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I already had an IRA account in fidelity. I just checked their online trade fee, which is $7.95. Since I am mostly interested in the stock trading. The stock trade fee on Scottrade is $7.00 and $4.95 on optionshouse. My question is: isn't it true that the lower the trade fee is, the better deal for the long-run stock trading would be? Or should I be careful with other caveat (e.g., extra fees), when I decide which company to go for the online stock trading?

  • If your typical trade is in the vicinity of $100 then a $3 difference in cost might matter. If it's in the vicinity of $5000 it doesn't. – Pete Becker May 22 '16 at 2:12
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Lower fees are always better, everything else equal. A lower fee makes your transaction overall a better deal, all else equal. Other transactions costs (like the SEC fee on sales) are mostly the same across brokers and there is unlikely to be any difference in execution quality either. When comparing brokers be sure to consider the other issues:

  • Account minimums
  • Margin rates, if applicable
  • Any tickers that are free to trade (like, vanguard lets you trade vanguard ETFs for free. This is becoming a more common practice)
  • Ease of moving money in and out--amazingly some brokers still require physical checks
  • Annual account fees (rare, in online brokers)
  • Any asset classes that may not be allowed
  • Ease of unusual transactions, like purchasing a corporate bond

To me, most of these are minor issues. For that reason, I'd say let transaction cost be your guide.

I hear a lot of talk about the quality of the interface. If you just want to buy or sell a stock, they are all pretty easy. Some brokers have better tools for monitoring the market or looking at technical indicators, if you are into that.

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Every brokerage is different, on all of their websites they have an actual list of fees. There are tons of different charges you may encounter.

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That all depends on you. The cheaper places are certainly going to cost less, but when it comes to comparing value that is a subjective decision that only you can make. Maybe the more expensive one has an easier to user website, friendlier customer service, or something else you value enough to pay more for trades.

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This very informative link gives a clear and comprehensive comparison (pros and cons) of various popular brokers:

https://www.nerdwallet.com/blog/investing/best-online-brokers-for-stock-trading/ (Best Online Brokers for Stock Trading 2016)

There are indeed some significant cons for the super-low commission fee. Just for a quick example, the Interactive Broker requires a minimum of 10k account balance, as well as the frequent trading activity even on monthly basis (or the minimum $10 commission would be charged).

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