January 27th, 2008. Posted by AppleOption
There are hundreds of online brokerage firms these days… TD Ameritrade, E-Trade, Scottrade, Fidelity, OptionXpress, OptionHouse, TradeKing, ThinkorSwim, Zecco, etc.
Learn who is stealing your money and who is helping their clients!
Every trade you place has an associated commission and fee that the brokerage firm charges.
So how should one decide which brokerage firm to give their money and perform trading?
Obviously commissions will play a significant factor! If an average order is $1,000 and you are paying $10 in commissions then from the moment the trade is opened/closed, you are down $20 or 2% of your investment. So you must acknowledge that they are going to take your money and realize there more pressure just to break-even. Scanning the chart, you’ll notice several brokers that have stock commission of less than $5.
Option commissions are complex. You have to know your typical trading style! Are you typically ordering 10+ contracts or less than 5 at a time. This analysis will help you decide which commission schedule to select. For example if you are buying 10 contracts, the flat base rate at OptionHouse is appealing, otherwise the next best deal is TradeKing’s $4.95 + $0.65/contract. If you are only buying a few contracts at a time (less than 6), ThinkorSwim offers a $0/trade + $1.50/contract.
Some of you might be drooling over Zecco’s free trading or cheapest commission rate. We placed them on this chart only to prove a point. While they are the cheapest in commissions, how does their user interface work? First, Safari is not supported and Firefox is poorly supported but manageable. The layout of the website makes it extremely difficult to navigate the trade station and to see level II quotes you’ll have to pay a monthly fee. In fact the process of creating an ACH transfer is a little daunting within their framework. So for free or cheap trading, you compromise greatly on the remaining service they provide. Iif you need customer service support, it takes plenty of time for a response if they ever do. We have traded with this company and they have serious issues with their option allocation! Almost every time we wanted to close a trade we ended up on the phone with this company, insisting they fix the option allocation. This issue is VERY concerning in a volatile fast moving market! If you can’t execute your trade timely, you could lose a lot with options! Granted they have only been in business for a little over 1 year, we prefer not to go through the growing pains of this company!
In contrast, ThinkorSwim has been around since 1999 and it’s costumer service is one of the best we have ever seen! During business hours they are available via phone or live chat. Our experience with any costumer service issues have been promptly addressed. By far this is one of the most user friendly online brokers!
ThinkorSwim takes it a step further… they want to keep you happy and will match your previous broker’s commissions. So take a good look at you trading style and find a commission plan that works for you! AppleOption utilizes the TradeKing rates ($4.95/trade + $0.65/contract) for the Index Condor Portfolio and a special rate ($0/trade + $1.50/contract) for both the AppleOption STP & LTP. ThinkorSwim will give you the best rates, while performing the best customer service.
The only remaining factor is the trading interface. TD Ameritrade, E-Trade, Fidelity and Scottrade all tout their “pro” trader interface, usually you have to hold $50,000 account balance or execute 100+ trades per quarter to qualify to utilize this interface. In essence, through higher commissions you are paying to use the platform.
ThinkorSwim has the best trading platform available to everyone!
We encourage you to watch any of the ThinkorSwim Desktop Platform Tutorial Videos.
ThinkorSwim has created a very professional user friendly trading platform which is available to all customers! The platform can be used as a desktop program, as a webbased application, or even on your mobile phone! This company is dedicated to helping you trade.
If you want to test out their trading platform, open up a paperMoney account.
paperMoney is our groundbreaking paper trading application available for thinkDesktop (software), Web-Based Trading (web), or thinkAnywhere (pocket PC.) The trading functionality is exactly the same except that the trades aren’t real and you can start over anytime you like.
With paperMoney every thinkorswim user has access a virtual margin account and a virtual IRA account each funded with $100,000 of “play money”. It doesn’t require a seperate download, special code or even a different username and password. All you need to do is select paperMoney at the thinkDesktop or website login screen (see below.)
In our option, AppleOption believes that ThinkorSwim is the best stock and option online brokerage firm. We have been extremely pleased with their service, appreciate the low commissions, and are impressed with the trading platform. We would encourage anyone looking for a new brokerage to consider if ThinkorSwim is best for you!
AppleOption does not receive financial compensation from ThinkorSwim for this article or customer referrals.