How to Find The Cheapest Online Brokerage

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By 02SmithA
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Article Rating: (5 Ratings)

Looking to spend pennies on the dollar?

Looking to find the cheapest online brokers? If you are it is likely that you are looking for the cheapest online trading possible. Cheap online stock trades are becoming more and more the norm, but to find the cheapest discount broker for you some research is needed.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Research time
Internet

Step 1

Sharpen that pencil and get ready to do homework

Finding the cheapest online broker is not quite as easy as it sounds because it is a little more complex than most people believe. In order to really be getting the best bang for your buck you must make sure the brokerage you are looking at has no hidden fees and has very cheap stock trading transaction fees. The transaction fee number is generally the only thing most investors look at, but it shouldn't be.
Step 2

You'll need to decide what kind of online broker you need for your particular investment situation. If you are looking to make small automatic investments over time such as direct stock purchase plans or DRIPS, then sharebuilder is a terrific option, but if you are looking for a full service brokerage that has someone there to answer your financial questions at all times, you will need to move up the ladder.
Step 3

Competition has meant cheaper stock trades

Over the years many of the online brokerages such as TDAmeritrade, ETrade, Schwab, and Fidelity have lowered their transaction fees. The competition in this industry is quite hot, which allows investors to get a good deal on their trading costs. Scottrade is another famously cheap online brokerage that offers $7 market and limit order trades.
Step 4

Where should you look for reviews? A great place to start is consumersearch, which breaks down multiple reviews of each online brokerage and has a breakdown of the fees associated with investing at each site. In addition to consumersearch it would be wise to look at Barron's, Smart Money, and Kiplinger Magazines; which all take a close look at the online brokerages quite often.
Step 5

Before signing up and sending in your funds review the rules and the fine print very closely. Several of the cheapest online brokers have ways that they can hit you with other charges that make them not so cheap anymore. Take a broad look at how much you'll be paying out per year if you make trades or if you don't make a trade at all. Inactivity fees are just as unacceptable if not more than high transaction fees!