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  • Online Brokerage Comparison: I Gave Up on Scottrade!

    Posted by Frugal on May 18th, 2006

    Before I tell you about my terrible experience with Scottrade, let me first compare several online brokerage firms in terms of commission costs:

    1. Ameritrade Izone: Best for active traders. $5 per trade, very cheap rate for option contract at $5 + $0.75 per contract.
    2. Scottrade: Best for casual traders and/or investors. $7 per trade. $0 for loaded mutual fund, but $17 for most other non-loaded mutual funds. Option contract at $7 + $1.25 per contract. Has offering on CD & fixed income bonds. Can only do the following option trades: buying put/call, or sell covered call.
    3. ETrade: More expensive compared to both Ameritrade Izone and Scottrade, unless trading more than 1500 trades per quarter.
    4. Sharebuilders: Good for long term investor. $4 for automatic investment, and can be as low as $1. Selling is $12 to $20 depending on the plan. The biggest downside is that you give up the control on the market timing for your buy order. Instead you will do time-averaging through automatic investment.
    5. BuyAndHold: Best for asset allocator and long term investor. I will recommend this to anyone who is currently using Sharebuilders. I like their $14.99 per month for unlimited number of “window” trades which get routed 3 times a day. With $120 $180 a year, you can buy and build 1000 stock portfolio if you want (just kidding, but it’s true). I don’t think you can beat this deal, especially after http://www.freetrade.com/ (under Ameritrade) is gone.
    6. FirsTrade: Even better than Scottrade. I’m sure everyone has lamented the reduction in the NTF program for mutual funds at Scottrade. Well, if you use FirsTrade, you can get it back. Yes, ALL mutual fund trades are FREE. And the stock trades are 5 cents cheaper at $6.95. Their pricing model is essentially the same as the old Scottrade. But they don’t have any physical branches. If they have active referal program, you can send me an email and ask for the referal code for free trades.

    Enough of cheap commissions, but if it is not reliable, it is pretty much useless. So back to my Scottrade bad experiences. My problems with them is that their internet servers are getting so unreliable, especially the first half hour right after the market opens, that it is no longer usable.

    1. One time I tried to day trade a stock, and I almost got sacked by Scottrade. I placed limit order, and I was barely able to cancel and modify my entry price in time because their servers kept non-responding.
    2. The second time, it was pretty much unforgiveable. I put in a limit order, and when I attempted to cancel the order, I simply cannot cancel it, even though it is still showing on my screen as open order. Somehow somewhere there is a server problem. Minutes later, my limit order became executable. I called up customer services, and they could not determine whether my order was filled or not. After an hour, my order got executed with a timestamp of an hour later. Scottrade claims that the timestamp is the reporting time, not the executed time, and my order was filled minutes later, instead of an hour later. Scottrade refused to correct anything, but simply blaimed everything on the delays of the market makers.
    3. Yesterday, again, stupid me, I was doing trades near market open. I am so certain that I cancelled my order. But I had some problem with their server again in the morning. After a couple of hours, I finally found out that my “un-cancelled” order got executed. They claimed that I never cancelled the order. They really have a big problem with this process. At the end of cancellation screen, there is never a confirmation number given out. I can never write down any # to prove that I have attempted to cancel my order. So after a long talk of repeating the same information over and over, and an eventual non-callback, it appears again that they will not do anything to my phantom trade becoming real and losing significant money in such a big down day.

    I know that FirsTrade has its problems, especially with market quotes right after market starts. But at least there is never a problem with non-responding servers that give you a page-not-found error. Probably because they are smaller company. In any case, I am moving majority if not all of my money out of Scottrade. I’m so fed up with their parrot-talking customer non-service. I was planning to move my tradings to Ameritrade Izone, but after reading some comments at Dogs of the Dow, I’m a little hesitating now. If you have recent positive experience with Ameritrade or any online brokerages besides Scottrade, would you please suggest them to me? I don’t really know where I could find a reasonable priced and reliable brokerage now. I plan to use FirsTrade for now. Since I never tried their streamer, maybe FirsTrade streamer will not have quoting problem. I can always use the other online brokerage accounts for quote too, so it won’t be such a problem.

    Thanks in advance for your online brokerage suggestions to me. Cheap commission is not everything. Without reliability, all (stock) bets are off. I’m planning to take my complaints to NASD. By the way, I really miss the reliability offered by Datek, which was bought by Ameritrade. That was my first reason of moving to Ameritrade since I assume that the platform would be similarly reliable. And I hope you will find both FirsTrade and BuyAndHold useful.

