tradeMONSTER's Commission Structure

tradeMONSTER provides a very straight forward pricing structure, which entails a cost of $7.50 per trade and $12.50 for the first 20 options contracts, $25.00 for 50 contracts and $0.50 per additional contract thereafter. If mutual funds are your thing, tradeMONSTER charges $15.00 per purchase, but allows the sale of mutual funds free of charge.  Should you need telephone assistance when making your trades, there is no additional cost.

tradeMONSTER's Customer Service and Fees

According to their website, the average experience of tradeMONSTER customer service reps is 10 years, making them an excellent resource.  Agents are available from 8am ET to 6pm ET and if you ever have trouble getting a hold of someone by phone, tradeMONSTER has a live chat function online that's never busy.

Like most brokers, discount and full service alike, tradeMONSTER does charge certain fees for extra services. Some notable fees are $2.00 for paper statements and $25.00 for closing out an IRA.

tradeMONSTER's Trading Platform

The main feature that sets tradeMONSTER apart from other online discount brokers is its trading platform.  Whether you're a beginner or a seasoned pro, tradeMONSTER has unique features that can help in executing the trade that you want.  Some of the unique features it offers are:

• paperTRADE: For those not ready to trade real securities, tradeMONSTER offers a virtual trading platform that has most of the amenities that real money accounts have.
• Trade Simulation: This feature allows you to see how a trade would effect your current portfolio by executing a "fake" trade.
• Real Time Streaming Quotes & Charts: No need to constantly refresh your computer screen, as real time quotes are always streaming.
• tradeLAB - Spectral Analysis: More for the options trader, this patent pending technology can show an experienced trader how current gains and losses could shape future contracts and outcomes.
• spreadMAKER: Again for the options trader, spreadMAKER allows you to build options spreads where a risk graph will update, showing you expected profit and loss, depending on future prices.

tradeMONSTER falls right in line with other brokers when comparing pricing, customer service and fees. From a technological perspective, however, tradeMONSTER continues to excel at creating a more user friendly platform.  With an ample amount of educational videos, tradeMONSTER caters to both the experienced investor and the newbie, making them a must-try for every trader.

tradeMonster Videos

Investing has become a social experience. We like to share with others our successes and maybe even our investing failures. tradeMONSTER facilitates the social aspect of investing by integrating Twitter right into its investing platform. Now you can easily tweet information about your portfolio or public companies. Here's a video explaining how tradeMONSTER uses Twitter:

For more information or to open account, visit the tradeMonster website.

The money manager charges 2% of invested assets and regularly takes short positions (bets against the market). He is also partial to ProShares, a mutual fund that uses leverage to boost returns (and losses!), as if investing weren’t risky enough.

Anyway, the wife’s basic beef with long-term investing strategies was that the market over the past ten years had failed to produce positive returns. In her view, the market goes up and down, but in the end, finishes right where it started. One might say the market is ‘full of sound and fury, signifying nothing.’

While I can certainly relate to her frustration, I’m still a big believer in the ‘buy and hold’ strategy. So I thought it would be a good time to discuss what 'buy and hold' investing is, and why it's the approach I follow.

What is ‘Buy and Hold’ Investing

Buy and hold investing is a long-term investment strategy that largely ignores market volatility. One way to understand buy-and-hold is to imagine you’re trying to hit a golf ball over a pond and onto a green. The pond is the market volatility. It may look scary, but if you hit the ball far enough (or invest long enough), you’ll clear the pond with no worries.

Now let’s apply buy and hold to the market freefall we felt last year. For buy and holders, a 40% decline in market value one year is at worst a distraction. It’s certainly no fun to watch your investment portfolio tank, but if you are investing for the long term, the market value of your investments in any given year is unimportant. Last year my investments were down 35%. This year they are up 24% so far. Who knows what next year will bring, but since I’ve got 20+ years to retirement, the current value of my portfolio is nothing but a number on a computer screen.

Asset Allocation is Critical

For buy and hold investors, asset allocation is critical. Asset allocation is the investing equivalent of ensuring that all your eggs aren’t in one basket. By investing in a mix of stocks, bonds, and cash, you can lower the overall volatility of your portfolio while at the same time maximizing your returns. Remember that returns are a function of risk, and with asset allocation, you can control the risk of your portfolio.

