It's starting again. Your dentist is hitting you up for stock tips. Ticker symbols are being scribbled on cocktail napkins. CNBC analysts are becoming household names.
The trade trade is back.
When you're gung-ho about stocks, you don't pay much mind to the tools you use to trade them. But that could be a big mistake. Commission schedules, fees, services, restrictions, and customer service at discount brokerages can change directions as fast as the stock market. If you're an active trader, you don't want to be handicapped by a hike in trading fees. And woe is the investor who trots his IRA contribution check to the local brokerage office the day his taxes are due only to find that the branch has boarded up its doors and is now conducting business solely online.
Don't get blindsided by your broker. Here's a closer look at what's available right now at 10 of the best-known discount brokerages. If you're itching to start investing -- or just wondering how your current broker stacks up against the competition -- this is a great place to start. But remember, the brokerage business like the market can change direction on a dime. The fact that they reserve the right to change their pricing structure is yet another reason to use this as a first step -- but not the ultimate diving board. Let's go shopping.
Ameritrade - site
A speed freak with a five-second trade execution guarantee (albeit only on orders for the stocks that make up the limited S&P 100), Ameritrade(Nasdaq: AMTD) is a true online broker. Despite a 28-year history that predates the Internet's transformation into a trading platform and three million accounts, you won't find a local branch office.
Ameritrade's fee of $10.99 for both market and limit orders that are placed online is one of the lowest around. The company also received the highest marks in Barron's 2003 Online Broker Survey under the "Ease of Use" and "Research Amenities" categories.
Ameritrade is one of the four sponsors in the our Broker Center. It is currently offering Fool readers five weeks of commission-free trades -- up to 25 trades -- on new accounts. More information on this offer.
Charles Schwab - site
Probably the first name that pops in your head when you think about discount brokerage firms, Charles Schwab(NYSE: SCH) is the top dog in the market. It didn't get there on price. You won't find rates much higher than Schwab's $29.95 online order minimum that escalates to $54.95 for a broker-assisted transaction.
However, what you do get with Schwab is the reputation and the network of nearly 400 Investor Centers. Its global high-end marketing, asset management account solutions, and full-service feel have helped it acquire customers who look beyond the commission schedules. Never stodgy, it was actually a dot-com pioneer when it offered online trading through General Electric's(NYSE: GE) GEnie service over a dozen years ago.
E*Trade - site
Memorable Super Bowl ads haven't been the only score for E*Trade(NYSE: ET). While the company was only incorporated in 1996, it was quick to embrace the Web as an enabler of equity trading. It has also moved quickly to acquire other brokers and companies that specialize in online banking.
Its 12b-1 fee rebate program for mutual fund investors is bold. While the firm's $19.99 commission rate isn't exactly noteworthy, really active traders pay just half that sum -- earning the company top marks from Gomez for hyperactive stock traders.
TD Waterhouse - site
The TD in TD Waterhouse stands for Toronto Dominion(NYSE: TD) but that may not be for long. While the company broke off merger talks with E*Trade as quickly as they started this month, there may be other potential suitors waiting. That's fine. Trading is Waterhouse's lifeblood and it has actually traded publicly on its own twice in the past.
The company's equity commission rates of $17.95 for market orders and $20.95 for limit orders isn't rock bottom relative to its deep discounting rivals but the company has other things going for it. Waterhouse adds to its online research and educational efforts by providing free online seminars at the company's local branches.
TD Waterhouse is one of the four sponsors in the our Broker Center. It is currently offering Fool readers 30 days of free stock trades on new accounts. More information on this offer.
Scottrade -
site
The company's low online commission rates ($7 for market orders, $12 for limit orders) and its passive investor friendly policy of not charging account inactivity fees have made Scottrade an endearing alternative. It has rated tops in J.D. Power & Associates' survey of online brokers over the past few years and its discussion board on the Fool.com site is the most active of all broker-specific forums.
While the company offers mutual fund investors fee-free access to more than 9000 funds, it will charge you $17 for most no-load fund orders placed directly with a broker or for any redemptions within the first 90 days of ownership. There are few dents in Scottrade's armor, although it would be nice if it followed the lead of many of its peers and allowed for the reinvestment of stock dividends. With nearly 200 offices nationwide, odds are that you have a Scottrade branch near you.
BrownCo - site
Brown is picky. The account opening minimums are high. While most brokerages will be more than happy to take your investing dollar, Brown requires new accounts to have five years of trading experience along with net worth and net income requirements.
The upside of jumping through all the hoops is that the J.P. Morgan(NYSE: JPM) subsidiary offers bargain basement commissions of just $5 for market orders ($10 for limit orders) to go along with low margin rates and no maintenance or inactive account fees.
HARRISdirect - site
As the self-directed arm of The Harris family of products that includes full-service and private banking, HARRISdirect's rate schedule starts at $19.99 and goes as low as $9.99 for hyperactive traders.
The company's collection of free online resources offers Web-based risk managing and other financial planning tools.
HARRISdirect is one of the four sponsors in our Broker Center. It is currently offering Fool readers $100 credit on new accounts with at least $5,000 deposited. More information on this offer.
ShareBuilder - site
If it's Tuesday, it must be ShareBuilder. Unlike traditional discounters, ShareBuilder is particularly appealing to buy-and-hold investors that are looking to build up their equity positions gradually. Charging no more than $4 on buy orders in its free basic account (and less or nil on monthly subscriber accounts), the company executes orders on Tuesdays that were placed no later than Monday afternoon.
While the company will charge you $15.95 when you want to sell a position or execute a real-time transaction, it's as close as you can get to the Drip experience of buying additional shares beyond dividend reinvestments. Rex Moore took a closer look at ShareBuilder back in June.
ShareBuilder is one of the four sponsors in our Broker Center. It is currently offering Fool readers a free long-term investing online course consisting of six emailed lessons for new accounts. More information on this offer.
Fidelity Investments - site
As the market leader in managed mutual funds, it was only natural for Fidelity to offer brokerage services for those who wanted to roll their own dice. A logical consolidator if you own mutual funds in the Fidelity family, the minimum commission of $29.95 for its basic account may not be too inspiring. However, high rollers with at least $1 million in assets can pay as little as $8 a trade.
Quick & Reilly - site
Taking the discounting world by storm, Quick & Reilly marketed aggressively and opened its 100th branch office 10 years ago. While its standalone growth has slowed considerably, as a subsidiary of FleetBoston(NYSE: FBF) the company also has a presence in 1500 Fleet Bank branches.
With $19.95 minimums that drop down to as low as $12.95 for hyperactive traders, the company's biggest strength may be its convenient bank locations for FleetBoston customers.
More
The discount brokerage universe doesn't end here. You will find many of your Fools discussing even more options in our Discount Broker discussion board. While sector consolidation may shrink the number of players from the 140 firms that existed during the market highs three years ago, the one constant is that you do still have a choice.
Invest your time in finding the right broker the same way you invest your money -- prudently, confidently and with every intention of winning in the end.
Rick Aristotle Munarriz has been trading through discount brokers for just over a dozen years. He does not own shares in any publicly traded broker at this time. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.
