BEST Online Stock Brokerages (SHORT TERM TRADING)

|March 13, 2020

Alex Moschina:

Hey there. Welcome back to Manward. I’m Alex.

Andy Snyder:

I’m Andy.

Alex Moschina:

And today we’re going to be talking about brokerages and again, it was one of our most popular videos that we did last year. Best online brokerages that you can use. Today we’re going to issue a few updates, talk about some news in the sector and possibly even shuffle our rankings just a bit. All right. So first let’s talk about the biggest news in the industry at the moment, which is Morgan Stanley buying E-Trade.

Andy Snyder:

Yeah.

Alex Moschina:

That’s a pretty big title shift.

Andy Snyder:

The rich buy the poor.

Alex Moschina:

Yeah. I think that’s how it works. Andy, in your view, why would Morgan Stanley buy E-Trade? What’s the point of this purchase?

Andy Snyder:

Sure I mean, we can talk about the business strategy and almost the demographic strategy of it all. So E-Trade is kind of every man’s brokerage, younger investors, beginner investors.

Alex Moschina:

The average E-Trade account is worth around $70,000.

Andy Snyder:

Yeah, and Morgan Stanley on the other hand is $900,000.

Alex Moschina:

Yeah, it’s just mostly my account.

Andy Snyder:

He skews it way off to the right, but no. So Morgan Stanley is the more robust, richer platform for lack of better words of E-Trade again, is that every man platform. So Morgan Stanley reached out. They want to tap into that, build that wealth. From a business perspective, it has to do with the fact that everybody’s going to zero fee trades. They’re using E-Trade and all the cash that’s in there kind of as leverage and as a bank, but they’re using this almost as a way to get more money cheaply to fund other things. And that’s just the way the brokerage business works.

Alex Moschina:

Yeah. I mean, it’s a smart move for them. They’re casting a wider net. They’re going to have access to a whole bunch more clients, and hopefully they make those clients richer and that-

Andy Snyder:

Just improves their funnel.

Alex Moschina:

And so, yeah, you mentioned commission-free trading. I think all of this ties into that huge title shift that happened in the industry just a few years ago. Robinhood hit the scene. Everybody loves Robinhood, especially beginning traders because it gave them a chance to invest without having to have that $6, $7 trading fee.

Andy Snyder:

Just totally kicked off a wave of mergers, acquisitions, business strategy changes. It’s really cool to watch, and it’s been fascinating to watch it unfold. It’s great news for the average investor.

Alex Moschina:

Yeah. And I mean, the sort of amusing thing is that we have certain presidential candidates right now who have, threatened isn’t the right word, but they’ve suggested that they would like to add a tax, an annual tax for investors, whether they’re cashing in or out of investments, which is kind of funny because basically you could have next year the state taxing Robinhood.

Andy Snyder:

I don’t think it’s funny. I think it’s kind of stupid.

Alex Moschina:

Yeah. So, I mean, going back to E-Trade, on the business side it means something. What does it mean for E-Trade customers?

Andy Snyder:

In a word, nothing. So E-Trade is still going to be E-Trade, Morgan Stanley is going to be Morgan Stanley. So if you’re a customer, you don’t have to expect anything to change.

Alex Moschina:

Yes. But I think what this all highlights is the fact that trading is currently cheaper than it’s ever been. It makes now the perfect time to start investing, if you don’t already. With that in mind, let’s take a look back at our previous ranking and maybe issue some updates to that. Because I think that we got some good questions in regards to our last video on the subject and we have a couple updates.

Andy Snyder:

Yeah. I think most people, they wanted to know the difference between, with brokers there’s long-term and short-term. If they’re a short-term trader, are our rankings the same as they would be for long-term? Last time we looked at long-term investing. So now let’s look at the short term side of things.

Alex Moschina:

Previously we ranked TD Ameritrade as number one. We had E-Trade smack in the middle. We had Robinhood actually pulling up the rear due to just some of the limitations with their platform. Let’s dive into Robinhood since we’re talking about it.

