The big three discount brokers – Schwab, E-trade, and TD Ameritrade – typically charge $7.99 to $9.99 per trade in addition to other fees. Deep discount brokerages only charge $1.00 to $5.00 per trade. Investors might assume they are receiving superior trade execution for these additional charges accrued. But NerdWallet’s analysis didn’t find that to be the case.
Indeed, the big guys use the same execution service as the cheaper deep-discount brokers. For example, TD Ameritrade and Scottrade use Citadel, Citigroup, and Knight for execution services. (Knight has agreed to a $1.4 billion merger with another trading firm, Getco.)
The deep discount brokerages TradeKing and Cobra Trading use these same execution services.
For the services most investors need on a regular basis, NerdWallet found they could be trading far more affordably with a discount brokerage.