Choosing a Brokerage Firm that Represents Your Investing Style

I have written before about choosing the right brokerage firm. I have given the names of some of the different types of brokerage firms, I have explained their plusses and minuses, I have given examples for the types of people who might appreciate different named brokerage firms. It's so strange to sit here and label myself as one who doesn't practice what he preaches.

During the anemic week of Thanksgiving, I have been sitting on a few different stocks. With the unimpressive volume of shares traded this week, it has been nothing to write home about, at best. Except this one stock, BZCN. I bought 50K shares of BZCN on a hunch several weeks ago after looking over their past years performance. BZCN is a clearing house for eBay and for two years of the last three; from around the end of November till the middle of January is when this stock has performed its best. Because of the holiday season. People are always trolling around for "value" - a stock like BZCN ties in nicely with that value play.

At the beginning of the week a number of my picks were up; a number of my picks were flat; some were down slightly. However BZCN began this tear. There was some hype about eBay perhaps buying out the tiny company and this persisted for a number of days on the discussion boards. While this rumor was never really founded in any kind of reality, it still gave the sub penny stock quite a nice little pop. 100% one day, reaching highs of +75% the next day. With over a billion shares traded, this stock was doing wonders for the heavy volume day traders; the type of trader I'd always envisioned being.

But you know, things get complicated; changing brokerage firms is difficult and I'd been with my brokerage firm for so many years. Honestly it wasn't until I lost so much on the blue chips (timing!) that I even considered the penny stocks a place I might like to play.

But my pesky brokerage firm and their blasted transaction fees.

I get a good deal too, in relative terms because I'm a heavy trader (and I have a pretty generous net balance) but $8 for every 10,000 shares in penny land is a joke. I mean, BZCN which was less than a tenth of a penny not too long ago, means that the only way you're going to make money in the short term is on volume. In fact, the trade costs for making the trades I did with my brokerage firm were more than the price of the stock I was buying! I bought 50K shares (5 transactions of 10K each) and at $8 per trade; that's forty bucks! All 50K shares with the transaction fees built in only cost me $68! That means the costs of the stock was $28 (or .00056 average share price) and the fees were the rest.

So as I watch BZCN climb another 45% today, I can only imagine what my balance might be had I invested in a different brokerage firm who has flat fees no matter how many shares you buy.