In my twenties, my portfolio was invested 100% in stock mutual funds. Today I’m in my mid-forties and have lowered my investing risk by gradually moving 30% of my investments into bond funds. As I get older, God willing, I’ll continue to move a greater percentage of my invested assets into bonds.

So why is asset allocation critical? It’s critical because it will help you weather the financial storms that are sure to develop. Put all your money in one stock or one fund or one asset class, and you’ll be far more inclined to sell in a down market. Think of asset allocation as insurance against you doing something stupid with your investments.

Take Advantage of Down Markets

I hope you see 2008 as an important learning opportunity. Carefully evaluate how you reacted to the falling market. Did you sell all of your stocks? Did you keep your stocks, but stop investing? Or did you stick to your investment plan, ignore the market, and go play catch with you son or daughter?

How you handled 2008 is really important in figuring out how you should invest going forward. In fact, if you sold your stocks out of fear of the falling market, consider the following:

• Asset Allocation: As noted above, the proper asset allocation is critical to buy and hold investing. It may be that you were taking too much risk or just not paying enough attention to your investments. While asset allocation by no means guarantees gains each year, it does allow you to control potential downside given your risk tolerance.
• Money Managers: As you probably guessed from my reaction to my friends hiring a money manager, I'm not in favor of the idea for the vast majority of us. I manage all of our retirement investments and taxable accounts we have with an online brokers. Still, sometimes we are our own worst enemies when it comes to investing. If you find yourself doing stupid things with your portfolio, a money manager that charges 1% to 2% to manager your money may be a good investment.
• Learn from 2009: I know several people that pulled out of the market at the end of 2008 and early 2009, and now they deeply regret that decision. They've missed out on the returns of 2009, and now wonder when they should get back into the market. The take away here is to realize that the market goes up and down. It always will. Don't let short term volatility, no matter how dramatic, dictate your investment decisions. As Warren Buffet puts it, in the short term the market is a voting machine; in the long term it's a weighing machine.

When (if ever) Do You Sell?

Buy and hold does not mean that you never sell an investment. In fact, there are many good reasons to sell:

• Rebalancing: There are times when you need to adjust investments to maintain your desired asset allocation. If there is a run-up in stocks, for example, you may end up owning more stocks than you intended. I generally rebalance my investments about once a year.
• Changing Asset Allocation: As we get closer to our investing goals (typically retirement), we need to change the allocation of our investments. In most cases, this means reducing our exposure to equities and increasing our exposure to bonds and other forms of debt. The rule of thumb is that your stock allocation should equal 120 minus your age (others use 100 minus your age). Whatever approach you take, it will require adjustments to your portfolio from time to time.
• Taxes: For retirement accounts, taxes are not typically an issue until you start using your money in retirement. But for investments in taxable accounts, taxes are extremely important. Last year, I sold my interest in Vanguard International Explorer (VINEX) because it was generating a lot of taxable gains each year. One might ask why I invested in the fund in a taxable account in the first place, and the answer is simply--it was a mistake. It was many years ago, and I've learned a lot about investing since then. But the point is that tax considerations can and should influence your investing decisions in taxable accounts.
• Retirement: For many, it will be necessary to use retirement investments to pay for expenses during retirement. This will require selling investments of course. By this time, however, your asset allocation will be very conservative, and most if not all of your yearly expenses will be coming from conservative bond funds and cash accounts.
• Macro Economic Considerations: I do think it's important to consider the big picture. Fifty years ago, international investing was unnecessary. For a host of reasons, including technological, investing in foreign issues was not as easy as it is today. And U.S. investments, given the growth of the U.S. economy, made for great long-term investments. Today, exposure to foreign investments is critical. And as the U.S. government proves unwilling to control spending, the falling dollar may make foreign investments all the more important.

So what's your take? Is buy and hold the best approach for most of us, or do you think market timing is the answer.

Scottrade's Commission Structure

Pricing is always an important factor when choosing and online broker and Scottrade currently offers a flat fee of $7 per online trade.  Regardless of the volume of trades you make with Scottrade, the $7 cost always remains the same.  However, if you need help in placing your trade, the cost can rise.  Telephone trades can run you $17 and broker assisted trades cost $27, making Scottrade a somewhat pricey option if you need expert assistance.  For options commissions, Scottrade charges $1.25 per contract, and if you are looking for options exercises and assignments, expect to pay $17.

