Are low commission trading sites safe?
"Generally, yes.  Rather than ask, ""why are these guys so cheap?"", you should be asking why the big names are so expensive. :) Marketing spend plays a big role there. Getting babies to shill for your company during the super bowl requires a heck of a lot of commissions. Due to the difficulties involved in setting up a brokerage, it's unlikely that you'll see a scam. A brokerage might go bankrupt for random reasons, but that's what investor insurance is for. ""Safeness"" is mostly the likelihood that you'll be able to get access to your funds on deposit with the broker. Investment funds are insured by SIPC for up to $500,000, with a lower limit on cash. The specific limits vary by broker, with some offering greater protection paid for on their own dime. Check with the broker -- it's usually on their web pages under ""Security"". Funds in ""cash"" might be swept into an interest-earning investment vehicle for which insurance is different, and that depends on the broker, too. A few Forex brokers went bankrupt last year, although that's a new market with fewer regulatory protections for traders. I heard that one bankruptcy in the space resulted in a 7% loss for traders with accounts there, and that there was a Ponzi-ish scam company as well. Luckily, the more stringent regulation of stock brokerages makes that space much safer for investors. If you want to assess the reliability of an online broker, I suggest the following: It's tempting to look at when the brokerage was founded. Fly-by-night scams, by definition, won't be around very long -- and usually that means under a few months. Any company with a significant online interface will have to have been around long enough to develop that client interface, their backend databases, and the interface with the markets and their clearing house. The two brokerages you mentioned have been around for 7+ years, so that lends strength to the supposition of a strong business model. That said, there could well be a new company that offers services or prices that fit your investment need, and in that case definitely look into their registrations and third-party reviews. Finally, note that the smaller, independent brokerages will probably have stiffer margin rules. If you're playing a complex, novel, and/or high-risk strategy that can't handle the volatility of a market crash, even a short excursion such as the 2010 flash crash, stiff margin rules might have consequences that a novice investor would rather pretend didn't exist." I have used TradeKing for a couple of years now and love it.  It really is a great site.  They hold an IRA trading account for me and have been helpful in rolling money into that account, and with answering the occasional question. Previously I have used Scottrade and found that TradeKing is a much better value.
"Pink Sheets is not a stock exchange per se, and securities traded through it are not as ""safe"" as the ones on a stock exchange regulated by SEC. Many companies are traded there because they failed to comply with the SEC regulations, or are bankrupt or don't want the level of reporting to the public that the SEC regulations require. Since you're talking about an ADR of a company traded on LSE, it might be much safer that other, ""regular"", securities, but still it means that you're buying an unregulated security (even if it is of a company regulated elsewhere). Notice the volume of trades: mere thousands of dollars per day (in a good day, in some days there are no trades at all). It makes it harder to sell the security when needed. Why not buying at LSE?" I think your best bet would be commission-free ETFs, which have no minimum and many have a share price under $100. Most online brokerages have these now, e.g. Vanguard, Fidelity, etc. Just have to watch out for any non-trading fees brokerages may charge with a low balance. However, is it a risk that they may withhold liquidity in a market panic crash to protect their own capital?  Two cases exist here. One is if you access the direct market, then they cannot. Secondly if you are trading in the internal market created by them, yes they can do to save their behind, but that is open to question. They don't make money on your profit or loss, their money comes from you trading. So as long as you maintain the required margin in your accounts, you can go ahead. I had a mail exchange with IG Index regarding this and they categorically refuted on this point. Will their clients be unable to sell at a fair market price in a panic crash? No. Also, do CFD providers sometimes make an occasional downward spike to cream off their clients' cut-loss order?  Need proof regarding this, not saying it cannot happen. They wouldn't antagonize the people bringing them business without any reason. They would be putting their money at risk. But you should know, their traders are also in the market. Which might look skimming your money, it would be their traders making money in the free market. After all Google, Facebook etc also sell your personal data for profit, why shouldn't the CFD firm also. Since they are market makers, what is to prevent them from attempting these tricks? Are these concerns also valid for forex brokers serving the retail public? What you consider as tricks are legitimate use of information to make money. I will expand this to 401K's, 403B's, and the federal retirement program.  There are 3 things to worry about when trading: The tax friendly retirement programs will remove the worry about taxes. Most will reduce or eliminate the concern about transaction fees. But some programs will limit the number of transactions per month. In the past few years the federal program has cracked down on people who were executing trades every day. While employees are able to execute trades without a fee, the costs related to each transaction were being absorbed into the cost of running the program. To keep the costs down they limited the number of transactions per month. Some private programs have limited the movement of money between some of the investment options. Well they do have incentive, the more volume you trade the more they make in commission. The shop is mostly daytrading oriented but you can do whatever you want. From what I gather, alot of their revenue comes in the form of training programs (although they offer one for free when you sign up, mostly in equities) which are completely optional. Also, they're willing to sponsor me for my 7, which is good. I mean this is a super risky career move but you roll the dice when you enter prop trading, in more ways than one. "For ""smaller trades"", I'm not sure you can beat FXCM.com, a large, dedicated FX trading shop with extremely tight spreads, and a ""Micro"" account that you can open for as little as $25(US). Their ""main"" offering has a minimum account size of $2k (US), but recommends an account  size of $10k or more. But they also have a ""micro"" account, which can be opened for as little as $25, with a $500 or higher recommended size. I haven't used them personally, but they're well known in the discount FX space.   One strong positive indicator, in my opinion, is that they sell an online FX training course for $19.99.  Why is that positive?  