot. Competition among various brokerage firms is currently very strong with new brokerage firms coming out almost every year pressuring firms that have already established themselves in the brokerage business with very aggressive pricing.
Deep discount brokers will also offer a pay-per-share commission structure and with it, traders will pay for every trade share. The more shares a trader buys with the pay-per-share structure the higher the cost will be. All deep discount brokers usually have a minimum charge per trade of at least $1.00. Below are some of the top 5 deep discount brokerages in the U.S. today.
1. Trade Station
Trade Station is a discount brokerage firm commonly known for the lowest rates it offers to its traders. The firm only charges $0.01 per share for the first 500 shares and $0.006 per share after that with $1.00 minimum per trade. Options pricing in Trade Station can go as low as $4.99 with an extra $0.20 per contract for each active trader. Mutual funds in Trade Station have been priced at $14.95 per transaction.
However, one of the main downfalls of using this broker is that if you have not traded at least 5,000 shares within the previous trading month, a $99.95 fee will be charged for using Trade Station’s trading platform. But the fee does not apply for accounts with a balance of $100,000 or more. Barron’s magazine has rated Trade Station as ‘The Best Broker for Worldwide Traders’ and ‘Best Broker for Frequent Traders’.
2. Options House
Options House is one of the top discount brokerage companies available today which charges a flat rate of $4.95 for ETF trades or stocks regardless of the number of shares in a specific order. There is also an additional surcharge of $0.005 for stocks that are not options eligible and priced at $2 or less. Options House also offers options trading with $4.95 plus an additional $0.50 for every contract rate. The mutual funds are priced a bit higher than Trade Station at $20 per transaction.
Options House is one of the best choices for day traders and active traders looking for a flat rate commission account that will allow them to make larger and cheaper trades which are normally expensive with the pay-per-share pricing plan. This discount brokerage company also offers to its traders virtual trading, a free checking account, and real-time quotes. There are also no extra fees for IRA accounts and for inactivity.
3. Interactive Brokers
Interactive Brokers is a discount brokerage company that offers to its traders a pay-per-share commission structure. Traders at Interactive Brokers normally pay $0.005 for each share that has a $1.00 minimum for every SMART routed order. This generally means that orders of up to 200 shares will cost traders $2.50 per trade while orders of 1,000 shares will cost $5.00 per trade, and orders 2,000+ shares will cost $10.00 per trade.
Options trades at Interactive Brokers are typically priced at $0.70 or less for every contract including exchange fees while mutual funds cost $14.95 for each transaction. There are also additional costs that can be incurred when trading with Interactive Brokers such as a $10 monthly fee if an account is inactive which can also go up to $20 if the balance of the account is less than $2000, and if a trader’s trading commissions are less than $10, then he or she will incur a $10 monthly fee for market data. This means that investors who don’t trade often could end up paying up to $360 every for being inactive.
4. Options Xpress
Options Xpress is another great discount brokerage company with a name that suggests that it mainly deals with options. However, besides options, traders have the option of trading in almost anything such as future contacts and stocks. Stock trades at Options Xpress cost $9.95 which is slightly more than what some discount brokerage companies have to offer and trade options have a $12.95 flat fee for up to 10 contracts. Margin rates are normally from 6.00% to 8.25% and the mutual funds are priced at $9.95 including loading fees.
Options Xpress also has no additional costs for broker-assisted transactions making it a very good choice for traders who require help with their trades. This discount brokerage company is also well known for its trading tools which fall into three categories that are designed to help traders locate good investment opportunities, analyze those opportunities, and execute trades.
5. Scott Trade
Scott Trade is a highly ranked and privately owned discount brokerage company that operates both at retail locations and online. It offers a very reasonable cost compared to other deep brokerage firms with stock trades and trading options only costing $7 plus $1.25 per contract, and broker assisted trades $27. The firm also ranks well in most broker surveys including SMART money’s 2009 survey. It also features various types of accounts including IRAs and other retirement accounts. In the IRA account, there is no annual, custodian, opening, or closing fees.
Margin rates range from 5.25% to 7.25% while mutual funds are priced at $17 per trade. The account opening minimum is $2,500 and there are no maintenance or inactivity fees incurred when using this deep brokerage firm. Scott Trade has the largest network of branch offices among the various discount brokerage companies available today allowing most traders in the US to be able to talk to their staff face to face more easily if they need to.