Scottrade's Trade Execution

The price of trades seems to get a lot of attention when it comes to discount stock brokers. While this makes some sense on the surface, one needs to avoid being penny wise and pound foolish. While the cost of stock, option and other trades is certainly important, poor trade execution can easily wipe out any cost savings from using some low cost brokers. So what's trade execution?

Scottrade Trade Execution Process

Trade execution is the process of bringing together a buyer who wants to buy a stock with a seller who wants to sell the stock. Remember that while the market is open, actively traded securities are continuously changing in price as buy and sell orders are executed. Because of this, the speed and price of trade execution can have a major influence on the price you pay when you buy a stock or receive when you sell. And Scottrade excels at both.

Scottrade's execution price beats industry averages when it comes to the percentage of orders that are executed at or within the National Best Bid and Offer (NBBO). The NBBO is an SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities. Scottrade consistently beats the industry average for trades that meet or exceed the NBBO. And Scottrade goes one step further, and seeks to even do better than the price you are expecting, and succeeds more than half the time.

Scottrade's Customer Service

Customer service is another important consideration when choosing an online discount broker, particularly if you are new to investing or online trading. In speaking with family and friends that use Scottrade, they all agree that it's the best of the best. Rarely do you have to wait longer than 30 seconds on hold to speak with a representative. And if you're experience is anything less than perfect, expect to receive a follow-up call or email from Scottrade the next day looking to make things right.

Probably the best thing Scottrade has going for itself is that it's a no fee broker.  A lot of the online discount brokers out there like to charge you for simply maintaining your brokerage account. Scottrade, on the other hand, does not charge a fee for the following notable services:

• Having an inactive account
• Monthly or annual account maintenance
• Real-Time streaming quotes
• Transferring money out or closing your account
• Terminating your IRA

Another real positive that Scottrade has going for itself is the ability to visit a brick and mortar location.  For those not as comfortable with trading stocks online, Scottrade currently has 436 branches nationwide that can conduct all of the services they have available online.

Scottrade's No-Fee IRA Accounts

For me, this is one of the big reasons I'll be opening a Scottrade account later this year. Scottrade offers no-fee IRA accounts, including a traditional IRA, Roth IRA, Rollover IRA, and SEP IRA. Scottrade's retirement accounts have no opening, closing, annual or custodian fees, and there is no minimum annual contribution requirement.

Scottrade Videos

This first video shows how to place a stock trade through Scottrade's online platform:

This recent video introduces the Scottrade community that all account holders have access to. It's a great way to interact with and learn from other Scottrade investors:

Finally, this video provides some insight into the current stock market and what we might expect going forware:

Overall, Scottrade grades pretty well when taking everything into consideration. With their main downfall to be pricing, they certainly make up for it with other amenities.

Scottrade.com -- Official Site

Hedge Against Inflation. Gold does not provide investors the return on investment its proponents, the gold bugs who have been bitten by the gold craze, would like you to believe.  According to the Motley Fool, “Across ten asset classes, over a near-40-year time horizon, and in increments of three, five, and 10 years, there is one investment vehicle that's been a total loser…gold!”  What is the most horrible inflation that we have seen in America?  It was the gas crisis of the 1970's.  How many gas stations do you remember taking gold coins or bullion as a form of payment back then?  That's right…none, zero, zip!  I even asked my mother to make sure. If gold is such a great investment to ward off inflation, a $1,000 price of gold in 1980 should have appreciated to $2,350 per ounce in 2009 just to have kept up with inflation. But, it hasn't done that, and that is why gold is a bad investment and hedge against inflation.

Gold is not the fall back medium of payment in the times of crisis that those guys that sell it on late night TV want you to believe.  What about emerging market countries such as Argentina and Mexico that had extremely high inflation in the past?  Do they abandon their pesos for gold when catastrophe strikes?  No.  What would we do if there was an Armageddon?  We would barter, maybe with gold, probably not though.  We would most likely barter with our labor like the father of economics Adam Smith suggested.

52-Week High: I hate buying stocks and other investments at their 52-week high values.  It goes against our fundamental rule as investors of buying low and selling high.  One recent report said, “Gold bugs have been dreaming of global financial disaster driving the gold price to $3,000 [per ounce]. But they have just had ‘their perfect storm’[in our recent recession], and it didn't happen.”