It means that their margins on your activity are small, and they're not trying to get you ""hooked"".  If that were not the case, they'd give the course away, since they'd be able to afford to, and they would expect to make so much of your subsequent activity.   They do have some free online materials, too, but not the video stuff. Another plus is that they encourage you to use less leverage than they allow.  This does potentially serve their interests, by getting more of your deposits with them, but a lot of FX shops advertise the leverage to appeal to users' hope to make more faster, which isn't a great sign, in my opinion. Note that the micro account has no human support; you can only get support via email. On the other hand, the cost to test them out is close to nil; you can literally open an account for $25." While theoretically it works it's not a realistic trade because of market efficiency. It's realistic for brokers to advertise trades like this so they can earn more customers and commission. These sorts of trades will be priced in to highly liquid big ticket names like KO and the vast majority of the market. The possibility exists with small names with less liquidity, less trading volume; however, the very execution of this trade will alter the behavior of impending traders thus minimizing any potential profits. How easy is it to take out your money? To they offer any trading? Do you have to put more money up on your own to trade with?  This seems pretty sketchy. I am currently working at a prop trading firm and although some sketchy firms require you to make a deposit, most legit ones do not. Not to mention their commissions are incredibly high (I interviewed at another sketchy firm but only charges a couple cents for commission).   &gt;most of the time you get rebates on them  If it is not explicitly stated in the contract of how they decide your rebates than don't expect much. Most of the trading industry is build around taking advantage of people where people's word soon becomes meaningless unless it is in writing. I recommend you two things: I like these investments because they are not high risk. I hope this helps. Now the question: is advisable for a beginner to speculate in CfDs?  No. If not, is there a better way to invest with a small amount of money? In the US, and I'm sure this carries to the UK, most (if not all) big brokerages (Schwab, TD Ameritrade, Fidelity, Vanguard, etc) have a set of funds that are zero load and zero commission though the fund will still have an expense ratio.  This is the Barclay's UK page related to zero cost investing in the Barclay's funds.  Barclay's might not be the right fit for a beginner as it seems there is a hefty account minimum, but the same zero commission concept exists in the UK.  Again, most of these brokerages will also have an extremely low expense ratio S&P index (or some other market index) fund.  As a beginner that's where you should start. This is not meant to patronize beginners, it's just math.  Assume your trade commission is £7.  If your investment is £100, you'll lose £7 right up front to the buy commission, then another £7 when you sell.  Lets say your position raises 10%, you'll be at a net loss of 4.7%. Meanwhile if you put your £100 in to a 0.1% expense fee mutual fund with no transaction commissions and no load fees, after a 10% gain you'd owe £0.11 due to the expense ratio at the of the year.  You'd have £109.89. Beginners get crushed by fees and commission.  It is not advisable, by any stretch of the imagination, to attempt to day trade or actively manage a portfolio of any sort of security; and commodities and currency are the WORST place to start. "I think this gets at why some of us are becoming concerned about the volume (or more importantly the portion) of HFT in capital markets these days. You have algos trading based on ""technical trends"" which are increasingly just the behavior of other algos. Rinse and repeat. At a certain point it just becomes a feedback loop.  Now, I agree that there's no reason to be scared of HFT simply because its new or fast, which is what I think threatens a lot of people. But the problem is that the economic and social utility of markets arises from their being information aggregation engines. If it gets to the point where most of the price action is driven by algos which are trading solely based on a few minutes of technical data, no new information is being contributed to the price discovery process.   Now, it may be that a certain amount of ""meta-information"" can be discovered from pattern analysis of short term technical history. But it seems to me this information is more limited in both quality and quantity compared to the information inputs of thoughtful humans acting on a reasoned analysis of economic and other world events." Oanda.com trades spot forex and something they call box options, it's not quite what you are looking for, but maybe worth looking up. There is normally a policy at the organisation that would restrict trades or allow trades under certain conditions. This would be in accordance with the current regulations as well as Institutions own ethical standards.  Typical I have seen is that Technology roles are to extent not considered sensitive, ie the employees in this job function normally do not access sensitive data [unless your role is analyst or production support]. An employee in exempt roles are allowed to trade in securities directly with other broker or invest in broad based Mutual Funds or engage a portfolio management services from a reputed organisation. It is irrelevant that your company only deals with amounts > 1 Million, infact if you were to know what stock the one million is going into, you may buy it slightly earlier and when the company places the large order, the stock  typically moves upwards slightly, enough for you to make some good money. That is Not allowed. But its best you get hold of a document that would layout the do' and don't in your organisation. All such organisation are mandated to have a written policy in this regard. "I've never used them myself, but Scottrade might be something for you to look at. They do $7 internet trades, but also offer $27 broker assisted trades (that's for stocks, in both cases). Plus, they have brick-and-morter storefronts all over the US for that extra ""I gotta have a human touch"". :-)  Also, they do have after hours trading, for the same commission as regular trading." For starters, that site shows the first 5 levels on each side of the book, which is actually quite a bit of information.  When traders say the top of the book, they mean just the first level.  So you're already getting 8 extra levels. If you want all the details, you must subscribe to the exchange's data feeds (this costs thousands of dollars per month) or open an account with a broker who offers that information. More important than depth, however, is update frequency.  The BATS site appears to update every 5 seconds, which is nowhere near frequently enough to see what's truly going on in the book.  Depending on your use case, 2 levels on each side of the book updated every millisecond might be far more valuable than 20 levels on each side updated every second.