Online Stock Trading:
Full or Discount
Higher
commission fee actually increases profit for many!
Online stock trading is probably not for you if you are not a frequent
trader. By a frequent trader, we mean if you have more than one
stock transaction per month.
If you trade less than once per month, you will probably be better off
going with a full-service brokerage firm other than the online stock
trading offered by the discount brokerage firms.
If you like the ease of online stock
trading, your full service brokerage firm can still offer you this
service.
The main point is that full service
brokerage firms usually have better execution than the
discount brokerage firms. Since you do not trade often, you
transactions are likely to be larger than that of frequent traders.
A good execution can mean up to 1% lower
cost basis than your cost basis at discount brokerage firms. Even
with the higher commission cost, you will end up with a lower
cost in your stock purchase.
However, if you trade often, then you want your commissions to be as
low as possible. Discount brokerage firms can give you all that: low
commissions and online stock trading.
Here's a
online stock trading comparison table (full,
discount, specialty) that will make sure you pick out the best brokerage
structure for yourself.