A return-chasing type of investment is what is driving this modern-day gold rush, and that chasing is exactly why you should be looking elsewhere for your investment returns.  Anyone who is chasing returns will most likely come late to the party.  Gold has already been above the $1,000 per ounce level twice before, only to fall back to lower levels each time.  In the late 1970's, the price of gold was much higher than its $1,000 price tag in real terms (today's dollars).  In 1980, the price of gold rose to $850 per ounce.  After that peak it fell very far below that level and stayed well below that for decades, bottoming at a low of about $250.

Hard To Liquidate: In times of uncertainty, people want to buy physical gold, bars and coins, and then keep them either at home or in a safety deposit box.  Buying gold coins on TV is just like buying the Magic Bullet or some other late night fare.  It is just a waste of your money.

Despite the recent run up in the stock market, the American economy is still in the doldrums.  We are still losing jobs by the hundreds of thousands every month, and our homes are still slowly sinking in value with no new significant levels of home buyers on the horizon.  People are scared and want to latch onto anything that has a feel of safety and security, and that is the main reasoning behind the overwhelming favoritism for gold right now.  But, over-weighting your investment portfolio in gold or any other precious metal for that matter is not the answer.

If you want to invest about 10% of your nest egg in commodities and precious metals such as gold, there are better alternatives out there than just buying gold off of late night television.  Buying shares in a gold mutual fund such as an exchange traded fund (ETF) which tracks the price of gold, gold processors, and miners and can be bought and sold relatively easily in the open market. And even buying gold in conjunction with a self-directed IRA is a much better option than buying physical gold.  Or, you can invest in gold stocks directly in firms such as gold miners and processors.

Bottom line: investing in gold because it is popular right now is the wrong thing to do for your financial future.  Investors often lose sight of gold’s poor longer-term historical results, especially during short time horizons with extreme volatility and market uncertainty.  Gold and precious metals should only be used for a small portion of your overall retirement and investment portfolio instead of the main component.  And, it should never be bought off of late night television.

This is a guest post from Hank who writes about personal finance and investing on his blog, Own The Dollar. You can also check out his RSS feed to see his latest posts or follow him on Twitter

Zecco: With Zecco, you get two options to earn a return on your uninvested cash. First, Zecco will credit your account with an interest rate currently set at 0.025% per year for balances over $500. This interest is paid monthly. If you'll have cash in your investment account for just a few days, this is probably fine. If you plan to hold some cash for a longer period of time, Zecco offers another option.

Zecco offers one of three money market funds where you can stash your case. In what are called sweep accounts, you can move your money into one of these funds when it's not being invested. When you're ready to move the money into the market, you can transfer it back to your brokerage account for trading. The three funds are the CAT Tax Exempt Portfolio, the CAT MM Portfolio, and the ICT Treasury Portfolio. The interest rate on the CAT Tax Exempt Portfolio is currently 0.87%, but check with Zecco as rates do change.

Scottrade: For arguably the most full featured of all the online discount brokers, Scottrade offers a rising rate based on the amount of cash you have in your account. At the low end, Scottrade pays just 0.05% for balances under $5,000. The rate increases to a high of 1.00% for balances of $1 million or greater. Perhaps not the best rates unless you have a lot of cash in your brokerage account, but at least it pays some interest. You can get more details and check the current rates on the Scottrade website.

E*Trade: Of all the online brokers, E*Trade is perhaps best known for its cash management features. In addition to stock brokerage services, E*Trade also offers banking services as E*Trade bank. With an E*Trade brokerage account, you get access to an online savings account. Funds can be easily and quickly transferred between accounts. E*Trade also allows you to set up an automatic savings plan. Currently, E*Trade's online savings accounts pays 0.50% interest. The E*Trade bank also offers online checking and CDs. Because these rates change frequently, you can get current rates and details about E*Trade's brokerage services on the E*Trade website.

TradeKing: For cash held in your brokerage account, TradeKing does not currently pay any interest. However, they do offer a sweep account that is FDIC insured and pays interest. There are several options for a sweep account, including money market funds. Presently, the highest paying option is just 0.05%. For more details, check out the TradeKing website.

100 Free Trades from OptionsHouse: Follow this link to OptionsHouse and use the promo code FREE100 when you open a new account. With this promotion code, you'll get 100 commission-free trades.

$100 ACAT Transfer Rebate: If you are transferring brokerage accounts to OptionsHouse, you can get up to $100 rebated by OptionsHouse for ACAT transfer fees. When you sign up for OptionsHouse, use the promotion code ACAT100REFUND.

