Lowering Commisions On ETF Trades

The favorite objection of the anti-ETF crowd is the fact that, unlike conventional mutual funds, every ETF trade incurs a brokerage commission. As ETF investors, we need always to be on the lookout for cheaper ways to trade.

In the past, I have written about Sharebuilder.com, which lets clients buy ETFs for as little as $4. However, there are restrictions: Sharebuilder pools all of its clients orders and executes them twice a month, so it’s not exactly a great choice for rapid-fire traders. For long-term investors, though, it's an excellent option.

But now there’s a new kid on the block that seems to offer the best of both worlds. TradeKing, which launched recently, is an online brokerage with $4.95 commissions on pretty much all trades, both equities and options. That combines a low cost that is very competitive with Sharebuilder with the immediacy of execution that Sharebuilder lacks.

I need to learn more about TradeKing before I can render an opinion, positive or negative. But, in the meantime, I’d say it’s certainly worth checking out. If you’ve used it, please post to the comments here and let everyone know what you thought.