    P.S. This is an old post. Please scroll thru comments for other good trading sites, such as Zecco.com, TradeKing, free trading at BofA, etc.


    More related posts:
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    54 Responses to “Online Brokerage Comparison: I Gave Up on Scottrade!”

    1. Novice Says:

      Your experience with Scottrade scares me, since that is what I’m currently using. I’ll be interested to know where you settle on.

    2. ML Says:

      I have several accounts at Scottrade. Since I don’t trade those accounts much, I haven’t encountered any problems yet. I checked out FirsTrade a while ago and thought they were pretty good. My main account is at Ameritrade which after the merger with TD actually lowered their commission to $9.99 and started offering NTF funds. For a while I thought they were going to raise commissions and were ready to switch to FirsTrade.

      I like TDAmeritrade because of the free level II comes with Apex. They’ve been very reliable so far.

    3. CB Says:

      I’m a little confused about your description of BUYandHold.com. Maybe it’s a typo or maybe I’m just not understanding. How could you build such a 1000-stock portfolio for $120 per year? Wouldn’t the cost actually be $180 per year ($14.99 per month x 12 months)?

    4. frugal Says:

      Sorry, with market going down so big, I cannot focus even doing my math. I will change it. Thanks.

    5. frugal Says:

      Sorry. With market going down so much, I sometimes can’t focus even when I do my math.

    6. Todd Says:

      I experience much the same problems with Scottrade. One morning, I missed my opportunity on a trade that was very important because the site was down for a long time. Also, I feel order fulfillment price is bad. My E*Trade orders get executed a lot faster and at a better price than with Scottrade. I don’t totally understand what is going on, but I know there is a noticable difference.

    7. frugal Says:

      I’m going to switch to Ameritrade, and use Firstrade in the meantime. Having servers down in the middle of making a trade is the LAST thing that I need to be concerned.

    8. Mighty Bargain Hunter Says:

      The Carnival of Investing…

      Welcome to this week’s Carnival of Investing! I enjoyed reading all of your posts.
      Here we go!!

      Is investing in a company actually supporting the company? Doubting to Shuo discusses topics dealing with ethics and investing.
      Capital Chronicle i…

    9. frugal Says:

      Alright, my transfers from Scottrade to both FirsTrade & Ameritrade Izone are all completed. It took less than a week. I’m surprised. Personally, I will be using FirsTrade & Izone unless I run into any problems.

    10. John Says:

      I have to admit, I began using ShareBuilder because it was the cheapest I knew about at the time–and I could only afford to save so much. (“They” say you should save SOMETHING, even if it’s only a little every month.) Fortunately, it’s been equally reliable and I have no complaints thus far, although I am a novice investor. It appealed to me because I can only afford to put away $300 a month and that includes saving, investing, etc. I never heard of BuyAndHold, but thanks for the tip, I’m very interested.

    11. frugal Says:

      You should keep the transaction fee to be less than 0.5%, including buy & sell. Assuming a lackluster stock performance, you get some 5% to 7% gain out of your stock. Keeping your transaction fee to below 10% of your (potential) profit simply makes a good business sense.

    12. Bob Says:

      Does either Ameritrade or FisTrade allow writing naked puts?

    13. frugal Says:

      You can get approved for that at Ameritrade.
      I’m not sure about FirsTrade, but I assume that is possible.

    14. Matt Says:

      I’m interested to know why there was no mention of TradeKing. It’s got good rates, has won awards, and (in my experience) trades are carried out within a few minutes.

    15. Frugal Says:

      Matt,
      Thanks for your mention of TradeKing. I didn’t mention it, simply because of my ignorance. You know, I only have 24 hours a day, and my brain is only so big to fit some many things. I am not a know-all person.

    16. Vacman Says:

      Why not go use the new broker!! Sogoinvest.com they have been around for 90 days and they seem to be very good. All trades are $3.00 cost!!!! And they do listen and are changing to the peoples desires.

    17. Frugal Says:

      Vacman,
      That sounds good too. Actually Bank of America is providing free stock trades for anyone who has $25K deposit. See my post on Oct 14, 2006 on Random good and bad deals.

    18. David Says:

      Hi,

      Zecco has $0 no commission trading and $3.50 for options.

