Online brokerages frequently offer incentives like free stock trades, cash bonuses or commission credits to attract new accounts and customers. We've previously looked at the best bonuses and promotions at the five major players, and will now focus on top discount online brokers that offer free stock trades. These incentives can take the form of commission-free trades and rebate promotions. We've included SogoTrade, Firstrade, Optionshouse, TradeKing and Tradestation in this analysis due to the similarity of their offerings and qualification requirements.
From our analysis, the best free stock trading deal and the most bang for your buck comes from discount online brokerage TradeKing, with approximately 202 free stock trades. Not only does TradeKing have one of the cheapest fee per trades, but they offer the highest maximum value achievable in commission rebates. TradeKing is followed closely by SogoTrade and Optionshouse, who rank with the next best free trade offers, with the lowest opening balance requirements and one of the lowest stock trading costs, respectively.
|Free Trades Equivalent (#)||202||50||100||100||100|
|Fee per Trade||$4.95||$9.99||$5.00||$6.95||$4.95|
|Maximum Free Trade Value||$1,000.00||$500.00||$500.00||$695.00||$495.00|
|Deposit amount to qualify ($)||$5,000.00||$5,000.00||$500.00||$5,000.00||$5,000.00|
|Type of Promotion||Rebates||Rebates||Free Trades||Free Trades||Free Trades|
One thing to note: these aren't cash credits, so if you don't use up all of your free trades, you won't get a refund; the remaining trades just expire. These incentives kick in when investors fund their new accounts with at least $5,000 (aside from SogoTrade) within each online brokers' specified qualification period. These promotions were accurate at the time of posting, but they change quite frequently, so there's no guarantee they'll remain the same.
We'll further break down this group of discount online brokers based on how they're doling out the free trades: through commission-free trades, and through commission rebates. The online brokerages in this consideration set either only offer free trades or rebates for the commissions for your trade.
Discount Brokers with the Best Free Stock Trades
SogoTrade, Firstrade and Optionshouse all offer free trades for new account holders - you get 100 free trades within the first month or two that you fund your account. SogoTrade, however, leads as the top online brokerage with the lowest opening balance of $500, which is great for those investors with low investable funds. Everyone else either required having accounts funded with $5,000 or more. Once the free trading period expires however, we believe Optionshouse may be the better choice in the longer term for investors looking to maximize rewards and minimize costs due to the difference in fees per trades. Optionshouse leads with the lowest base fee for trading stocks.
While the maximum free trade dollar value an investor receives for the promotions (# of free stock trades x fee per trade) may seem the highest at Firstrade than at Optionshouse, that's really only because Firstrade’s fee per trade of $6.95 is almost 30% higher than Optionshouse’s at $4.95. In the crowded field of online brokers, however, all three - SogoTrade, Firstrade, and Optionshouse - rank with some of the lowest online fees per trade compared to the $8.90 average base trade cost we've calculated. Once the opening deals expire, the trading fees will be the most common type of fee you'll see when using your online brokerage.
As we mentioned, SogoTrade has the most attractive free trade offer for those looking for low opening requirements. No other online brokerage in our study offered promotions at $500. The 100 free trades at SogoTrade are valid for 30 days after account opening, and is a good opportunity to essentially trade stocks for free, and may be the best reward for small investors looking to open an account with only $500. Firstrade and Optionshouse both offer 100 free trades for investors with new accounts funded with at least $5,000. Firstrade’s free trade rewards are valid for 30 days, while Optionshouse’s free trades can be used up to 60 days after account opening.
Discount Brokerages with Commission Rebate Promotions
With the commission rebates, an account holder at TradeKing can potentially make approximately 200 free stock trades. An account holder at Tradestation can only make up to 50 free trades since Tradestation’s fee per trade is double that of TradeKing’s, in addition to the smaller dollar value of the commission rebates. TradeKing and Tradestation both offer commission rebates up to a set dollar value. TradeKing offers investors with new accounts funded with at least $5,000 a commission rebate of up to $1,000, valid for 60 days after account opening. Tradestation offers a commision rebate of $500 for new accounts funded with at least $5,000, and the rebates can be used up to 90 days after account opening. We converted the commission rebates into the amount of free stock trades an investor can make, based on the online broker’s fee per trade.
Qualification and Reward Expiry Timelines
There are various timelines to keep track of in order to be eligible for these bonuses. Generally, investors must transfer their funds to the new accounts within a period of 0 to 30 days from account opening to be eligible for the rewards offered. Investors must also ensure that the account value doesn’t dip below the threshold set by the online brokerages to keep the introductory rewards. All five online brokerages set deadlines for when the free stock trades or commission rebates expire.
|# Days to Fund Account (Qualification Period)||At opening||30||30||30||At opening|
|# Days until rewards expire||30 following account opening||30 from award date||60 from award date||60 from award date||90 following account opening|
|# Days Funds Must Remain in Account (after Qualification Period)||Not defined||Not defined||Not defined||180 days||Not defined|