Please visit the online discount broker review page to see the best brokers compared.

Company
Based out of Illinois, Think or Swim is a broker specializing in option trading. Their pricing structure caters to high volume traders and is intended to weed out smaller investors not willing to purchase large quantities in a single trade. They don’t charge some of the maintenance or inactivity fees you’ll see at other brokers. Their customer service is top notch and actually proactive if you are a big enough client. Overall ThinkorSwim is pushing the envelope on tools, software, and charting but may not be the best choice for newbie investors. If you are new to the game it doesn’t hurt to open an account because they don’t have an inactivity fee.

Pros:
No inactivity or IRA fees.
Three free mutual fund trades per month.
Top rated software and mobile applications.
Barron’s top choice two years in a row (2009 & 2010).
One of the best educational services around (including free paper trading accounts).
Desktop application is rated one of the best tools for option trading.
Charts provided are some of the best for technical analysis.

Cons:
Can be intimidating for newbie investors.
Minimum Required Balance of $3,500.
Bond pricing is not favorable.
FOREX Trading is not optimal here but have improved lately.
Commission structure can be expensive for newbies and penny stock traders.

Notes on ThinkorSwim
Some investors have been able to price match a competitors commissions just by asking for them. These investors have confirmed receiving TradeKing commission on their thinkorswim account. It’s worth a try.

Coupons & Promotions
Refer a friend and get $50 for each successful account created.
$100 Account Transfer Rebate – When you transfer to Think or Swim (TOS) they will reimburse any fees you incurred from your previous broker up to $100.
Active Trader Rebate – If you make more than 40 trades a month they’ll credit you $39 to cover some of your internet bill.

Background
OptionsXpress was one of the first brokers to embrace options as an online discount broker. Their development brought options trading online much faster. As a company they have always pushed the envelope on professional trading tools and have always provided them for free. OptionsXpress was one of the first companies providing entry-level and advanced education for free to their customers. Their pricing strategy has driven down the cost of commissions and per contract fees industry wide. Overall they are an excellent company.

Pros
Has the best tools and resources for the active options trader.
Advanced option trading.
Very good execution on trades.
Considered the best options trading broker.
No minimum account balance required to start trading.
Charts for individual options are available.

Cons
Their commissions are competitive but not the lowest online.

Optionshouse is currently the low cost leader among discount online brokers. In addition to having the lowest cost per trade online they also have one of the best deals for new customers:

100 Free Trades for New Accounts.

But how does Optionshouse stack up against other brokers? This review will explore the pros, cons, and provide a summary and recommendation.

Pros:
Optionshouse has the best commission structure in the industry.
Fast execution and plenty of servers for a fast interface.
Ability to replicate an order very quickly.
One of the best margin rates anywhere.
Very good customer service.
They are backed by Peak6, a professional trading company.

Cons:
Their tools and resources are good but not the best.
They don’t have charts for each individual option.
Strictly web-based.

Summary
If you are a bargain shopper OptionsHouse cannot be beat. If you like trading both stocks and options these guys are a great choice. It would be safe to say these guys are here to stay and they’ll be releasing improved services each year.

With Zecco there are no minimum balances to open an account. To get 10 free trades a month a $2,500 minimum is required. They have very little fees with the exception of a 30 annual fee on IRA accounts. When I signed up for Zecco the paperwork was a nightmare but I think they’ve fixed that now. They seem to be adding more and more to their offering and will be a viable broker into the future.

Start an Account with Zecco

Overall Scottrade Rating

Get free trades using code HXOA4390 when you sign up.

Summary

Scottrade strikes a good balance between quality and value. They have the most physical branches than anyone else online. This gives them an edge with customer service and convenience. With their online set of tools Scottrade is one of the best brokers around. Scottrades biggest downside is that they are more expensive than other brokers with comparable service.

Fees & Pricing

Scottrade is slightly more expensive than other discount brokers. Any additional fees are kept to a minimum and many costs found in more expensive brokers don’t exist. Most notably is their no fee IRA, no fee for inactiviy, and no minimum balance. Their no

Stock Trade (limit and market) : $7.00
Broker Assisted Trade: $27
Options $7.00 + $1.25 per contract

Mutual Funds (No Load, No Fee): Free
Mutual Funds (No Load): $17

IRA Fees: None
Inactivity Fee: None
Closing Fee: None

Minimum Initial Deposit: $500

Investment Products

Scottrade offers a full range of investment products including: stocks, options, mutual funds, IRAs, ETF, and ESAs. Their fixed income products include: US Treasuries, bonds, and CDs.

Tools and Resources

Scottrade has led the pack in real-time, up to the minute, reporting tools. They continue to push the envelope with their ScottradeElite trading platform (but you need $25K to access it). All of their tools have ample video tutorials and documentation to help first time users get started. Their web trading platform is also quite nice with fully customizable columns, reports, and charts.

