Best online brokerage?

[SuperDave]

I'm new to stocks and investing and I was wondering the best way to buy stocks and which brokerage is the best to use? I'm currently a college student and cannot afford many stocks (likely around 10 shares per company actually) and I just want to know how to start and really get into it. I want to start early and make the mistakes now instead of later and really lose big money. Thanks for the advise!

Dave

[Wuzi]

there are many choices out there, I use Scottrade, but also am planning to open an Ameritrade account as well! As there are many features and commission differences between the companies. Some other big online brokerage firms are E-trade and Sharebuilder. Most of these require at least $500 minimum to open a cash account.

Scottrade- $7.00 internet trades for stocks over $1.00, anything under $1.00 is $7.00 + 1/2 percent the principle. and if you want to trade canadian exchange you have to do broker assisted $20+$7

Ameritrade- $9.99 internet trades, doesnt matter if its above or below $1 and you can also trade canadian shares online as well!

E-Trade- announced recently that they are soon going to be allowing their customers to trade on foreign exchanges in the native currencies! So instead of buying ADRs on the American exchanges, you can trade on the exchanges in Germany, Japan, China etc etc...

***note *** these are just a few small examples from these particular firms.


But overall there are a good few to choose from out there, and different opinions on each, saying one is the "best" is very hard to do, as none of them have the perfect configuration. (if the features of all were combined into one firm, that would be the best!)

Check out each of these sites, see what each charges and offers. If you have any more specific questions just shoot.

TD AMERITRADE
Online Discount Brokers, Online Stock Trading, Stock Investing, Mutual Funds, IRA - Scottrade
ShareBuilder: Build Your Future
www.e-trade.com

-Wuzi

[SuperDave]

Originally Posted by Wuzi

there are many choices out there, I use Scottrade, but also am planning to open an Ameritrade account as well! As there are many features and commission differences between the companies. Some other big online brokerage firms are E-trade and Sharebuilder. Most of these require at least $500 minimum to open a cash account.

Scottrade- $7.00 internet trades for stocks over $1.00, anything under $1.00 is $7.00 + 1/2 percent the principle. and if you want to trade canadian exchange you have to do broker assisted $20+$7

Ameritrade- $9.99 internet trades, doesnt matter if its above or below $1 and you can also trade canadian shares online as well!

E-Trade- announced recently that they are soon going to be allowing their customers to trade on foreign exchanges in the native currencies! So instead of buying ADRs on the American exchanges, you can trade on the exchanges in Germany, Japan, China etc etc...

***note *** these are just a few small examples from these particular firms.


But overall there are a good few to choose from out there, and different opinions on each, saying one is the "best" is very hard to do, as none of them have the perfect configuration. (if the features of all were combined into one firm, that would be the best!)

Check out each of these sites, see what each charges and offers. If you have any more specific questions just shoot.

TD AMERITRADE
Online Discount Brokers, Online Stock Trading, Stock Investing, Mutual Funds, IRA - Scottrade
ShareBuilder: Build Your Future
www.e-trade.com

-Wuzi

Wow thank you so much for your quick and insightful response! I was looking at Scottrade myself but Ameritrade sounds great too. How do you like Scottrade? Would you recommend it to someone new to investing? Can you day trade with a limited amount of funds in an account, say $500? Again thank you so much!

[Wuzi]

I do like scottrade, it is a great way to learn about the stock market. Now if the stocks you are looking for are over $1.00 and are listed its pretty good, but if you are going for under $1.00 or looking for certain pink sheets or Canadian listed stocks, the commissions can get a bit expensive.

Day trading with $500 will be extremely difficult, ( and impossible to do with scottrade). With $500 you will be severely undercapitalized, and with scottrade you need to maintain a minimum balance of $25,000 to be considered a pattern day trader.

Day trading cannot be done with $500 in scottrade this is why:

Say you buy 100 share of XZY @ $5.00 ($500) then sell the next day at $7.00 you now have $700 of unsettled funds. You can make another purchase with these unsettled funds, but then you will be locked into that purchase (lets pretend 100 shares of ABC @ $7.00) until those funds are settled from that sale you made of XYZ. (usually 3 business days) selling before that is considered a “free-ride� and is against SEC rules.

I am not too familiar with the nitty gritty of day trading, but from what I understand the large amount of capital they have prevents these free-rides from happening, and by being classed a “pattern day trader� you fall under a whole different set of rules and regulations.


Now do get discouraged, there is still ways to make money but it is just going to take a bit longer than someone who has more money invested.