      I haven’t tried them. Also, I got an e-mail from Hedgestreet that
      says if you open an acct with $100, then you get the new ipod shuffle
      for free after the first trade. No commissions the first 30 days:
      http://trade.hedgestreet.com/shuffle?osadcampaign=shuffle

      David

    19. Frugal Says:

      Thanks David.

      ML has just test-driven Zecco.com. Check out his post. I don’t have personal experience with Zecco. Looks very good to me though.

      And thanks for the link on hedgestreet.

    20. Bill Carson Says:

      I use Ameritrade. I play with pink sheet stocks and find that Ameritrade restricts buys on some of these stocks. I feel it’s because they have a short position in them and want to keep the price down whole they cover. I have called them before to get my order represented only to be told that it is a risky security. Why? It is my money to lose. I play with these stocks with only a small percentage of my portfolio. I understand the risk. Ameritrade claims they are trying to protect me from bad trades. They only route your orders through 1 market maker. I am currently looking for a firm that doesn;t restrict trades and routes your orders through more than one market maker. Any suggestions?

    21. Bill Carson Says:

      I am also looking for a website that gives level 2 quote on all markets, streaming news, time sales and sizes, and current order sizes and market makers on a stock. Any sugguestions?

    22. Frugal Says:

      Many websites offer Level 2 quotes, but maybe not as much info as you would like. I don’t think there is any big disadvantage of having being routed through a single market maker. They are ALWAYS forced to give you the best buy/sell price in the market no matter what.

    23. Eric Says:

      Also check out thinkorswim. Excellent options oriented broker — but also trades equities and futures. Platform is outstanding and free.

    24. Frugal Says:

      Eric,
      Thanks for your tip. Saw that the other day, but never tried it personally.

    25. terchin Says:

      Does Firstrade have a stop loss order option when one purchase the stock?

    26. Frugal Says:

      Please contact FirsTrade for any questions. I don’t use it, so I’m not sure.

    27. wing Says:

      I do not like sccotrade and ameritrade because they do have a DRIP program at all!!

      My contribution of the day is Check out https://www.tradeking.com

      $4.95 commission rate applies to equity and option trades. See more details on trade commissions for low priced stock, bonds, mutual funds and other securities.

      2 “Best Discount Broker” by SmartMoney 8/1/06, based: on Commissions/Fees; Customer Service; Mutual Funds; Trading Tools; Research; Banking Amenities.

    28. Adventures In Money Making Says:

      I use interactive brokers for my option trading. they’re super duper cheap – $0.75 per contract
      and for stocks its something like $0.001/share.

    29. Rosemie Says:

      Hi there I find this website worthwhile a contribution as I too hope to have a million in my 30s For Brokers I recommend thinkorswim It seems complicated at 1st and it does not try to advertise to the average investor because they want their customers to be educated. However they have classes through out the country and I think they are great. I’ve been with tradeking for a whole year now and they are ok not great. I really like ameritrade for many reasons but mostly because I’m faithful I’ve been with them since they were datek. Any way if you join thinkorswim, when you fill out your application and it asks where did you hear about them one of the options is “investools” chose that and You will get better rates. Lately I pretty much don’t trade for more than 5 dollars any more and with thinkorswim I like the fact that you can pay a flat fee of $1.50 per option contract and execution is fast hope this helps.

    30. Frugal Says:

      Rosemie, thanks for your tip. Really appreciate it.

    31. Jay Says:

      Do you have any advice/info on options trading. Also, are these online brokers good for this type of trading?

    32. Frugal Says:

      Most of the online brokers are good for option trading as well.

    33. J Says:

      TradeKing has low commissions, but charge $20.00 for wire transfers back to your bank.

    34. Frugal Says:

      Thanks, J.

      I don’t have any experiences with TradeKing, but that doesn’t sound too good.

    35. retrobeast Says:

      Have you seen http://www.zecco.com ??

    36. jason Says:

      You may want to update the article. It appears that First Trade is now charging $9.95 for no-load mutual funds.

