Etrade vs Tradeking vs Zecco – Trading Commissions Comparison

We hear about free commissions from Zecco, the good customer support from TradeKing or the great overall interface of Etrade but how do you actually decide which stock broker to use? How much of a difference does trading commissions really make? Let me try to use a real life example of my stock transactions to help you compare.

Let’s consider that I bought 10 stocks totaling $12,000 on the first business day of the year and held it for the whole quarter.

Etrade Brokerage Account Fees

The commissions from Etrade for the 10 trades equate to $99.90 (Power Etrade has commissions at $7.99 to $9.99 per trade but 10 trades won’t qualify for the lower price). Simple enough.

Now what if I had to used margin for the trades? This is where it gets interesting. With Etrade, the rate is 6.99%. Below is a rough calculation of the margin interests I would incur.
$12,000 were borrowed: $204.53 (89 days / 365 * 0.0699 * 12000)
$6,000 margin balance: $102.26

Zecco Brokerage Account Fees

Free trades are still possible with Zecco, but you need a balance of $25,000 or more. Otherwise, it’s $4.50 per trade. The 10 trades would be $45 for most of us.

With the same margin balance scenario, the margin cost for Zecco are (with margin interest of 7.20%):
$12,000 margin balance: $210.67
$6,000 – $105.34

A little higher than Etrade, but lower overall considering the commissions.

TradeKing Brokerage Account Fees

The trades will cost $49.50, very similar to Zecco’s cost.

TradeKing’s margin rates below $50,000 is 6.50%. The same margin balances will cost:
$12,000 – $190.19
$6,000 – $95.10

Accounting for margin balances, actually has lower trading cost as compared with Etrade or Zecco. Great!

Final Thoughts on the Comparison – Which Stock Broker Wins?

Many people fall into the trap of comparing fees and commissions, but this example shows that all three brokers have similar cost structures. For those contemplating about Etrade’s higher commissions, the extra commissions may only be $50 more a quarter. While money is money, you may find that the extra $50 is worth it if you combine the fact that you can integrate an online bank with the brokerage account and its global trading platform, which is extremely convenient.

As for the difference between TradeKing and Zecco, the price difference is almost negligible for average investors. will win if you are trading on margin, while Zecco will be cheaper on a raw per trade cost. One thing that may tip the scale though. TradeKing is known for its customer support while Zecco has a bad rep for customer service. If you never need assistance, then by all means go with Zecco. If you need help once in a while with either trading or account maintenance type questions, is what you should choose since they would even assist you on your trades over the phone with no additional cost.

Resources:

Other Stock Broker Reviews You Should Read:

{ 3 comments… read them below or add one }

Invergy Forex May 6, 2009 at 12:26 am

Anyone with real experience using TradeKing ?

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Investing School May 6, 2009 at 7:12 am

I actually have an account and is using it right now. TradeKing so far has been quite impressive and everything is smooth once you get your funding account setup. Trading, research tools and support are all pretty good. You don’t get those all-in-one trading platforms that power etrade gives you but I’d think that most people are fine with TradeKing’s platform.

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direct shares August 31, 2009 at 12:11 am

I agree that when choosing a stock broker it is important to base the decision on which company can give you more value to your money and not just on the trading commissions and fees. Also, choose the company that can give a suitable platform for your investment needs. From the three options, I chose etrade.

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