$25 Wire Transfer Rebate: The fastest way to fund a new account is with a wire transfer. If that's how you intend to fund a new account, OptionsHouse will credit your account with $25. Here are the details:

For initial funding only - minimum of $1,000 for a cash account, $2,000 for a margin account. You must apply for the fee reimbursement offer by inputting promotion code WIRE25REFUND when opening the account or by using this code when speaking with an OptionsHouse customer service representative. Reimbursement will be made to your account via a credit within 60 days.

Refer-a-Friend for $50 or 10 Free Trades: Once you become an OptionsHouse account holder, you can refer friends to OptionsHouse and get either $50 or 10 free trades. There's some fine print on this one:

All OptionsHouse customers with a valid funded account are eligible. Each "friend" can be referred only once. New accounts must be opened within three months of referral and funded with at least $1,000 for a cash account and $2,000 for a margin account (according to OptionsHouse policy). You will be eligible for a credit of $50 (or 10 free trades) after your friend has opened and funded his or her account. If you choose the 10 free trades option, you will have up to six months to earn these free trade commissions. Bonus only valid if referred friend is not already an OptionsHouse account holder. Account holders receive a free trade commission, up to a maximum of 10 free trades, for each stock or option trade executed within six months of the referred friend funding his or her account. Account holders pay the applicable commission rate (and any related regulatory fees and transaction charges) on all trades at the time of the trade, and accounts will be credited with the commission within 60 days of the expiration of the six-month period or completion of 10 trades. Account holders will not receive cash compensation for any unused free trade commissions. Offer excludes employees of OptionsHouse, LLC or its affiliates. OptionsHouse, LLC customers may trade up to 50,000 shares or 4,000 options contracts per order; trades in excess of these parameters require multiple order tickets and will be billed as separate orders. Flat commissions may not apply outside certain risk parameters. OptionsHouse reserves the right to restrict or revoke this offer at any time. Additional restrictions may apply.

There's no limit on the amount of money you can earn by referring friends to OptionsHouse.

Please keep in mind that promotion codes can and do change without notice, so make sure to verify these offers on the OptionsHouse website. Also, if you know of another OptionsHouse promotion code, please let us know in the comments below.

If you are still undecided, read our review of OptionsHouse or our comparison of the top online brokers.

Insider trading by definition is not illegal.  The term was derived for employees of companies that traded shares from within. Insider trading is only illegal if two principals are met.

• First, the information used when making trades must be material and non-public.
• Second, revealing or trading upon this information must knowingly breach a duty of “trust or confidence”

Whether a specific set of circumstances constitutes illegal insider trading can be extremely difficult to assess. Ultimately, one should consult an attorney to understand whether any given trade or communication of information will run afoul of applicable laws. But to better understand the fine line between legal and illegal, here are four hypothetical situations:

Example #1 – John Johnson, the CEO of Company 1, just came out of a meeting with his financial team in which the company profits are $0.50 higher than expected.  Quarter earnings reports are due to the public in three days and John decides to buy 5,000 shares just days before the reports are released.  By having material, non-public information that the company is performing better than expected and using it to make a trade, Mr. Johnson has conducted an illegal trade.

Example #2 – Bobby Roberts, the CFO of Company 2, learns that his company is tanking.  The patent they needed to release their new toothbrush technology did not come through and his 10,000 shares are sure to tumble.  Knowing that if he sells these shares before the public is alerted about the patent problems he will be breaking the law, Bobby decides to sell his shares a day after the information is made public, minimizing his imminent losses.  Because Bobby is a high-ranking employee, selling a large number of shares, he will probably have to report this trade to the regulatory committee making this a legal trade.

Example #3 – Thomas Street is celebrating his 25^th wedding anniversary with his wife at a fance restaurant.  They are seated next to the CEO of Company C who has nothing but a smile on his face.  While eating Thomas overhears the CEO telling his fellow employees that they can expect good raises in a couple of weeks because they profits are through the roof and there’s no stopping them.  Thomas rushes home and buys 1,000 shares of Company C making a ton of money.  Even though he had information that was not public, it was through no fault of his own and the meeting that the CEO and fellow employees had was not designed to leak information.  The outcome is very legal and very profitable.

