Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Saturday, April 26, 2014

Question: "Which Broker is Best for Me?"

Before reading any further, please take a moment to review my first post on brokers. I will do my best to update this post anytime there is a significant change.

I am often asked by new traders to give my opinion on which broker would be the best fit for them given their circumstances. Since I can't take the time to reply to all of these questions individually, I thought that I would rank brokers I have used based on certain criteria. Of course, this is all my opinion only. Keep in mind this only covers brokers I have experience with; there may be other options out there. If you don't see a broker on this list, you'll have to try it for yourself, because I will have no opinion on it.


Brokers I Would Use for Short Selling:
1. Centerpoint Securities
2. Interactive Brokers
3. Speedtrader

If you want locates, these are the only brokers that will be able to get them for you. By far, Centerpoint has the best borrows - it isn't even close. Even if a stock isn't easy to borrow there at the start of the day, there are other ways to get a locate on it. To short-sell pump and dumps, these are the only three brokers I would consider.

Brokers I Would Use for OTC Executions:
1. Centerpoint Securities
2. Speedtrader
3. Etrade
4. Interactive Brokers

Speedtrader recovered most of their OTC routes, and they added CDEL to their list which is a huge help. Centerpoint has the best executions, mostly because I feel their NITE route offers better executions than Speedtrader's. They also offer routing options to CSTI, ATDF, CDEL, ARCA, and a few others. Etrade won't let you pick specific routes, so that definitely limits your ability to get a fill sometimes.

Brokers I Would Use for Trading Cheap Stocks:
1. Etrade
2. Speedtrader
3. Interactive Brokers

If you want to trade sub-penny stocks or anything even remotely cheap, you need a broker that won't eat you alive with routing fees and commissions. Speedtrader and Etrade don't charge on a per-share basis for their routes, which helps keeps fees cheap and under control. Centerpoint does charge per-share though, so fees add up VERY quickly on the cheaper stocks you need to trade large amounts of shares with. Interactive Brokers makes this list because their commission structure is .005/share OR 0.5% of total trade value, whichever is cheaper. At the end of the day, they will also be a cheaper option than Centerpoint.


Please let me know if there are additional categories you'd like to see me break down. I will also do my best to update this post as I gain experience with new brokers. Hope this helps!

44 comments:

  1. Very detailed and informative.

    Is the slow executions for OTC stocks with Suretrader worth the trade off for getting around the PDT?

    Also, I've read about people getting hit with insane ECN fees with Suretrader, have you had an experience with commission fees upward of $200 / trade?

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    1. Suretrader has routing fees from .001 to .004/share. Also, They charge a comission of $4.95 or .00495 per trade, wichever is higher. Basically it means that if you buy up to 1000 shares, you will pay 4,95 per trade, but if you buy 2000, you will pay 9.90 per trade. You can tell them that you want to trade penny stocks, though and they will make it 4,9 per trade, up to 10,000 share.
      Hope this helps

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    3. Basically, you should avoid Suretrader if you want to trade OTC's

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  2. What about ThinkOrSwim Platform?

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    1. I have TD Ameritrade (ThinkOrSwim). They have a flat rate fee of $9.99 per trade. You can trade subpennies but you can NOT short OTC stocks. You get the ThinkOrSwim platform free (includes Level 2).

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    2. Thanks Todd. I'm in the process of learning TOS Platform right now while waiting on funds. Did you mean can NOT Short OTC stocks or lack of availability of stocks to shorts? I'm gonna try to find a few more broker to avoid the PDT rules instead of Suretrader route. IB, SpeedTrader and ETrade may be my option.

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    3. TD Ameritrade does not allow you to short OTC stocks.

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    4. I'm finding it extremely difficult to find a broker that will allow/not hinder short selling stock especially if you are starting out 2-3k. Seems impossible due to the brokers available right now to turn 3k into 30k since I can't even find a broker to begin executing the trade strategy I've heard so much about from Tim and Tim. The thinkorswim/TDAmeritrade merger was really the final straw that broke the back of new traders wanting short sell with limited resources.

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  3. What this broker's accept Portuguse clients?? And I Think ThinkOrSwim are good too for Best Brokers for Trading Cheap Stocks, what you think? (accept Internacional Clients like me :D )

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  4. Thanks Tim,
    Initially I found you through Tim Sykes when I was looking up Short Selling. I think I'm going to go with IB to start shorting. I've been w/Etrade since 1999 ish. Also Been following Nathan Michaud on Twitter for some good trade pics early in the mornings. Also figured out you can follow people trading a certain stock on twitter because they post the stock they are trading like this $VAPE, & it will take you to the entire list of people currently trading it & talking about it.

