When starting out in trading online, one of the most important decisions you will make is to find the best broker for your needs.  You will want to compare brokers based on cost per trade, charges for specified stock purchases, account maintenance fees, cancellation fees, and account minimum deposit.

In most cases, beginners will want to find a cheap online trading company that will allow them to make trades for a minimal charge or even for free at times because of their minimal initial investment they have available.  This is by far the most important factor when choosing a broker to go with.  For example, if your charged let’s say $5 per trade, as soon as you make your first trade, your in the hole $5 already, so it is very important to protect your investments with cheaper trading costs.  On top of that, we can assume you will sell that stock one day, so there is an additional $5 to figure in the equation, so that’s a total of $10 to buy and sell on one stock order.

In addition to finding a cheap online trading broker, you will want to factor in if the broker charges any special fees for specified stock purchases.  Many discount brokers will charge what they call an “upcharge” for certain kinds of trades, such as stocks that are bought for under $2, also known as penny stocks.  If you plan on trading stocks that are small in value per share, be sure to look at the fine print when it comes to these types of fees.

Another common fee to compare is account maintenance fees.  Most of the cheaper trading brokers will not assess these, but this is another type of fee you want to read the small print for as some brokers will charge a maintenance fee if you do not make a certain amount of trades per month.  This is again very important for beginner traders as you are most likely starting out with a smaller investment and its very disheartening to see a chunk of change be taken from your account when you are least expecting it.

One more very important factor for choosing a cheap online trading broker is the minimum deposit amount and/or minimum account balance.  These 2 things are actually completely different so you want to ensure what balances you will need in your account.  The minimum deposit is the minimum amount of funds you will need to just to open an account with the broker.  On the other hand, the minimum account balance, which is usually smaller than the minimum deposit amount, is the amount you must have in your account at all times else you are charged a fee for going below your account balance minimum, which is similar to a checking account in some cases.  With traders who are just starting out, you’ll probably want to find a broker that does not have a minimum for either of these 2 balances, which there are plenty of.

Lastly, you will want to see if the broker has a cancellation fee.  Most usually do, but it is nice to know what you will be charged if you ever need to cancel and pull your funds from the account. 

Below is a list of 5 cheap online trading brokers that we have found to have minimal fees and balance requirements, which have built themselves a solid reputation.  Here is a quick review of these online trading brokers:

Zecco – first 10 trades per month with $2500 account equity, otherwise it is $4.50 per trade.  No additional charges, no cash account minimums, and no maintenance fees.

TradeKing - $4.95 per trade, but there are additional charges and requirements for trading stocks under $2 per share.  No cash account minimums and no maintenance fees.

Scottrade - $7.00 per trade and charges/requirements apply to stocks under $1 per share.  There is a $500 cash account minimum but there are no maintenance fees.

TD Ameritrade - $9.99 per trade, with no additional charges.  However there is a $2,000 cash account minimum with no maintenance fees.

E*Trade – their trade prices are tiered from $6.99-$12.99 per trade.  They do have additional charges based on number of trades per quarter and account balances.  Also, they have a $1,000 cash account minimum with a $40 quarterly account maintenance fee, which could be waived based on account size.

To find other cheap online brokers, you can always do some research for yourself.  Go onto online trading forums and see what other traders are using, or check out some stock trading blogs to see who they are using.  Asking questions and finding out who other people are using is one of the best ways to get additional information on a company.

For Your Convenience, we have additionally listed some of the cheapest online stock trading brokers that you may wish to do your own research on below:

 

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