Margin account is okay for stock traders? Which brokerage is best? Scottrade seem to be the best?
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You do have to deposit $25,000 into another BAC account to get the free brokerage. I would rather pay the $7 a pop at Scottrade myself, but then I do not make all that many trades a year. Actually, I am with other on line brokers, but Scottrade is a good deal.
Nothing is FREE !
You need to look at the underlying fees that they charge just to keep an account there, along with the associated fees per trade (the commissions). Brokerages makes their money off the commissions, so changes are BoA just means the have no other fees (no minimum balances, etc). Scottrade has no minimum balance, no maintance fees and is $7.00 per trade. TdAmeritrade is the same but is $9.99/trade.
Go to www.fool.com and you can read all about discount brokerages and what to look for.
On the surface, it looks ok but a lot depends on your situation which isn't specified.
As Muncie stated, you have to have 25k on deposit so one thought is that you could put 25k in a 4.95% CD which gives you decent liquidity and a decent return with little risk. The problem with banks is that they charge much higher fees for savings/checking accounts than do credit unions. If you already bank with BoA, then you are already paying those fees, but if you are in a credit union and would have to open a BoA account, those fees are additional costs you need to take into account.
The BoA account allows 30 free trades a month. How much do you trade and is that sufficient for you? I make 50-100 transactions a month so for my situation, there are better deals.
How fast is BoA trade routing and execution? If they are slower than an online broker, then a stock price may move away from a limit order or you may not get as good a price on a market order. In the recent China selloff, delays were occurring even with the bigger online brokers. Would BoA be better or worse in that situation?
Finally, the March 5th edition of Barrons had an article on the "Best Online Brokers".
The top 3 web-based were:
TD Ameritrade
optionsXpress
Fidelity Investments
(Zecco came in last)
The top 3 software based (trading platforms) were:
thinkorswim
Interactive Brokers
MB Trading
They were evaluated on Trade experience, Trading technology, Usability, Range of offerings, Research Amenities, Portfolio Analysis & reports, Customer Services & Access, and Costs.
I use Scottrade - great if you make your own investing decisions. It is also a factor that they have 290 offices across the country because - even though I trade online - I like to know there is an office I can visit, if the need arises.
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