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  5. There might be some push back by IB if you withdraw money after you've meet the minimum deposit requirement. In order to get around the $10k minumum. See here, http://ibkb.interactivebrokers.com/article/819

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    1. That means what Tim said isn't eligible anymore...or am I wrong ?

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    2. I have $500 in my IB account right now and it remains open... I really doubt they'll give anyone trouble

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    3. That's interesting, if so then the statement they made might be just to scare out ppl from withdrawing.

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  6. Thanks for the information Tim. Which broker(s) would you recommend for those who want to want to start with buying longs? I'm particularly interested in buying breakouts/pumps. Is this even a worthwhile strategy anymore for tiny accounts? I noticed Etrade was a broker that made your lists twice, so I'm considering going with them.

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  7. How different is eTrade from any of the other major discount brokers like TDA, Fidelity, Scottrade, etc. when it comes to commissions?

    Couldn't also you use any of those others to trade (or at least buy) cheap stocks for about the same commission level?

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    1. I used Fidelity Active Trader Pro, there commission is $7.95 flat rate, been with them 1 years. The software lacks alot of bells and whistle and no downloadable version for MAC. I swap to TOS and find it is very nice also i got them to lower my commission to match my Fidelity from $9.99 to 7.95

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  8. Scottrade does $7 per trade plus .05 for trades that are executed under $1. The platform is smooth and easy to use but lacks a more in depth trading experience.

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  9. any comments on tradestation? i've read really good reviews but i haven't seen any penny stock trader say anything about it!

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  10. What is the minimum $ amount to open acct w/ Regal please?

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  11. When you talk about CenterPoint good for OTC, is it ETC or Wedbush? Thanks.

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  12. Any thoughts on clearing through ETC vs Wedbush at Centerpoint? Will both have excellent borrows?

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  13. Why is speedtrader #3 on the list for "Best Brokers for Trading Cheap Stocks" dont they charge .001+ for routing fees which would be a ton of money for trading sub-penny and penny stocks?

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    1. No, if you route your OTC/Pink Sheets through NITE, LAFC, VFIN or PBBB it's $2 per trade ontop of the $6.95 commission.

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  14. How much funding is required to keep the Centerpoint Securities account open?

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  15. I emailed regal securities and they said they do not offer otc stocks? please explain

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    1. Sorry I should have included this in the post, if interested in regal you need to email Keith Sorrentino at KSorrentino@regalsecurities.com he will set you up

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    2. Tim,

      Is there any connects that you have for Suretrader and those ECN fees. Do they have a flat fee for ECN routing if a certain amount of shares are purchased?

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  16. Hi, I have a doubt in Centerpoint Securities, what the diference of ETC or Wedbush account? Thks I'm a fã trying to learn...

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  17. Hi Tim
    I'm from Peru and I have around 5k ready to invest.
    What broker do you recommend for international traders?
    Congratulations for your success

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  18. How are executions at SureTrader on Nasdaqs?

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    1. They're fine as far as I know... I'm no longer with them so I can't check for you unfortunately

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    2. I haven't had any issues with executions on Nasdaqs

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  21. What trader would you recommend for a non US resident?

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    1. Im looking into the same. What I have found so far is and is still going to look into and confirm:

      Etrade doesn't take non us residents.

      IB have a $10k minimum, but I think you can withdraw a part of it again after your account is up and runing. If for exemple you only wanted to start with $5k. ( Still need to confim this )

      Suretrader, sadly even the bad words about them this can be a choice for me. To avoid the PTD rule and (going to mail them tomorrow about this) possible to lock in the $4,95 / trade for penny stocks.

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  22. After what I read (reviews, etc.), Suretrader + non US resident = very low chances you will be able to take out your profits. Hope I am wrong. Maybe Tim can give us more info's about Suretrader.

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  26. Hi Tim,

    I know this is an old blog now, but hoping you can still help. Any recommendations for Australiands trying to trade US stocks? Mostly wanting to start Long on OTC stocks and down the track shorting aswell.
    Apparently IB dont allow shorting and have high fees for pennystocks and many of the other companies dont even allow accounts for aussies.
    Any tips?
    Thanks

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  27. Hi Tim,

    I know this is an old blog now, but hoping you can still help. Any recommendations for Australiands trying to trade US stocks? Mostly wanting to start Long on OTC stocks and down the track shorting aswell.
    Apparently IB dont allow shorting and have high fees for pennystocks and many of the other companies dont even allow accounts for aussies.
    Any tips?
    Thanks

    ReplyDelete