The vast majority of online brokers have eliminated commissions for trading stocks and ETFs. Firstrade lives up to this standard and has gone further by also reducing most other fees and commissions to zero.
Firstrade is the rare broker who does not charge a per contract fee for options. While most of the competitors have eliminated commissions for option trading, they still charge a fee per contract.
Firstrade also offers a range of commission-free mutual funds, although some of its fund offerings charge a sales charge and you may incur early redemption fees if you hold your mutual funds for less than 90 days.
For fixed income investments, including bonds, Firstrade charges on a net return basis, which means the returns you see on these already include Firstrade’s commission. An exception is primary market certificates of deposit (CDs), which cost a fixed fee of $ 30 to set up.
If you need help with your trades, a live broker can process trades over the phone for an additional fee of $ 19.95 for trades in stocks, ETFs, and mutual funds. Option contracts can be executed over the phone for a fee of $ 19.95 plus $ 0.50 per option contract. These broker-assisted trading fees are low compared to other online brokerage firms.
Like many (if not most) of its competitors, Firstrade receives payment for the order flow. This means that the company receives commissions from third-party market makers to route users’ transactions through their systems. These third parties can then potentially invest in this information before your transaction is completed, which may result in you getting a lower price than you might otherwise.
Margin traders should avoid Firstrade, which charges exorbitant rates for borrowing funds. Margin rates start at 8.75% and decrease as you borrow more. Yet even if you borrow $ 500,000, the rates are very high compared to other brokers in our survey.