Example #4 – Marcos Padilla goes to a bar Friday night after work where a random fellow asks him if he wants to make a lot of money.  Naturally, Marcos is interested and listens to the gentleman tell him that he has a tip on a cold stock.  Company D is about to be prosecuted for fraud and their shares are likely to plummet.  Marcos also learns that this tip comes from a financial analyst with company D so it’s legit.  If Marcos decides to sell this stock short, he is breaking the law as this is defined an illegal insider trade.  Should Marcos not have been informed where the tip comes from, there’s a good chance he wouldn’t be prosecuted however knowing the information came from a member inside the company is a big no-no.

You can see from the examples above that prosecuting individuals that commit illegal insider trades is extremely difficult.  The best deterrent remains the stiff penalties given in these high profile cases.  Several times a year, every public company has the potential to give away insider information making the policing of it nearly impossible.  Bottom line is that if you are lucky enough to come across information in good faith, just make sure to keep it to yourself. And if you question whether trading on certain information is proper or not, consult an attorney experienced with insider trading laws.

Let's take a look at some of the best money articles from this past week.

• Your Take: Married Women Out Earning Their Husbands @ Bargaineering: It seems that with each passing year, more married women are bringing home the majority of the bacon.  Goodbye Sugar Daddy, hello Sugar Mamma.

• Refinance Now? @ Credit Karma: Maintaining a mortgage is a crucial responsibility.  Refinancing now could save thousands but take a look a few pointers before rushing in.

• Should Parents Have a Financial Double Standard for Sons and Daughters? @ Moolanomy:  On the surface this would seem ridiculous simply based on gender but there's a couple of excellent examples where it probably should be applied.

• 5 Steps to Follow to Make Sure You Do Not Lose Everything To the Next Bernie Madoff @ Gather Little By Little:  Apparently, the New York Mets actually profited $48M from investing with Bernie Madoff.  Sickening to think how many people that money belongs too.  Protect yourself from future Ponzi schemers.

• How To Do Halloween Cheaply @ The Bargainist: It's nearly impossible to celebrate all Holidays with glitz and glamor.  Maybe you should take a break this Halloween and same some green?

• Coupons, Discounts and Sales Do Not Mean You Are Saving @ Realm of Prosperity: Just because it's on sale doesn't mean you need it.

• Save Money by Practicing Moderation in Your Life @ Think Your Way to Wealth: If you find yourself struggling with the self discipline to manage your finances, take a look.

• 10 Free Online Budgeting Applications @ Lazy Man and Money: You don't have to use all 10 for them to be free but it doesn't hurt to give them all a shot!

As I mentioned in my review of Sogotrade.com, I'm looking at online discount brokers to determine where to open an IRA account later this year. And in the process I've learned three important things about online brokerage firms. First, there are a lot of them. You've probably heard of many discount sites that allow you to trade stocks online (e.g., Zecco, Scottrade), but I'm guessing there are a lot of online brokers you've never heard of (Sogotrade may be one example). Second, while on the surface they can all seem similar, when you dig deep into what these brokers offer, you'll find big differences. For example, not all of them offer the same account types. With some you can't buy mutual funds, while others offer more mutual funds than most. And the stock trading tools available to you vary from one discount broker to the next.

And the third thing I've learned is that the cost of these discount firms can be tricky to understand, and in the end, maybe not the most important factor. Because I watch every dime we spend, it may seem odd that cost isn't the most important factor to me (after all, we are talking about "discount" sites, not full service brokerage firms). I'll come back to that in a moment, but first, it's important to understand a few things about the fees discount online brokers charge.

How Much Will You Pay To Buy And Sell Equities Online

All of the firms make a point to advertise how much you pay to buy or sell stocks, mutual funds, options, or other equities. Zecco made a big splash several years ago advertising free trades (Zecco's commission structure has changed since then). Today most trades at discount sites run from about $2.50 to $12 per trade. The key to remember, however, is that many of these firms charge additional fees, depending on how you use your account. These additional fees may include fees for large buy or sell orders, fees to buy or sell stocks trading at less than $1, account maintenance fees, account inactivity fees, and of course interest if you buy on margin.

Because these fees vary among discount brokers, the starting point is to understand how you will use your stock trading account. Will you trade frequently or just once or twice a month (or quarter)? Do you want to set up an automatic investment plan? Will you be buying stocks and mutual funds, or do you also plan to trade options? The answers to these questions will help you narrow the selection and ultimately pick the best broker for you investing needs.

