What A Broker Must Offer (Last Update: 10/18/13) I have a couple of rules that a broker must fulfill for me to open an account with them. In no particular order they are: (1) no surcharges on penny stocks or stocks under $2.00, (2) a solid platform capable of providing level 2 data and time and sales, (3) a decent commission rate, and (4) a solid reputation. With all of this taken into account, the following are brokers meeting this criteria: Charles Schwab, E-Trade, Fidelity, TDAmeritrade, Think or Swim, Interactive Brokers, and Speedtrader. Do not consider any broker besides these reputable brokers. (Hereis a link to a .pdf that compares brokers side-by-side.)
With all of the details listed, I would use commission rate as the primary factor. This is where I get a little bit bias. I have two accounts at Speedtrader. For stocks, I pay $2.50 per trade with a maximum size limit of 5000 shares (i.e. I pay $5.00 for buying 5000 shares twice). I don't know if you need to have a minimum of $25,000 in order for them to give you this rate. I've never asked directly, but somehow I get the feeling that that is how it works.
For me this works out well because I tend to purchase 10K shares when I enter into a position. Assuming I scale out in quarters, I will use a total of 6 trades for $15, overall. That to me is fantastic and unbeatable. If you have a larger amount of capital, I definitely recommend Speedtrader. You can also get $2.50 at Just2Trade, but their reputation isn't that great. (In their defense, I used J2T as my previous broker prior to moving to Speedtrader. J2T's platform, while free, just wasn't for me.) Another upside with Speedtrader is the waiving of platform fees if you generate a greater amount in commission which usually happens whether you day-trade or swing trade.
Brokers to Avoid (short version) 1. Scottrade - "-10c Stop Rule." 2. OptionsHouse - Forced to use their platform which doesn't have L2 or T&S and surcharges for penny stocks. 3. TradeKing - Surcharges for penny stocks. 4. SureTrader - Wiring charges and platform (Das Trader) charges. 5. E-Trade/TD Ameritrade - High commission unless you negotiate to getting it lowered.
If Your Account >$25,000 Capital Try doing what I do (an account at Speedtrader at the $2.50 rate). Besides the commission rate, Speedtrader offers a fantastic platform (Das Trader) for a monthly fee ($499 for Level 2, as of Oct. 2013) that can be waived if you generate enough in commission. It isn't great for charting like eTrade's platform, but it gets the job done.
If Your Account <$25,000 Capital I recommend going with a broker that offers a Per Share payment plan. For example, Speedtrader offers .39 per 100 shares and Lightspeed offers .0045 per share. (Speedtrader wins by .06.)
If you plan on swing trading 1500 shares and you're with Speedtrader, it will cost $5.85 to enter. The advantage of having a per share plan is scaling out of a position. If your gameplan is to buy once (1500 shares) and exit twice, you will pay $5.85, $2.93, and $2.93 (total: $11.71). If you were paying $8 flat, you would pay $24.
Which broker is my primary preference? Speedtrader. No one can beat their platform (Das Trader) and the discount commission cost ($2.50-2.95, limited shares though) they offer.
As of 10/3/13, I'm on a $2.95/20k share commission strucutre. No broker can come close to beating this structure. Every trader is too caught up trying to get a deal with the big, mainstream, brokerage firms (e.g., Think or Swim, eTrade, and Charles Schwab). The only single flaw (as of 10/3/13) is how they charge for their Das Platform.
Before, you could have the platform fees waived IF you generated enough in commission. For example, if the feeds I've activated for Das is $175, the fee will be waived if I generate that much in commission; it's essentially free.
However, now you must generate at least $499 (for Level 2 services). I think that is a bunch of bull. Even with all L2 feeds enabled, the cost is ~$275. In my opinion, they should raise the price of their individual feeds instead of setting the bar at $499.
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