If you’re a very active trader like me, you too probably check your commissions column in your P&L once in a while and open up a bottle of scotch to forget it all. But of course, cost of commissions is only one side of the equation. Any other problem with your broker can cost you much more than commissions. That’s why a good short term trader should make sure he’s working with the best of the best in terms of price and performance.
I always have 3-4 accounts to have a better shot at borrows, and been looking for the best discount broker for a while. As a result I had the pleasure (or pain) of working with a bunch of discount online brokers. Here is a quick summary of my thoughts:
Thinkorswim (thinkorswim.com):
Pros:
- Amazing trading platform
- Amazing and fast customer service
- Decent borrows
- Almost flawless and fast order execution
- Amazing iphone app
Cons:
- None, really.
Verdict:
Hands down, best broker ever. If you’re an active trader you gotta have a TOS account. Commissions are a tad expensive but not too bad, especially considering the service you get.
Zecco (zecco.com):
Pros:
- Flat cheap rate for everything, including the cheapest and crappiest stocks.
Cons:
- Customer service is inconsistent, incompetent and slow.
- Awful trading interface, no realtime buying power update.
- No extended hours trading.
Verdict:
There is only one type of trader that should be using zecco: Traders that trade a lot of OTC and PK stocks. Otherwise, stay away.
Tradeking (tradeking.com):
Pros:
- Cheap flat rate (4.95) for stocks above $1.00. Cheap options trades.
- Cheap broker-assisted trades, if anyone cares (I don’t)
- Responsive customer service (not always helpful)
Cons:
- A lot of speculative stocks are in their “can’t trade” list, which is retarded. And I’m not talking about obvious pump&dumps. You may buy a stock, want to sell it and realize you can’t sell it online and need to talk to customer service first. Pure crap if you ask me.
- Only one hour of after-hours trading and you can only enter orders for after hours during this period.
- Execution of short orders takes about a minute. Unacceptable for me. Buy orders are fine.
- Obnoxious security. Every time you need to input your password on a virtual keyboard. They’ll return your check if it’s missing your middle name on it. And a lot more things like that.
- Very slow initial account setup
Verdict: They are so overprotective of themselves and you that it’s definitely a terrible fit for a speculative short term trader. For a long term investor they may be fine.
Track Data (mytrack.com):
Pros:
- Insanely fast account setup. I was able to start trading the next day even though I sent a regular personal check.
- Great customer support, they know what they’re doing
- Their trading platform is very professional, a little hard to get used to but capable of most things you need.
- Full extended hours trading til 8PM (for example with thinkorswim it stops at 6:30)
- Cheap fixed commissions ($5)
- One week of commission free trades on signup
Cons:
- Borrows are not great
Verdict: I’m absolutely blown away by this little known brokerage. Definitely recommend it if you’re looking for maximum quality at a low price.
Sogo Elite (elite.sogoinvest.com):
Pros:
- Great borrows
Cons:
- Terrible and slow customer service
- Terrible and slow account initiation
- Sometimes slow execution
Verdict: Even though I hate Sogo mostly, I can’t live without it since they have a pretty good inventory of shortable stocks. And that’s the only thing they’re good for. If you short a lot, definitely have an account here, albeit a small one.
Etrade (etrade.com):
Pros:
- Good iphone app
Cons:
- Expensive
- Terrible borrows
Verdict: I haven’t used ETrade much, so I might be missing something here. But I happen to have an account because of my job and I wasn’t really happy with anything on it.
That’s pretty much it, hope it helps you find a broker that fits your needs. Meanwhile I’m working on transferring one of my accounts to Interactive Brokers as I’ve heard really good things about them.