As I mentioned above, cost is not a critical factor for me. Why? For starters, I'll only be buying individual stocks, not options or other more expensive equities. Second, I won't be trading a lot--once or twice a month at the most. So the difference between a $3 trade and a $7 trade is just not that significant for me.

Factors To Consider Other Than Cost

But just like most anything we buy, the cost is just one of many factors to consider. And the same is true when selecting a discount broker. So what are the factors besides cost that we should consider when selecting a discount stock broker? There are several, and they include ease of use, customer service, types of accounts offered, investing tools, type of investments you intend to buy, and account minimums. I've highlighted these and other factors below in the summary of the best online discount brokers. But just like cost, it's important to know your investing goals when you evaluate your options. For example, account minimums may be a non-issue for you if you plan to invest a significant amount of money. Likewise, if you are looking for a specific account time (like an IRA), you can quickly eliminate those discount stock brokers that do not offer that account type.

Summary Of The Best Online Discount Brokers

1) Scottrade: Scottrade is high on my list of potential discount brokers for my IRA account. There are several reasons why I'm leaning toward Scottrade. First, the cost is reasonable, with stock trades costing $7. Broker-assisted trades are $27, but I'll rarely if ever use a broker. Scottrade ranks well in broker surveys, including Smart Money's 2009 survey. Its one downside according to Smart Money is its banking services, but I'm not going to be using its banking services. It offers a number of account types, including IRAs and other retirement accounts. And with a Scottrade IRA account, there are no opening, closing, annual or custodian fees. I also like the look-and-feel of the site. It's well organized and easy to navigate. The account minimum is just $500, and there are no inactivity or maintenance fees.

Scottrade has one other feature that I like--physical locations. Among discount online brokers, Scottrade has the largest network of branch offices. While I expect the vast majority of my transactions will be online, it's good to know that I can talk to a person face to face if I need to.

You can get more information about Scottrade or open an account by visiting www.scottrade.com.

2) Zecco: Zecco was one of the pioneers of online discount stock brokers. Today, Zecco offers 10 free trades per month if you either (1) have $25,000 in your account, or (2) trade at least 25 times per month. Beyond that, stock trades are just $4.95. Zecco offers Forex trading, including a $50,000 practice account if you are new to buying and selling foreign currencies. Zecco also has video tutorials on how to use its tools and resources. Here's one of Zecco's video tutorials on basic stock investing:

You can read my more detailed review of Zecco, or to get more information and open account, visit www.zecco.com.

3) OptionsHouse: At first the word "options" in the name led me to believe that OptionsHouse only allowed you to trade options. Not true. With OptionsHouse, you can trade stocks, options or spreads. The cost to trade stocks is a flat $2.95, making it one of the lowest cost stock trading alternatives. There are no maintenance fees or monthly minimums, either. According to OptionsHouse, it offers a professional-grade trading platform backed by PEAK6 Investments, one of the largest options trading firms in the world. It is from this platform that OptionsHouse offers an array of professional trading tools:

To give you an idea of the look-and-feel of the OptionsHouse trading platform, here is a screen shot of its online design:

For more information or to open an account online, visit www.optionshouse.com.

4) OptionsXpress: OptionsXpress is another broker with a name suggesting it only handles options. But with OptionsXpress, you can trade just about anything including stocks and futures contracts. Stock trades cost $9.95, which is a bit more than some other discount online brokers. With OptionsXpress, however, there is no additional cost for broker-assisted transactions, which makes it a good option for those that want some help with their trades. Perhaps the one thing that OptionsXpress is best recognized for is its trading tools. Smart Money's 2009 Broker Survey awarded 5 stars to OptionsXpress for its tools. The tools fall into three categories, designed to help traders find investing opportunities, analyze those opportunities, and finally to execute trades. And these tools include an extensive collection of videos. Here is a short video describing the trading tools offered at OptionsXpress:

To get more information or to open an account online, visit www.optionsxpress.com.

5) E*Trade: E*Trade was ranked first among discount stock brokers by Smart Money's 2009 Broker Survey. E*TRade scored high marks across the board in categories ranging from customer service to research to banking services. While it ranked as one of the best in just two categories (banking services and Research), it scored consistently high in all categories. E*Trade's research resources including portfolio management and analysis, stock and fund screeners, independent research, and risk analyzer. Stock trades cost $9.99 or less depending on trading volume and account balance. In addition, E*Trade is offering up to 100 free trades for new accounts, the details of which you can find on E*Trade's website.

