Cheapest Online Stock Trading... 

Finding The Cheapest Online Stock Trading Broker 

The cheapest online stock trading brokers will probably be a brokerage that gives you free trades if you either only trade x times a month, trade at least x times a month or have an account balance greater than x.

For most traders these are not good options as they do not trade frequently enough nor do they have a large enough balance to qualify for the cheapest online stock trading rates, free.

The best one can do for the lowest stock commissions and to achieve cheap stock trading is to use a deep discount broker. You can find them online that charge anywhere from $4.95 to $14.95 a trade and these can be a great choice if you are trading large lots of stock.

But, active professional traders often use services that are geared towards them and this is where you will find the cheapest online stock trading fees. I use Interactive Brokers and pay less than .01 (I don’t want to reveal the plan I am own for personal reasons) a share per trade with a $1 minimum. They have several plans to choose from but rest assured, you will pay less than .01 a share which is phenomenal and is the very definition of cheap stock trading!

Just as an example of how brokerages like this are the cheapest online stock trading you can get let’s say I buy and sell 200 shares of a stock.  I pay $1 to buy and $1 to sell for a total of $2.

With the flat rate of $4.95 I will be paying $9.90 for the same trade or $7.90 extra. If you multiply that by 100 round trip trades a month (just 5 a day with 20 trading days per month) you will be paying an extra $790 per month in commissions or $9,480 per year!

Based on this example which is the cheapest stock trading option? Obviously it is not the flat rate commissions!

Trading stock must be treated like a business and transaction costs should be looked at no differently than any other business expenses like rent, electricity or supplies and any time you can reduce your expenses by cheap stock trading online versus a traditional full service broker you make that much more in profit which is the only reason to be trading.

One caveat, there are many different deep discount brokerage firms to choose from and the cheapest online stock trading firm may not be the best for your needs. Be sure you do your due diligence and research the different firms to find one that will meet your expectations before opening an account.

You should look for reviews in trading forums as well as trading periodicals to see how others feel about your prospective new online stock broker because being the cheapest online stock trading company might sound good if their trading platform is unstable or goes down frequently and you can’t place a trade you might find that the costs you saved in commissions might be ate up by any losses you incur by not being able to place your trade in a timely manner.

You also want to be aware that while these firms offer phone based trading you will pay a steep commission, maybe $25 a trade or more and you want to take this into consideration as well before making your decision.

Some traders will have multiple trading accounts (I do) with several of the cheapest online stock trading brokerages. That way you can spread your risk around plus you can trade the same stock from the long and the short side at the same time if you wanted to all the while getting truly cheap stock trades.