Discount Broker Reviews: Scottrade, Zecco, TradeKing, Firstrade, ShareBuilder, and QQQDirect
Dec 18, 2006 
Sun
Find out the pros and cons of some best online discount brokers including ShareBuilder, Firstrade, SogoTrade, Scottrade, TradeKing, OptionsXpress, OptoinsHouse, and Zecco before selecting one to trade stocks/ETFs.
Currently, I am using six discount online brokerage firms: Tradeking, Zecco, Scottrade, Firstrade, OptionsHouse, and OptionsXpress, plus two for scheduled investments at ShareBuilder (not active anymore) and QQQDirect (for purchasing QQQ only). In addition, I also use ComputerShare to investment in stocks from Direct Stock Purchase Plans. Among these discount brokers, Scottrade is the first one that I ever used and it is also where I hold most of my investments outside the retirement accounts.
I used to have everything with Scottrade, including individual stocks, mutual funds, even IRA account. However, when they restructured their fee schedules at the end of 2004, I started to move some of my assets out of Scottrade because of the high fee they charge for buy and sell mutual funds that are not in the no-transaction fee fund category (see my discount broker comparison post for how much brokers charge for investing in mutual funds). For the six online brokers I am using, none of them gives me all I want: low fee, real time execution, quick fund transfer, free dividend reinvestment, and free non-load mutual fund investments. As a result, I have to use different brokers for different purposes. For example, I use Scottrade to buy individual stocks because I can get free trades from Scottrade using their referral program. If I want to buy stocks with good dividend payout, such as Altria Group, I then use TradeKing because it offers free dividend reinvestments.
Each broker offers different features, at a different price. For me, my first and utmost concern is price, i.e., how much it is going to cost to trade with the broker. Most of the time, I will only look further into the broker if its commission fee is competitive. So among all these discount brokers I am using, which one is the best broker?
In the following I am trying to give you a quick summary of each broker based on my personal experience, what I like and don’t like. Obviously, “the best” is a very subjective term here. What is the best for me may not be the best for you at all.
Scottrade
What I like
- $7 flat fee for real time equity trading, including stocks and ETFs;
- Low account minimum: Only $500 is required to open an account;
- Windows based trading platform, ScottradeELITE (free for investors), makes trading easy;
- Free Gainskeeper to track gains/loses, realized and unrealized;
- Free real-time streaming quotes;
- Web-based research tool for mutual fund research as well as individual stock research;
- Local branch offices for easy contact and quick check deposit;
- Money Direct (ACH) for same day deposit. However, fund may not be available for trading for up to 3 business days if you want to buy stocks that are under $4;
- Improved website much easier to use and more functions;
- No inactivity or account maintenance fees, no minimum;
- Earn free trades by referring friends;
What I don’t like
- $7 commission per trade is not very low (extra fees for stocks below $1);
- Most popular mutual funds are not free ($17 for no-load, transaction fee funds including funds from Vanguard, T. R. Price, and Dodge & Cox, etc. Fee reduced to $2 for systemic purchase plans);
- No dividend reinvestment for stocks/ETFs;
- Can’t buy fractional shares;
- Do hard pull on Equifax;
Firstrade
What I like
- $6.95 flat fee for real time trading, lower than Scottrade;
- Free mutual fund investing (2 years ago when I was considering where to transfer my mutual fund holdings out of Scottrade, Firstrade was an option. Eventually, I sold all of them because I didn’t know how long Firstrade can maintain the commission free mutual fund investing option. Two years later, they are still offering it);
- Free dividend reinvestment (a big plus if you have lots of dividend-pay stocks/ETFs);
- No inactivity or account maintenance fees;
- $50 Firstrade referral bonus
What I don’t like
- $6.95 commission is not low enough, again;
- No stand alone trading platform, web based only (they do have X-Stream for real time quotes);
- Slow fund transfer (use ACH for deposit, and funds less than $5,000 available in 3 business days, any amount above $5,000 will be available 4 business days after deposit);
- No systematic (periodic) investment plan yet;
- Can’t buy fractional shares (except from dividend reinvestment);
OptionsHouse
What I like
- $2.95 per stock trade is really cheap;
- Web-based trading platform is more like a standalone platform with lots of functions;
- Free real-time streaming quotes;
- Free virtual account to practice stock and options trading;
- Free tax exposure viewer to help make real-time, cost basis and tax-based investment decisions to minimize tax liabilities;
- Reimbursement of account transfer fee charged by other broker when moving account to OptionsHouse;
- $50 bonus for referral new customers to OptionsHouse;
- Support ACH fund transfer;
- Periodic promotions with free trades for new account;
What I don’t like
- $1,000 minimum to open an account is quite high compared to other discount brokers;
- $100 minimum in the account to cover commission cost (this requirement has been removed);
- Account application from has to be submitted before account becomes active;
- Can’t use real-time quote before making $1,000 deposit;
- Can’t change account information (such as address, phone number, etc) online;
- Can’t download account information to Quicken;
- No dividend reinvestment;
Sharebuilder
What I like
- $4 commission with no subscription fee (this is much cheaper than Scottrade and Firstrade and you can get even lower rate with their subscription services);
- Discount on commissions (I used my Costco executive member to open my first account and I can get 20% rebate on quarterly commissions);
- Periodic promotions (you can possibly make hundreds of dollars of free money);
- Since Sharebuilder uses scheduled fund transfers, there’s no delay for scheduled purchase (changes can still be made on Monday 2:00 pm);
- Free dividend reinvestment;
- Can buy fractional shares (like buying mutual funds);
- Use Express Funding option to fund account in the same day (good option for real time trading);
What I don’t like
- $4 commission only available on Tuesdays and it’s not really that low for batch purchases (I’d love more flexibilities on this, but I probably won’t pay only $4 if I indeed get it);
- Scheduled investments are only for weekly or monthly, no bi-monthly or quarterly automatic investment plan;
- $15.95 per real time order is too high (this is too much, making it impossible to use);
- No mutual fund investing (there are plenty of no-fee mutual fund options available);
QQQDirect
What I like
- Commission free investment in QQQQ (this is the only option I am using);
- No minimum deposit requirement for opening an account;
- No inactivity or account maintenance fees;
What I don’t like
- QQQQ investment only available on Tuesday;
- All other investments are not free (much like Sharebuilder plans);
Zecco
In addition to the above four discount brokerages, Zecco seems to be a very attractive alternative as they offer commission free trading on every thing from stocks to ETFs, as well as free dividend reinvestments (you do, however, have to have $2,500 to open an account). You can find a comprehensive review of Zecco Trading here.