    37. John Says:

      My opinion is to have 2 programs running. Esignal for unbeatable data for the price. The charts are only limited by your imagination – they have tick replay, scripting, back testing, and the whole chart moves around like a piece of paper – very sharp. For about $100 per month + $2 per exchange for real time data you can have quotes, linked to charts and streaming news.
      Some have a problem paying $100 per month, but ask yourself, would you go to a dentist if you were having chest pains? Go to the company for their expertise in 1 area.
      Use Scottrade for what they do – trading. (personally I think its garbage). Alternativly, trade through Fidelity and always get there 25 free trade offer. They also have the best margin rates on the street for large balances – for some reason beyond my understanding. If they refuse, tell them goodbye, and they’ll make an exception for you. I’ve done this 6 times through a series of (honest business partners) friends which provided me with 150 free trades. They are desperate to get their ATP off the ground because it is the most profitable part of Fidelity’s business – even greater than 401k management, portfolio advisory (asset allocation of your money in mutual funds of their choosing – good if you like that prison rape feeling)
      ****Esignal also has a NEW site called market Q. It is a java based applet for $25 per month that has a ridiculous amount of professional trading decision making tools for every financial market on the globe. CHECK IT OUT, it is wise.

    38. Joe Says:

      Firstrade lured tons of people in with no transaction fee no-load fund trades. Rated “Hands down winner for mutual fund investors.” Then they dropped that feature and now charge people $50 per account to transfer out. Classic bait and switch. Poor ethics.

    39. 1stmillionat33 Says:

      Nothing is free anymore. Scottrade did away with $0 trading fees for mutual funds. Firstrade followed suit. Now Zecco no longer have zero commission fees unless you have $2500 in your account and they reduced them from 10 free trades a day (up to 40 trades a month) to 10 free trades a month! Also they raised their IRA custodial fee from $10 to $30 a year. SUCKS!

      Firstrade seems to be the best deal for mutual fund investing at $9.95 per trade for TF funds but i’m not sure how many NTF funds they have. I read before that Scottrade has about 1000 NTF funds while Firstrade only has 600+. Not sure how many they are now. I sure wish I can get CGMFX at no cost!

    40. Taylor Says:

      I use WellsFargo due to $0 trades (100/yr per account?) with a low requirement. Great for trading ETFs and Stocks.

    41. Anoymous Says:

      As always I find your site very informative… Another such site for any inquisitive and/or new traders is: Online-Broker-Review.com

    42. five whys Says:

      Agree with Taylor.. wells Fargo seems to be good for upto 100 free trades / year.

      My recent experience of Interactive Brokers says that seemingly low cost is not always “low”. I think if you are a frequent trader, features of the platform, speed and execution quality matters. If you are buy-and-hold investors, ease of executing, research reports, asset management etc, matter a lot as well.

      I have set up a most comprehensive and easy to use brokers comparison site. Feel free to take advantage of it while doing your research!

    43. sam Says:

      I have a 2 tdameritrade accounts, but i will be transferring all of my assets into my new zecco acount withing the next 2 months.

      Heres the things i dont like about TDameritrade:
      1. I cant get approved for margin on either accounts

      –This is completely screwed up, i have plenty of cash behind me. In fact one account is co owned by my mother (managed by me), so the only reason for rejection i see is that i am young. Maybe you have input on this?

      2. I cant get approved for lower commisions

      –I have been constantly adding cash to my account and increasing its net value since i opened it, but that is not enough to get even a minutely lower rate. Considering im a fairly active trader, this is also a no go.

      3. I cant make an account at Izone

      –I talked to a manager who told me to open an account at Izone if i wanted cheaper rates. Well that sounded great, but nope, no dice. I figure again it has something to do with my age? I meet everysingle requirement, but they wont let me in the vip.

      Other than that, they have been decent. Id probably say they are a slightly above par brokerage with the capability to meet the needs of average investors. However, dont expect any special treatment. And if you already have an account with TDameritrade, do you think they are going to let you create an account at Izone? To quote a manager at TD, “im trying to run a business here”.

      So yeh, screw TD….

    44. Rich Says:

      Opened accounts at TradeKing and OptionsHouse a couple of months ago after I began to worry that E-Trade might go belly-up. At $4.95, both shops have very nice rates on stock trades. If you routinely trade option lots in excess of 10 to 15 contracts, it is next to impossible to beat OptionsHouse flat fee of $9.95 for options. Example: 15 contracts at TradeKing is $14.70, 25 contracts is $21.20; Interactive Brokers has a very competitive price of .75 per contract…so 13 contracts is 9.75, but 25 contracts is $18.75; but IBB has quite a reputation for poor customer service, and their platform has a bit of steep learning curve as well. Of course for sheer versatility, it is hard to beat IBB.