In fact my first scottrade account I started I was a Jr in High school, I only started with $500, and in about a year my account had risen to $2500! Now if only that were $10,000 that I started with! haha.

All I can say is bombard yourself with information, get some books on finance and the stock market, read the business section of the newspaper, etc etc… it helps out drastically.

Ive been on other boards where people have had the same question as you, and people recommend trading currency, or futures, but that stuff is no joke and can potentially burn a beginner!



Also be aware of the price you are actually paying for a stock. A lot of beginners make the mistake of not taking the commission into consideration to the share price when you buy.

For example you buy 10 shares of XZY @ 5.00 a share +$7.00 Ã* your actual price per share (pps) is $5.70 !!!

And if you want to pull a profit, you are going to want to consider the commission for the sale, you are going to pay another 7.00 to execute that.

For a grand total of $6.40 (PPS) your stock has to be over $6.40 before you start seeing green!!



Be very aware of this, and try not to overtrade or spread yourself too thin with that $500



Wow I wrote too much, I will save some more for later.

[SuperDave]

Originally Posted by Wuzi

I do like scottrade, it is a great way to learn about the stock market. Now if the stocks you are looking for are over $1.00 and are listed its pretty good, but if you are going for under $1.00 or looking for certain pink sheets or Canadian listed stocks, the commissions can get a bit expensive.

Day trading with $500 will be extremely difficult, ( and impossible to do with scottrade). With $500 you will be severely undercapitalized, and with scottrade you need to maintain a minimum balance of $25,000 to be considered a pattern day trader.

Day trading cannot be done with $500 in scottrade this is why:

Say you buy 100 share of XZY @ $5.00 ($500) then sell the next day at $7.00 you now have $700 of unsettled funds. You can make another purchase with these unsettled funds, but then you will be locked into that purchase (lets pretend 100 shares of ABC @ $7.00) until those funds are settled from that sale you made of XYZ. (usually 3 business days) selling before that is considered a “free-ride� and is against SEC rules.

I am not too familiar with the nitty gritty of day trading, but from what I understand the large amount of capital they have prevents these free-rides from happening, and by being classed a “pattern day trader� you fall under a whole different set of rules and regulations.


Now do get discouraged, there is still ways to make money but it is just going to take a bit longer than someone who has more money invested.

In fact my first scottrade account I started I was a Jr in High school, I only started with $500, and in about a year my account had risen to $2500! Now if only that were $10,000 that I started with! haha.

All I can say is bombard yourself with information, get some books on finance and the stock market, read the business section of the newspaper, etc etc… it helps out drastically.

Ive been on other boards where people have had the same question as you, and people recommend trading currency, or futures, but that stuff is no joke and can potentially burn a beginner!



Also be aware of the price you are actually paying for a stock. A lot of beginners make the mistake of not taking the commission into consideration to the share price when you buy.

For example you buy 10 shares of XZY @ 5.00 a share +$7.00 Ã* your actual price per share (pps) is $5.70 !!!

And if you want to pull a profit, you are going to want to consider the commission for the sale, you are going to pay another 7.00 to execute that.

For a grand total of $6.40 (PPS) your stock has to be over $6.40 before you start seeing green!!



Be very aware of this, and try not to overtrade or spread yourself too thin with that $500



Wow I wrote too much, I will save some more for later.

I can't begin to thank you enough for all of your help. Wrote too much? I think you couldn't write enough haha. I was all for trying out day trading but I had no idea how much you had to have to be considered for it. But with your insight I think I will now open an account with Scottrade and start small with stocks over $1.00. I knew the commissions were a lot but man I forgot to add them into the equation of buying and selling the stock. But like I said I just want to start small right now and learn the ropes of trading stocks and getting into it further.

If you have any other information or advice, I would be ever grateful to pick your brain. Again thanks for taking the time to post and answer my questions. Have a great day!

[anfern057]

Check out Zecco. No Commissions. Great if you have a small account.

[SuperDave]

Originally Posted by anfern057

Check out Zecco. No Commissions. Great if you have a small account.

I just went and checked it out and it looks absolutely fantastic! Thank you for the heads up on that one. The only problem is that I need $2,500 to open an account but with zero commission trading I might just save up and open an account with them. How reputable are they? Has the company been around long? Thanks again!!

[StockJunkie]

Zecco lowered there minimum to $1,000 just recently. I would still be cautious with these guys though, make sure to read through their forum, apparently a lot of people of had problems getting setup. Bad customer service.