The $400 advantage ... itrade / Questrade

I see that Scotia Bank has absorbed itrade and is up and running, not sure how long they have been. I am a BNS client for mortgage, credit and a couple of accounts including my US dollar account so I thought I might take a look at their trading platform and fees. Perhaps there is an advantage in having everything in one location...perhaps not.

I like Questrade as they are cheap, $4.95 trades (a penny per share with a cap of $9.95), the pro platform needs 25 trades to be "free" and is reasonably flexible and the active account minimum is $250 with no additional fees or tiered commissions.

So looking at the Scotia offering, I was surprised that it did not really compare as I though that it might.

A quick glance shows the tiered commissions. $6.99 per trade looked good but I would have to have 150 trades per quarter. Sounds big, at 50 per month it is substantial. Their is no mention of trade size that I saw but there were a few restrictions based on share pricing and minimum trade size, it was not terribly clear exactly what that entailed though.

Comparing my activity levels I may qualify for the $6.99 trades in some months but I transact 30 plus trades per month, not always 50. Due to my small startup account being less than $50,000 I would typically get nailed for the $19.99 trade commission (2 cents per share after 1000) as I would need to have between 30 and 150 trades per quarter AND $50,000 to qualify for tier two.

Options trades follow the same pricing structure plus $1.25 per contract compared to the $9.99 plus $1 at Questrade. My current volume and account size puts me in the $19.99 plus $1.75 per contract though...and I consider myself pretty active... the second tier is close but, again, no $50,000 or I would see $9.99 plus $1.25, a little pricier yet but not enough to make a real difference.

Now, the real kicker comes in with the platform. The pro level software IS THE SAME SOFTWARE as Questrade uses. I should not be surprised though as this is a common theme with onine trading.

Pricing is a little different though:

For 150 trades per quarter it is free (50 trades per month), 30-149 per quarter it is $99 or greater than $250,000 in assets. The base price is $200 otherwise.

This compares to Questrade's pricing for Pro at 20 trades per month or $30 per month.

I like Questrade's simple commission and platform pricing structure and the fact that it is just plain cheaper overall. I have not had an opportunity to try out Scotia's itrade for customer service as I will not open an account just to test run it...I considered it though but it just didn't make sense to through the money away to satisfy my curiosity.

So, the bare bones comparison for my monthly fees given my account size and activity now is:

Questrade: $4.95 stock and $9.95 options commissions, zero account fees, zero platform fees...zero any other fees except ECN, margin rates and other probably comparable fees. $300 or more due to commissions. Nice.

itrade: $19.99 stock and $19.99 options commissions, $99 platform fee, other fees seem the same. $700 or more due to commissions and platform fees.

So, I will continue to use the $400 advantage of Questrade.

I must mention the one advantage in favour of itrade... which I likely wouldn't use at all anyway... Virtual Trailing Stop Orders. They track the VTSO actively them selves and execute the market order on my behalf. Questrade only uses the orders that are available through the market they are trading in. This may mean that a true stop loss order is also available through itrade as well. This begs the question about execution of these trades though. They explicitly outline that they are not responsible for losses due to failure of software and whatnot. I know that a VTSO or stop loss placed with a market will be honoured and executed, what happens in the case of a volume load and platform problem where the itrade VTSO cannot get through...I am not as comfortable having an order another "step" away from the market.

Having said that I am trading US markets that do support the VTSO and stop loss and I am not using stops, generally, for my option orders so the whole issue may be a moot anyway.

For any interested I have links on this blog for Questrade and the Scotia stuff can be found by just entering "itrade" in the search browser, it will show up near the top of the search.

Jeff.