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larrywww

Senior Member
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Posts: 2,305
Reply with quote  #1 
I seem to recall a thread that mentioned Interactive brokers. 
These are their fees compared to their major competitors:

US Commission Rates Comparison 2 - 100 Shares
Interactive Brokers
$1.00
E-Trade
$6.95
Fidelity
$4.95
Scottrade
$6.95
Schwab
$4.95
TD Ameritrade
$6.95
Vanguard
$7.00

According to the survey in Barrons, Interactive Brokers was cheapeast for infrequent traders, whereas Tradier (a relatively new outfit) was best for frequent traders---which seems to have locations in Charlotte, NC and Princeton NJ.  Tradier charges $3.50 for equity trades, 0.35 per contract with a 5$ minimum (7$ for multileg transactions), and 4.50% interest on margin.  Eoption charges for equity trades $3.00 plus 0.15 per contract.  There is a $9 fee for option exercise and assignment.  


Also, there is an outfit called Eoptions (which has no offices, except one near Chicago), which seems to have fairly low fees.

Also, if one is simply going to invest in certain ETFs or mutual funds, alot of websites have promotions making your first so many trades free or trades of certain stocks or trades within certain time frames are free----like the major brokers (mentioned above).

The other odd thing is that some of these online brokers don't have required minimums---which means you can (theoretically) open an account, do your research, and then perform the actual trades on a less expensive trading website.


https://www.barrons.com/articles/barrons-2017-best-online-broker-ranking-1489811850

Here is the Barrons survey (March of 2017)

The other question is how safe is your money?   I haven't researched this in detail, but it's my understanding that you don't have the protection from the FDIC of $250,000 which you have in regular bank accounts---or maybe that depends on the online broker in question.

According to an entry I found online:
"Nearly every brokerage firm advertises that $500,000 of the holdings in clientaccounts, including up to $250,000 in cash, is insured by the Securities Investor Protection Corp. But many investors might be surprised to learn how limited SIPC protection can be when fraud is suspected of having caused a loss."

Barrons has an article on the subject.
https://www.barrons.com/articles/testing-the-limits-of-brokerage-account-insurance-1430529930.  (In this case, a broker out of Redlands, California stole from 2 accounts totalling multiple millions of dollars.  SIPC is probably never going to pay anything significant, even though the investor has serious, clearly unjustified theft losses that can never be recovered.  In short, SIPC will only pay out the most minimal amounts---you can't rely on them the way you can rely on the FDIC.
   

The trend seems to be a consolidation of the online brokers due to cutthroat competition----but the fees ultimately do impact your long term returns, so it's not an idle question.  But the question of fees is not exactly simple since there can be a whole smorgasboard of fees one needs to (potentially) consider.


Has anyone researched this lately?  Thanks.
Paul

Senior Member
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Posts: 2,063
Reply with quote  #2 
Larry, I used IB for about 10 years and then transferred two IRAs to Trust Company of America and JeffNat because I have an adviser do what I was doing...but more efficiently.

I liked IB a lot, and their rates were unbeatable at the time for all asset clauses as a total. You might find a broker with better futures commissions, another with better options, etc, but IB's across-the-board commissions should always be among the best.

They also have very low margin rates. And their execution prices, always an area of contention, are good. I recall when interest rates were decent, their rates on cash holdings were the highest.

https://www.interactivebrokers.com/en/index.php?f=1340

If you're going to trade mostly options, T.D. Ameritrade (Think or Swim) is excellent and probably has the best analysis software.

One caveat on IB is that their customer service department isn't too big on hand holding. I suffered a few frustrations trying to initially learn their trading interface.
larrywww

Senior Member
Registered:
Posts: 2,305
Reply with quote  #3 
Thanks Paul, always great information and it's good to hear, in particular, from a long term customer.  I just hope they don't get acquired by some other online broker (frequently the pattern, lately).

Also, I hear that the Dow just lost 666 points, the worst in 2 years---and the 6th worst drop ever.

I am certainly worried that this superannuated bull market may be testing its limits.

And 1100 more points---2200 points in the last 6 sessions---now we're getting serious---though it frequently bounces back.  Apparently part of a global selloff.
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