How to Find The Cheapest Online Brokerage

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

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.

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.

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.

4. Where should you look for reviews? I highly recommend TradeWiser, which offers an in-depth comparison chart of all the online brokerages on one page. If you want an individual site review from TradeWiser, that isn't a problem either. TradeWiser is full of tools to help an investor determine which online brokerage would fit their needs the best. The trade calculator may be my favorite tool, as it allows you to see how much money you can save from one broker to another.

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!

Tips & Warnings

• Look for as many reviews and personal stories about the brokerages as possible. Knowledge is power.

• Call the company with any questions you may have before investing your money with them.

• Don't make a quick decision and not think this through, because investing your money at a brokerage is a large decision.

Resources

• TradeWiser Cheap Online Brokerage Trades