I Venture Forth From Music And Musical Equipment--My Scottrade Account
Written: Sep 11 '02 (Updated Feb 16 '05)
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Pros: Great service, low commissions, streaming quote feature
Cons: No checkwriting privileges, no premarket trading, no tax information
The Bottom Line: As with every on-line brokerage, Scottrade has its pros and cons. Here, the pros have a pretty big edge, especially when used in conjunction with another on-line brokerage.
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| sparkospunky's Full Review: Scottsdale Securities |
I had been doing my online trading with Fidelity Investments for quite some time, and for the most part I've been very satisfied with the service, the website, and the technical assistance that was available when I encountered a problem. The only downside with this reliable service was the trading commission--for most trades, I paid a commission of $14.95, plus an additional $5.00 for stop and limit orders. Since I'm the type of trader who sometimes trades stocks on movement of a few cents. I began investigating other online brokers to find one that offered Fidelity's reliability, but at a cheaper trade commission. After doing a lot of research on the matter, I came to the conclusion that Scottrade was where I needed to be, so I opened an account.
When I opened my account in January of 2002, the initial minimum deposit was $500.00, and if you wanted to trade on margin, the minimum deposit was $2,000.00. Since I don't much like the concept of buying stocks on borrowed money, I opened my account with the minimum amount of $500.00, and have been adding to it on a regular basis. I've made over 50 transactions since I opened my Scottrade account, and I can truthfully say I'm very satisfied, even though I do continue to maintain and trade in my Fidelity account.
What I Like About Scottrade
When I first opened my account, the website said that there were 135 service centers nationwide. Since that time, that number has grown to 160, which I take to mean that Scottrade is growing and providing more service centers to better serve their customers. My nearest service center is in Memphis, Tennessee, just a hop, skip and a jump down I-40 for me, and on the few occasions that I've needed technical assistance or had a problem, I've found the flesh-and-blood brokers in that office to be very helpful.
The website is very user-friendly. Scottrade has excellent research tools--you can access information about insider activity, company news, interactive charting, and changes in analysts' ratings. The really nice feature is the streaming quote function--when you log on and are directed to the home page, you can enable streaming quotes that give you real time price information on any stock that you're following. You can even make lists of the different stocks that you're tracking and enter that list with a click of the mouse. The streaming quote function gives current price, bid and ask price, size, volume and the day's high and low price for each particular stock. I think that having all this information at your command is essential for the day trader. Fidelity doesn't have streaming quotes, but it does compare favorably to Scottrade in most other areas.
Unlike Fidelity, Scottrade updates your portfolio value from minute to minute. At the bottom of your home page, there's a module that has a real time quote and value of all the stocks in your portfolio. All you have to do is add that total to the amount of cash in your account to see exactly how much your account is worth at any given moment.
Scottrade has certain features in place to make sure that when you place a trade you do it correctly. For example, before you can execute a trade, you have to type "I agree" in a box which follows an explanation (and somewhat of a caveat) about the risks of trading. Before your order can be placed with a broker for execution, you must enter your password. I think that safeguards like these, even though they take a little extra time, are for the ultimate protection of the trader.
I love the price--Scottrade charges $7.00 for most trades, and an additional $5.00 for stop or limit orders. Compared to a possible $20.00 fee levied by Fidelity, it's easy to see that people who sometimes trade on small movements in a stock's price can benefit financially from using Scottrade.
What I Don't Like About Scottrade
First, there's no premarket trading, and there's only after-hours trading in Nasdaq stocks. I believe that the early bird gets the worm, and I've made (and lost) some money by being able to trade in the premarket on my Fidelity account, when I've been able to act on early news, whether it be good or bad. That's one reason why I've kept my Fidelity account open and very active.
When I signed up for Scottrade, I was told by the broker that I would be able to write checks on my account beginning in April. This feature hasn't been enabled yet, which means that my Scottrade account is not as liquid as my Fidelity account, which had the checkwriting feature when I signed up several years ago. I haven't had to withdraw cash from my Scottrade account yet, but I know that it won't be as easy a simply writing a check.
My Scottrade account has no tax information--on my Fidelity account I can get up to the minute information on my gains and losses, which sometimes dictates short or long term trading strategies, but I just try to keep a running balance in my head with my Scottrade holdings. It would be so much easier to be able to see it in black and white, though.
My Final Thoughts
The good parts far outweigh the bad with Scottrade--I love the service, streaming quotes and trade commissions. Would I use it as my sole trading account? Probably not, because I've found that the features of both my Scottrade account and my Fidelity account sort of compliment each other. Each account has its' particular purpose in my investment strategies, and I'm sure I'll continue using both. I do recommend Scottrade, and you can go to the website and give it a look-see. One nice thing is that the streaming quotes are available to anyone for FREE--just sign up and you'll get a password to enable the feature, whether you open an account or not.
Here's the link: http://scottrade.com/
Happy trading!
Update---Alert! Alert! Alert!
As of January 1, 2005, Scottrade no longer charges the $5.00 fee for a limit or stop order--in other words, the commission is only $7.00 for a market, limit or stop order.
Resume trading!
Recommended:
Yes
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