Sunday, April 09, 2006

Ameritrade's new izone: all trades only $5, all of them.

Recently Ameritrade has launched a new brokerage service for clients seeking the lowest commissions. Ameritrade izone can do this because they have removed all the bells and whistles from the regular Ameritrade service. All support is by email only and all account funding done via electronic transfers. The result is $5 trades for all stocks and options. This is a better deal for active traders than even the most generous active trader programs at other stockbrokers.

One of the best aspects of $5 trades is that you rebalance your holdings quarterly without incurring massive trading costs. Rebalancing enhances performance and lowers portfolio volatility. Anyone with over $5000 on account should to consider using Ameritrade izone, if you don't need handholding or a lot of support. Ameritrade requires that you fill out a quick screening questionnaire, and all izone accounts are margin accounts.

(FD: I use Ameritrade as my broker)

6 Comments:

At April 09, 2006 5:33 AM, Anonymous Anonymous said...

Good tip - thanks. My account is currently with TD Waterhouse, and I hope this izone service will be made available automatically after the Ameritrade merger in June.

 
At April 09, 2006 6:00 AM, Blogger Market Participant said...

I think the best thing to do is to keep a minimum balance at a full service online broker so that you have acess to the bells and whistles and then use izone for your "active" book.

The only frills I use at Ameritrade are the S&P research reports and S&P stock screener.

The rest of it is mostly nonsense, and either zacks.com, stockcharts.com, or Yahoo finance/MSN have the rest of the data and charting you need.

 
At April 09, 2006 9:01 PM, Anonymous Agustin said...

What are your thoughts on the Ameritrade and TD Waterhouse merger? I hear from an insider at TD waterhouse that the site and entire platform will nearly reach full migration on 21 Apr 2006.

 
At April 09, 2006 9:39 PM, Blogger Market Participant said...

I think it's a good thing. Having the brick and mortar operations of TDW will bring added credibility. TDW was not price competative with other online brokers. Services like iZone will be important to retain more astute customers.

Look at how Charles Schwab the most expensive "discount" broker has credibility from their B&M operations. Marketing is going to be very important here, especially for those companies which are not either the cost or quality leaders.

It's going to be a long hard slog, but eventually ETF's will kill off most of the mutual fund industry, which means that profits from collecting 12-1b fee's will vanish.

I see the online brokerage market splitting into a cheap side for $7 or less a trade and an expensive side for $11 or more a trade.

 
At April 10, 2006 9:52 AM, Anonymous Anonymous said...

Tradeking is $4.95 ... a little bit cheaper. However, their per-share contract option prices are lower too.

 
At April 10, 2006 10:09 AM, Blogger Market Participant said...

Do you use tradeking? I've been thinking about switching to them. Do they offer any third party research with an account? How is the general quality of TradeKing?

 

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