In addition to software they also provide free access to Dow Jones News.

Scottrade Cons

Scottrade’s network of brokers is a good thing and a bad thing. It’s good because you can talk to a real person very quickly. It’s bad because they want you to use that instead of resolving many problems through email. They have also made parts of their online program lazy because of the dependence on these branches. To get your money into and out of Scottrade is a real pain. With no electronic transfer to and from a bank account you need to send your money to a Scottrade office for processing. To get your money out you need to request a check. With electronic transfers it cuts the time to a third of what you’d expect at Scottrade. UPDATE: Scottrade now accepts and supports ACH deposits and withdrawls. There was a time they didn’t have this option.

No automatic dividend reinvestment (DRIP) is kind of a downside too. If you invest heavily in dividend stock and like reinvesting the dividends Scottrade might not be for you.

For more advanced trading Scottrade’s system and customer support can be lacking. If you are an experienced trader executing non-traditional trades Scottrade might not be equip to help you much. If, on the other hand, you are a executing standard trades they will work great for you.

Scottrade Summary

Scottrade offers a competitive investment service and at $7.00 a trade they are hard to beat. The biggest complaint with Scottrade is that they don’t serve the more sophisticated or advanced trader very well. But for 95% of active traders Scottrade is one of the best options around. I still prefer TradeKing or Zecco because they provide the same level of service with less commissions. With that aside they provide a great value and offer a wide range of investment vehicles.

TradeKing offers the most competitive package compared to all the other online discount brokers. TradeKing’s interface is straight forward and easy to use. I’ve been using them for a few years now and their service is amoung the best I’ve tried visa vis Zecco, Scottrade, Sharebuilder. If you are looking to make a lot of trades their $4.95 fee per trade is unbeatable. They are also friendly to the beginner trader with $4.95 broker assisted trades, no inactivity fees, and top notch research tools.

I would recommend TradeKing to anyone getting into the market for the first time, seasoned traders, IRA account holders, option and day trader If you look around I’m sure you’ll agree that TradeKing has earned all five stars.

Stock Trading (Market) $4.95
Stock Trading (Limit) $4.95
Broker Assisted Trade $4.95 (Lowest anywhere)
Option Contract $0.65 (Only Zecco beats them at $0.50)
Margin Rates ($0-$49,999) 6.50% ($50K-$249K) 5.50%

Mutual Funds No Load Purchase/Sale $14.95

Bonds $4.95 per bond
Treasuries $24.95 per transaction

Certificates of Deposit (CDs) $24.95 per transaction

Inactivity fee: None
IRA annual fee: None

No Minimum Balance

Check Writing – Write checks directly from your account. This is a newer feature that most top end brokers offered to their clients.

Education – Tradeking is one of the best online brokers for education. Free seminars, tutorials, and tons of other material make this a broker you can learn a lot from.

Options – In the last few years TradeKing has really made options trading a bigger part of their business. They have the second bet pricing structure online. (OptionsHouse is the low cost leader).

Customer service – Tradeking has some of the best customer service anywhere online.

Great for beginners – Their software and approach is user friendly and new users won’t be overwhelmed by the complexity other companies may reveal. Don’t let this fool you, Tradeking is can still provide advanced trading features.

Graphs – They offer ‘risk’ graphs with each of their option trades so you understand a little better what to expect before you pull the trigger.

If in depth reports and research is your thing TradeKing has you covered. Their tools include: Options Pricing Calculator, Probability Calculator, Profit + Loss Calculator, Options and Strategy Scanners, Stock, ETF + Mutual Fund Screeners, Fixed Income, Maxit Tax Manager, AutoTrade, and Extra Hours Trading.

Education includes: Technical Analysis Education,Educational Videos and Webinars, Intelligence Reports, Live Events, & Webinar Instructions.

Research resources include: Market + Company Overview, Watchlists, Up to the second Quotes, Free MarketGrader research, Interactive Charts, Option Chains, Technical Analysis.

TradeKing also has a robust community of active traders that can help or give you ideas on trading.

TradeKings website is easy enough to use and navigate that finding answers is easy as pie. In case you need help you can access their award winning customer service through phone, chat, and email. When I had a question on my account they answered my email within five minutes. The wait time on the phone is less than a minute on most days.

Best of all you can talk to an actual broker and if you need to execute a trade it’s still only $4.95

If you are an old person that likes names like Vanguard or Charles Schwab then I can understand that. But paying 3 to 4 times more for the exact same service? There is no reason for that. In these troubled times our stock portfolio is already taking a hit. Paying all the fees and extra padding other brokers stack on doesn’t make much sense.

If you are going for the bear bones best price, Zecco is for you. If you want something in the middle between discount and full service broker TradeKing and Scottrade are great. If you are wanting more specialized option trading I would suggest optionsXpress.

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