As I search for online stock trading sites for my SEP IRA, it’s been interesting to watch the discount brokers compete on price. Zecco was one of the first deep discount brokers, offering free stock trades. They’ve since been acquired. But Sogotrade.com recently caught my attention because it offers stock trades for just $3 per trade.
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: