Originally posted by: m3rcury
Now that I'm all gradumatated and everything, and working full time, I figured I'd try putting around $500 or so in the stock market and see how it goes. Except I have no experience with online stock broking. I've done some reading, and it seems Scotttrade.com is the best (ahead of ameritrade and etrade).
Does anyone here have any online brokering experience? Any particular online broker site that you would recommend?
If you play around trading parttime, there are tax implications to consider, like capital gains taxes on your profitable positions. You can write off losses, but only $3k a year max regardless. In other words, a daytrader may make $10k in profits, $8k in losses over the course of time, but unless he is fulltime, he must pay taxes on $7k and not the $2k net p&l. These aren't very relevant if you are only using $500, but may be if you make money and do more.
And if you trade often, you may get tagged a "daytrader" according to sec rules that brokers must follow (5 trades a week, or month, not sure), which the brokerage will then be required to require you to use a minimum of 25k to continue daytrading.
Given those issues, you are better off investing, and not churning your money very often. But how much can someone make with $500 without getting in and out of profitable positions often? Subtract commissions and taxes and you're looking at a losing scenario.
But if you do something, I recommend finding a brokerage with no "non-activity" fees, and if you are looking for their research tools, which are usually only good for investing (vs. trading), then keep that in mind.
I'm familiar with Ameritrade, which has no fees, abut their research is fairly sparce. If you get into daytrading quite a bit, interactivebrokers.com is far and away the best brokerage for platform/execution/fees, but has no research tools.