More than one broker?

[timeiz2short]

Just wondering would it be a good idea to use two brokers? For example if you've got one broker that has a lot of good features but not exactly cheap, would it be a good idea to go with another broker that has a low flat fee. In my case I'm thinking to do that since fees can add up pretty quick with too many trades plus I'm a beginner. So that could guard against paying too much for losses.

Peace

[HappyT90]

What do you mean by good features? If you're saying that you're using one broker just for the research tools then I think that's a bad idea. There are many free websites out there that you can use to do your research. However, I know some people that have used two brokers before because of different commission rates. For example, if I decided to trade options, I could get a much better deal from ThinkorSwim than at Firstrade. However, for regular stock trading, it would be much cheaper to use Firstrade than ToS. Therefore, I would open two accounts. I would use my ToS account for options and my Firstrade account for stocks. However, I'm not that into options so I've never actually tried ToS before. Therefore, all I know is that they're very cheap for options. I don't really know how good their service is so any users of ToS can feel free to comment about them.

[MSheldar22]

Just wondering would it be a good idea to use two brokers?

I hear about people doing that and really there is nothing wrong with it. A very popular combination is Zecco for very inexpensive trades (free typically) and using Etrade, TD Ameritrade, or Scottrade for trading tools and research.

[Airelon]

There are days that I think that I have a hobby of 'collecting' brokers. I've been up to 4 different brokers before, and have multiple accounts within them.

Sometimes I use a different account at the same broker, or a different broker - for money management reasons. There are some brokers I use (such as Sharebuilder) purely for investing, and not for trading. Other brokers (such as Scottrade) are difficult, if not impossible to invest with - since they don't offer DRIP's. But they're ok, as far as trading goes.

So to answer your question - yes. And I know quite a few other traders and investors who do the same thing I do ...

[Ray The Money Man]

As of today I am using three brokers. They all have a "niche" they fit into. Just like my different trading strategies.

[kinjordan]

I heard that generally investors will keep the brokers for the sake of getting the profit until they get some experience on market trading I think keeping more than one broker is depends up on shares taken by investor.

[aquaswim47]

Originally Posted by timeiz2short

Just wondering would it be a good idea to use two brokers? For example if you've got one broker that has a lot of good features but not exactly cheap, would it be a good idea to go with another broker that has a low flat fee. In my case I'm thinking to do that since fees can add up pretty quick with too many trades plus I'm a beginner. So that could guard against paying too much for losses.

Peace

There are five different brokers that I like and you might have your own reasons for choosing multiple brokers. Also, if you trade mutual funds and ETFs, it is probably true that you will benefit by using a broker that is most friendly for the type of mutual funds you seek and the amount you wish to deposit on a regular basis.

I mean of the following list, each of these brokers you may like for a specific reason:

Mutual Fund
1) Fidelity - customer service and some funds are good; they charge $19.95 for stocks ($50,000 networth brings you to $8) and $75 for transaction fee funds, thus to trade stocks, ETFs, or transaction fee funds, it may be best to use a firm like Scottrade or Zecco.

2) T Rowe Price - they are great with their lifecycle funds; they have decent performance. They also have other funds to choose from. They allow people to invest in $50 per month increments instead of a minimum of $100 at Fidelity and $200 under their Simple Start IRA.

3) Vanguard - the lowest cost mutual fund. Founded by Bogle, they are most reknown for their index funds. They have pretty good deals on individual municipal bonds and bond index funds (where costs are especially important). I really like VBMFX for the upcoming year.

4) Schwab - this is a broker whereby people like it for their free technical analysis tools; it costs $49.95 for transaction-fee funds (but there is a large list of no transaction fee funds). For those funds that have a transaction fee, it might be best to either go thru the fund family or if there is a maintenance fee, to consider using Scottrade instead. I think the average trade is $12.95 per trade.

5) ETrade - $12.99 unless you meet the $50,000 requirement and than it is $9.99 (lower rates apply with 150 trades or more per quarter). This broker is mostly inexpensive for those who don't only wish to trade ADRs but to trade on other exchanges throughout the world. Canada costs $19.99 CAD, Europe costs 19.99 Euros, Japan costs 3400 yen, and the UK costs 9.99 GBP. Hong Kong costs 299 HKD.

6) Scottrade: Notorious for their $7 trades; however, they have a lot of no-transaction fee no-load funds. Also, they have a flat $17 rate on transaction-fee funds, such as Vanguard, thus those funds that have a transaction fee at other brokers or a maintenance fee at the mutual fund company, Scottrade may be the place to put the money, especially if you intend to hold it for a long-time.

7) Sharebuilder - they allow you to trade fractional shares. They charge $9.95 per trade and $4 for an automatic investment.

8) Zecco - they charge $10 for mutual funds and $0 to trade stocks. You get up to 10 free trades with a $2,500 minimum deposit and it is $4.50 per trade thereafter. It's an extremely good deal as it costs only one cent to sell a stock plus the cost of the bid/ask spread (which applies to every broker in which you trade stocks, not just Zecco). For those who trade ETFs or stocks and who know how to enter orders, this is the broker for you.

[Aaron1]

I think it certainly makes some sense to have more than one broker, though I don't see a need for collecting tons of brokerage accounts.