      One very big drawback for both TradeKing and OptionsHouse is that neither support AH trades from their platform…you must call in an order which is an impossible impediment for an active trader trying to capitalize on a fast moving market. They also only allow AH trades for a one hour window before and after regular trading hours!! Supposedly TradeKing is planning on introducing full AH trading from their platform…I will believe it when I see it. I have found TradeKing’s platform is slow and quirky at times as well. I am currently closing my TradeKing account and considering Ameritrade’s Izone…will keep my OptionsHouse account for the flat rate fee. I left Scottrade a couple of years ago due to the same frustration factor re. their servors and buggy streaming quotes always going down…though they may have those problems worked out by now. If Izone isn’t satisfactory I will most likely try IBB in spite of their poor reputation for customer service. There is simply no reason to pay $7, $8, or $9 for a stock trade. If you really like the tools at OptionsExpress, ThinkorSwim, or Fidelity…open an account with the minimum amount and then simply use their tools but place your trades where prices are reasonable.

    45. five whys Says:

      Rich, I agree.. IBB is almost unbeatable if you have many (>15) stocks trades in a month – though, for almost anything else, you can find a better choice.

      OptionsHouse and its flat fee sounds interesting, i will check it out for review and comparison listing on http://www.yenkenzen.com

      five whys

    46. Ben Says:

      btw, this site might help, list of user reviews and thoughts on brokers as well as links to blog reviews that come out

      http://www.whichonlinebroker.org/

    47. five whys Says:

      I came across OptionsHouse here (and of course saw their millions of ads on the internet!) Finally, I did add OptionsHouse review on YenKenZen.com

      Overall, it seems great (at-least for low to moderate volume trader) – except if you are going to trade

    48. M D Crisp Says:

      Seems we all loved Datek. Couldn’t agree more with all the bad comments about Scottrade. Am trying to decide where to move. Does anyone have any experience with Schwabb?

    49. John sloan Says:

      If you are looking to sign up with scottrade.com or take it for a test drive Why not do it for FREE…………..
      here is a Promo code (YWEU0574)to get 3 free trades…
      You will get 3 free trades with this promo code: YWEU0574

    50. Mike Says:

      John,

      The reason why Scottrade removed my permission for receiving free trades is because I posted my referral code on a blog. I got a call from a rep after they saw some free trades from different parts of the country in my account. I posted it on here thinking I could get some free trades for each person that enters the code and they would each get 3 as well, but apparently it is not good for Scottrade. My guess is that it brings in accounts that open with $500 and they place 3 trades and they don’t earn any revenue from it. It seems logical, but they wouldn’t give me a good reason why. If you want to receive some free trades and continue to, I would take the code off any blogs. I had about 36 and they took away all of them.

    51. David Says:

      For cancelling orders only. I have found that the first time you cancel, sometimes there is no feedback. Since, to my knowledge,
      it does not hurt to cancel an order more than once, I do it again. When you get a response that it is unable to find order to cancel,
      you will usually find the cancel acknowledgement on the Home page. My experience for 3 times so far.

    52. David Says:

      For cancelling orders only. I have found that the first time you cancel, sometimes there is no feedback. Since, to my knowledge,
      it does not hurt to cancel an order more than once, I do it again. When you get a response that it is unable to find order to cancel,
      you will usually find the cancel acknowledgement on the Home page. My experience for 3 times so far.

    53. Just Aname Says:

      I don’t know about you but I love making a statement…In these crazy economic times did ya ever want to send a message to the world about what’s really going on and what is wrong… I made a wish this morning and here is what it is… I am going to send this email to everybody I know cause it would really be funny to see this happen.

      By now everyone knows that GM’s stock is worthless. It is trading as MTLQQ.. Liquidation is in process and this stock is linked to the air. I would love to see it make the news and go up to $6.00 a share.. We the little people who believe in American can really make a statement. If one person out of every 1000 who read this buy 1000 shares OH MY GOODNESS we will make the news… Wanna have laugh and make some money….try it and we can all say we did it. The lil people…

      Signed a Rebel without a cause.

    54. Kevin kangal Says:

      Did you start this website after reading “How to do home business in you spare time” writing blogs.
      I could not learn much from your blog, after reading your personal experience. I do not see any strategy no nothing.

      But any way good luck I believe you are receiving lot of hits to your blog looking at the advertisement that I see on this page. Good luck with your blog.