Eventually, I’m going to do a review of the online broker sites as I’ve opened up accounts with TD Ameritrade, E-Trade, Think or Swim (TOS), Scottrade, and Zecco. They all have pros and cons, but several of the sites offer free trades during your first month (not counting Zecco – which gives you 10 free trades a month but has many known customer service and technical problems). Commission free trades provide the new trader an opportunity to experiment on the market with small positions, without the average $20 cost of buying and selling a stock.
TIP: I saved $400 by using TD Ameritrade when I first started out. They give you 500 free trades during your initial month. E-Trade has a similar offer (with a 100 trade limit), but I didn’t click on a web banner advertising the promotion and signed up just by going to their website so I didn’t get the special. So REMEMBER to either sign-up via one of these advertisements, or through the special sections on their websites to get the free trades (TD Ameritrade click here and E-Trade click here). I am not a referral affiliate of any broker, and I’m not saying either of these sites are the best long-term. I do suggest taking advantage of their free trading specials during your first months of trading. You still will be limited to 3 round trip trades every 5 business days as regulated by the SEC. However, you could practice overnight trades using very small positions at no cost. (I wished I had used smaller positions during my first month because there was so much I didn’t know about trading – but I wanted to make money right away, which means also I was at risk of losing money too!) One downfall with switching between brokers is that your capital will be tied up in the electronic transfer process. TD Ameritrade typically only takes 1 day, and E-Trade takes about 2 days to complete the transaction. Theoretically, you could have two months of free trades at reputable, established online-brokers. FYI, E-Trade has account maintenance fees after your first year if you don’t keep the account active, so remember to close the account if you sign-up only for the month of free trades.