And yes, E*Trade boasts the funniest commercials among the discount online brokers. Here's one of my favorites:

To get more information about E*Trade or to open an account online, visit www.etrade.com.

6) tradeMONSTER: With tradeMONSTER, you can trade just about anything, including stocks, options, ETFs, mutual funds and bonds. Stock trades are a flat $7.50 per trade, regardless of the number of shares transacted. Options start at $12.50. Overall, tradeMONSTER's commissions and fees are competitive among online discount brokers. One really nice feature tradeMONSTER offers is called paperTRADE. With paperTRADE, you can open a practice account, use all of the available trading tools at tradeMONSTER, and practice using their system to trade stocks or complex options. tradeMONSTER also offers powerful tools for those trading options,

The minimum balance to open an account is $2,000. If you'd like more information about tradeMONSTER or to open account, visit www.trademonster.com.

7) Trade King: Trade King is one of the lowest cost discount brokers, with both market or limit stock trades costing $4.95. And there is no additional cost for broker-assisted trades. It has been ranked #1 in customer service by SmartMoney Magazine and Kiplinger's. Here's what Kiplinger's had to say about Trade King's customer service:

In this category, TradeKing reigns. We were speaking with a friendly representative within 20 seconds when we called on a busy Monday morning for the stock market. Our e-mail asking a question about our account balance was returned in 7 minutes. You can also contact TradeKing representatives via instant messaging (only Schwab, E*Trade, Siebert and Scottrade lack the IM function on their Web sites).

The final thing I'll mention about TradeKing is what it calls the Trader Network. Through the Trader Network, you can connect with other traders, share strategies and trading tips, and see the hottest trades of the day. To get more information or to open an account, visit www.tradeking.com.

As far as I know, $3/trade is the cheapest online stock trading you'll find. With Zecco, you do get some free trades, but there are preconditions you must meet (either minimum balance or number of trades, many of which cost $4.50). But here's the key for me as it relates to Sogotrade—I don't trade a lot. I do plan to buy individual stocks in my SEP IRA, but I still don't expect to trade more than a few times a month. With Sogotrade, it doesn't matter. Trade once a year or once an hour, and the cost is still $3 per trade.

So the first question this raises is how does Sogotrade do it? How do they offer $3 trades when all of the other online discount brokers charge more?

According to Sogotrade, they undercut their competition on price through volume and by developing their own proprietary systems that other online brokers must license from third parties. As for volume, Sogotrade transacts over 120 million shares a day. While that doesn't make it the highest volume discount broker, it is impressive, beating out the likes of E*Trade and OptionsXpress.

Regardless of how they do it, Sogotrade has managed to offer the lowest cost equity trades with unlimited shares per transaction. Here's a price comparison chart:

Bonus Features Offered by Sogotrade

Sogotrade offers some bonuses when you sign up for a new account. Three bonuses actually, and they all may be of interest to you.

1.Up to $100 back when you transfer an account: Most online brokers are now offering to refund the cost of transfering your account from your current broker. These transfers occur through the Automated Customer Account Transfer Service, and there are costs associated with the transfer. Sogotrade will reimburse you up to $100 to cover these costs.

2.100 Free Trades: With a new account, you get 100 free trades during the first 30 days your account is open, for a savings of up to $300. Not a bad deal depending on how much you trade. I'm a big believer that every dollar counts, even incrementally small transaction costs. While I wouldn't chose Sogotrade because of this bonus, it's a nice add-on.

3. One Year Free Subscription to McAfee VirusScan Plus and SiteAdvisor: This bonus came out of left field for me, but it's an interesting approach to marketing for an online broker. The idea is to provide new accounts with software that can detect viruses that may make transacting trades online unsafe. Again, I wouldn't chose a broker for this reason, but if I'm looking for the lowest cost anyway, why not get some free software.

Options Trading and Account Minimums

Sogotrade also offers low cost options trades. While options aren't a part of my portfolio, if you do trade options, Sogotrade's costs are again one of the lowest among online brokers. Trading options costs just $3 per trade plus $0.70 per contract.

One final note--there is a $500 minimum balance requirement to qualify, but that shouldn't be a problem for most folks. If you'd like to see Sogotrade in action, check out this video of its trading platform:

All in all, I think Sogotrade's deep discount stock trades make it a real contender in the online discount stock trading wars. If you'd like to check Sogotrade out, you can visit the site at www.sogotrade.com.