TradeKing
Check out my comprehensive review of TradeKing where I discussed features of the discount broker which has been ranked No. 1 online discount broker by SmartMoney two years in a row.
SogoTrade
For discussions on SogoTrade, read my post Planned Investments: A Review of SogoTrade, ShareBuilder, and MyStockFund for details.
Featured Broker: Zecco Promotion Code
Ready to buy stocks and ETFs with zero commission? Open a Zecco free trading account and get 10 commission free trades every month:
| Promotion | Description |
| Buy Stocks Online for $0 | Trade stocks with no commission on Zecco.com when trading at least 25 times a month |
| Trade Stocks for Free | Open an account with $25,000 minimum and get 10 trades per month commission free. |
| Free Blogs, Forums & Trade | Why Invest in stocks? Find out at www.zecco.com for free blogs, forums and trade. |
And be sure to check out my Zecco review of the broker and my first trading experience before opening your account.r
Whatever you do, don’t go with Firstrade. They lured tons of people in with no transaction fee no-load fund trades. Then they dropped that feature and now charge people $50 per account to transfer out. Classic bait and switch.
Have you heard of SogoTrade? $1.50 per trade.
http://www.sogotrade.com
The other sibling is SogoElite.
http://elite.sogoinvest.com
I signed up with scottrade.com and got 3 free trades.
I think they require a $500 minimum to get the free trades. Still a great deal.
Greetings.
My name is Josh, and I felt the need to warn traders about Zecco. It is the absolute worst online trading experience I have ever had. To start, their customer service reps and managers are woefully misinformed about SEC regulations and their responsibilities to their clients’ money. They take the longest time on ACH transfers (20-30 days). A few of mine were cancelled for no reason and I had to call the office to follow up numerous times. Many times the reps say that they will call back to resolve an issue, and they simply don’t.
Their online platform is mediocre to bad. Their trailing stops feature was down for a week during volatile market times, when my other brokerages were doing fine. Their charts lag relative to their competitors, and their executions are slow. Also, uninvited total screen refreshes put you behind the 8-ball when you have to wait, wait, wait, then make a quick move. Don’t even think about trading on 5 minute intervals.
Third, they have hidden fees on every transaction. The $4.95 is not accurate. It’s listed in their Terms and Conditions, but who reads that? (I did, and that’s how I found out.) Their accounting system is broken. I’m having my accountant look over their records because my buying power doesn’t even coincide with what their own account records say. As it is, I’m out about $500 because of a mistake they made, which I have yet to see fixed. I have complained to FINRA and the SEC. Yes, I believe it’s that bad.
Lastly, I know some people would be willing to put up with all this crap for commission free trades, but as of March 01, that competitive advantage is OUT THE WINDOW!! It now takes $25K to get the free trades, which makes their structure merely competitive, not a hands down advantage. Think about it: If you make 20 trades at $4.50 (+hidden fee) and 10 are free, it’s the same as making all 20 at a $2.50 commission. Plus you have to put up with all the above crap.
I hope you’ll find some of this info useful and will publish it to keep people from going through the same thing I did. Zecco should be out of business. Thanks. Email back with any other questions.
ZECCO SHOULD BE OUT OF BUSINESS
I agree. Zecco is the pits and will rob you.
Wow some unhappy Zecco folks. I have used them for a couple years and love it. Granted the customer service isn’t the same as my other online brokers that I have used and still use. The trades are as cheap as they get and executions have been great. I read the terms and conditions again and don’t see any abnormal hidden fees… would like to know exactly what Josh is talking about so that i can look into it. All of my ACH transfers have been smooth.. all online in a few days max. I am upset with how their price structure with the free trades has changed in that I was originally getting 40 free trades a month!! when I first started with them.. and that lasted for a year. Now they have reduced it to 10 if you have the 25k. Anyways I use them and Im happy and I also use Scottrade for their tools such as streaming quotes and such. But most of the trades are done on zecco. Also there is a site where you can rate and post unbiased opinions about online brokers you might be interested in:
http://www.nakedhedgefund.com/about/online-brokers/online-broker-reviews/
@Josh: What Zecco did since its launch looks like a typical bait and switch scheme. They cited the current market conditions (low trading volume and low interest rates) as the reason to dump almost completely the free trades, but then swore they will never make any pricing change again. To me, it seems that they finally got the chance to get rid of it. I wonder how many small investors who went to Zecco for only reason of their free trades will stay after March 1.
When I search for discount online broker, I found Firstrade currently offers the 100 free trade promotion, and they offer this promotion to international account which is great for me.