Andy Snyder:

Sure. For short term, if you’re just into equity investing, sure. I don’t think it’s the most robust platform by any stretch. To me, the better side of Robinhood is on the longterm, especially if you’re using it for research, options, that sort of thing. If you’re looking for a robust research platform that gives you lots of option options, that’s not it. You can do better than that. Now, if E-Trade gets to the top when it comes to short term and specifically options, just a much more robust platform, again, it’s free. And even using it’s options platform, it tells you dates to watch for, it has a good P&L section, giving you the odds of profit and loss on various option trades, spreads, that sort of thing.

Just easy to use. Some of the other platforms have… Like TradeStation. We didn’t look at TradeStation last time, but this time I think we need to add it in for short term and for options because it does give some more robust research and again, charting things. It gives like 3D charts, that sort of thing. Nothing that you really need. It’s fancy, it looks nice, but it’s nothing all that great. It’s a little bit more complicated. It has some robust offerings which why it puts it in the middle of our rankings now, where last time we didn’t really talk about it because-

Alex Moschina:

It was a hardcore traders platform.

Andy Snyder:

Exactly. Yeah. And then, when we get into the real professional grade, that’s where Interactive Brokers comes from. So we talked about that a little bit last time. We talked about it being a little more complicated last time, but now if you’re thinking short term or options and you really want to get into it, I think for a margin account with Interactive Brokers, it’s a hundred grand. So it’s definitely for the upper echelon of traders, almost on the professional level. So, if we just had to rank, short-term your options, it’s E-Trade, TradeStation and then Interactive Brokers, in that order. And those three really are our beginner, intermediate and professionals. So if you think about it that way, that’s how you go through it.

Alex Moschina:

Yeah. And I think just putting E-Trade against, again, Robinhood up top, I know a lot of people like Robinhood. A lot of the people watching this video who maybe are new to investing like Robinhood. And it’s good for exactly that. It’s like your super beginner platform, but E-Trade really offers you so much more in terms of choosing your options. You have a lot more available to you. I mean, if you go on Robinhood and you go to trading option, it’ll literally ask you, “Do you think this stock is going to go up or go down?”

Andy Snyder:

Or E-Trade, if you’re a beginner, very beginner, never made a trade, never made an equity trade, stock trade, option trade, whatever, you can start there in E-Trade, you can build your knowledge up through it. You can get up into that almost a professional side with it.

Alex Moschina:

So that’s largely about options. Do you think short term stock trading… do the same rules apply?

Andy Snyder:

Same rules. Yeah, for sure. Focusing more on the options side, but E-Trade, the stock side, equity side, exactly the same.

Alex Moschina:

All right. So, last time we spoke, we were talking about long-term trading and we gave TD Ameritrade the top spot. I think we still stand by that.

Andy Snyder:

For sure.

Alex Moschina:

But on the short term, we have a newcomer, a challenger in the ranks here. We have E-Trade coming in there. So for short-term and options traders, E-Trade is probably going to be your best bet. For long-term trading you really can’t beat TD Ameritrade.

Andy Snyder:

Yeah. So this is just a broad overview of many different platforms. Let us know in the comments if you want us to take an in-depth look at a specific brokerage platform, we’ll do that. We’ll create a whole series looking through all of them. So let us know which ones you want us to look at and we’ll get it done.

Alex Moschina:

All right. So, we’ve gone over our rankings. I hope you found this video helpful. Just whatever you do, just get started.

Andy Snyder:

Yeah.

Alex Moschina:

Give one of these guys a try, even if it is Robinhood, it couldn’t be easier to give trading a shot.

Andy Snyder:

Yeah. I like that. I’ll toast to that.

Alex Moschina:

All right.

Andy Snyder:

Get started.

Alex Moschina:

Cheers.

Andy Snyder:

Cheers.

Alex Moschina:

Hey, thanks for watching. I hope you found this video helpful. Again, if you missed our longterm brokerage review, go ahead and check that video out. We’ll put a link over here and as always like, comment, subscribe really help us out. And if you don’t already get it, be sure to sign up for our free Daily Digest. There’s a link in the description below. Thanks.