This section tells you what you should know about the more inexpensive online brokers you are likely to find.
BASIC BROKERS
You should look into the services of the brokers in the box below. They are the most affordable online brokers that that we can find. They generally offer low-cost basic trading services, low minimum balance requirements, and low in-activity fees. For example, Firstrade and Trading Direct charge $6.95 and $9.95 respectively for buying and selling shares and they have no minimum balance require-ments although they charge an inactivity fee if they determine that you are not an active trader.
Affordable Online Brokers
Firstrade www.firstrade.com
Trading Direct www.tradingdirect.com
Scottrade www.scottrade.com
Mydiscountbroker.com www.mydiscountbroker.com
BrokerageAmerica www.brokerageamerica.com
TD Waterhouse www.tdwaterhouse.com
Etrade www.etrade.com
Ameritrade www.ameritrade.com
ShareBuilder www.sharebuilder.com
FolioFn www.foliofn.com
BUYandHold www.buyandhold.com
Please bear in mind that online brokers change their commission, fee, and balance requirement schedules all the time so you have to go to their websites for up-to-date information.
Specialty Online Brokers
Sharebuilder, BUYandHOLD, and Folifn are specialty online brokers that charge as little as $4 per trade. For the low fees, these companies generally purchase shares for you twice a day as opposed to purchasing shares for you as soon as you put in your order. This is just fine for Teenvestors since they should only buy stocks that don’t fluctuate too much. These brokers also allow you to buy fractions of a share.
ORDERS & CHARGES
Market & Limit Orders
Teenvestors should know the difference between a market order and a limit order. If you want the broker to buy a stock for you at whatever price at which that stock is being sold, this is called a market order. On the other hand, if you tell the broker that you don’t want to pay more than a certain amount for a stock, this is called a limit order. Limit orders cost more than market orders. You would request limit orders for stocks that move up and down quickly (that is, stocks with a high Beta). Find out what your broker charges for each type of order. The dif-ference between market and limit orders can be as much as $5 for some online brokers. As a beginning investor, you should buy stocks that are stable – i.e. low Beta stocks – at least for your first few transactions. In this way, you can put in market or-ders without the fear of the stock price increasing on you by the time your online broker processes your transaction
Extra Charges For Services
Online brokers often disclose all their charges on their websites. However, we’ve found that you often have to look hard to find these fees. Some charges you should look for are charges for: inactivity (i.e. for not being an ac-tive trader), falling below a minimum balance, having a statement mailed to you, speaking to a live person, mailing your stock certificates, listing the stock in your name instead of in the “Street Name”, etc.
BASIC BROKERS
You should look into the services of the brokers in the box below. They are the most affordable online brokers that that we can find. They generally offer low-cost basic trading services, low minimum balance requirements, and low in-activity fees. For example, Firstrade and Trading Direct charge $6.95 and $9.95 respectively for buying and selling shares and they have no minimum balance require-ments although they charge an inactivity fee if they determine that you are not an active trader.
Affordable Online Brokers
Firstrade www.firstrade.com
Trading Direct www.tradingdirect.com
Scottrade www.scottrade.com
Mydiscountbroker.com www.mydiscountbroker.com
BrokerageAmerica www.brokerageamerica.com
TD Waterhouse www.tdwaterhouse.com
Etrade www.etrade.com
Ameritrade www.ameritrade.com
ShareBuilder www.sharebuilder.com
FolioFn www.foliofn.com
BUYandHold www.buyandhold.com
Please bear in mind that online brokers change their commission, fee, and balance requirement schedules all the time so you have to go to their websites for up-to-date information.
Specialty Online Brokers
Sharebuilder, BUYandHOLD, and Folifn are specialty online brokers that charge as little as $4 per trade. For the low fees, these companies generally purchase shares for you twice a day as opposed to purchasing shares for you as soon as you put in your order. This is just fine for Teenvestors since they should only buy stocks that don’t fluctuate too much. These brokers also allow you to buy fractions of a share.
ORDERS & CHARGES
Market & Limit Orders
Teenvestors should know the difference between a market order and a limit order. If you want the broker to buy a stock for you at whatever price at which that stock is being sold, this is called a market order. On the other hand, if you tell the broker that you don’t want to pay more than a certain amount for a stock, this is called a limit order. Limit orders cost more than market orders. You would request limit orders for stocks that move up and down quickly (that is, stocks with a high Beta). Find out what your broker charges for each type of order. The dif-ference between market and limit orders can be as much as $5 for some online brokers. As a beginning investor, you should buy stocks that are stable – i.e. low Beta stocks – at least for your first few transactions. In this way, you can put in market or-ders without the fear of the stock price increasing on you by the time your online broker processes your transaction
Extra Charges For Services
Online brokers often disclose all their charges on their websites. However, we’ve found that you often have to look hard to find these fees. Some charges you should look for are charges for: inactivity (i.e. for not being an ac-tive trader), falling below a minimum balance, having a statement mailed to you, speaking to a live person, mailing your stock certificates, listing the stock in your name instead of in the “Street Name”, etc.
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