Canada’s best discount brokerages

In our second annual survey of the country’s best discount brokerages, we help you choose the right tool for your trades.

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by

From the June 2014 issue of the magazine.

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As one of Canada’s pioneering financial bloggers, Ram Balakrishnan is a seasoned Do-It-Yourself (DIY) investor. Since launching his Canadian Capitalist blog in 2004, he’s experimented with several discount brokerages, including Questrade, RBC Direct Investing and TD Direct Investing. He moved to BMO InvestorLine earlier this year. “Switching brokerages is no fun,” says the Ottawa software engineer, but he knows finding the right fit is important.

To help you find that fit, MoneySense has again partnered with Surviscor to present our second survey of Canada’s best discount brokerages. Surviscor, a business analysis firm based in Oakville, Ont., publishes comprehensive semi-annual reviews of online brokerages based on hundreds of measures. With 23 years experience in the brokerage industry, Surviscor president Glenn LaCoste knows the players like few others.

The year has already seen some big fee reductions by the bank-owned brokerages. While clients with $50,000 have long had access to low commissions, smaller investors were usually charged $29 per trade. But in the last six months RBC Direct, TD Direct, BMO InvestorLine, National Bank Direct, Laurentian Bank Discount Brokerage and Desjardins Online Brokerage (formerly Disnat) all unveiled under-$10 commissions to all clients, regardless of account size.



As Balakrishnan learned, however, low commissions are not the only factor to consider. Indeed, if you’re a buy-and-hold investor who seldom trades stocks or ETFs, the differences in trading costs can be trivial. “Most important is peace of mind,” he says. “You don’t want surprises. If there is a problem with the account you want it fixed quickly.”

In what follows, we identify the most important categories to consider when choosing an online brokerage. We used Surviscor’s proprietary research to identify the standout performers in each category. We’ve highlighted the two top picks in each category, listed in alphabetical order.

When it comes time to open an account, start by looking for a brokerage that allows online applications—we found BMO InvestorLine and Qtrade Investor have the most efficient process, while some (such as TD Direct Investing) make you visit a branch. Before applying, however, you’ll need to match your investing style with the following main features.

Brokerages Ease of UseTop picks: BMO InvestorLine,  Scotia iTRADE

A well-designed site starts with an efficient login screen and is thoughtfully organized so you won’t waste time hunting for important links. When buying and selling securities, order screens should be intuitive to minimize trading errors. If you get confused, the help screen should be easily at hand.

Scotia iTRADE’s design is fresh and frequently updated, with smart use of icons for easy navigation. No brokerage matches it for the sheer number of ways settings and displays can be customized. BMO InvestorLine deserves a nod for its useful “situational links” that anticipate your next move, minimizing the number of clicks needed to navigate.

Brokerages BankingTop picks: RBC Direct Investing, Scotia iTRADE

Canada’s big banks dominate the discount brokerage business. It’s convenient to access your investments, chequing account, and even your mortgage all on the same web page, and make instantaneous transfers rather than waiting a day or two. But integration can create confusion if the site doesn’t adequately separate banking and investment functions.

RBC Direct Investing and Scotia iTRADE make this process especially seamless. Both let you set up practice accounts so you can see how the integrated features will look on your bank’s website. At iTRADE, you can use your nonregistered investment account to pay your bills, while BMO’s AccountLink program lets you write cheques and use your debit card.

CIBC Investor’s Edge offers an added perk for loyal clients: households with a combined $100,000 qualify for reduced trading commissions of just $6.95.

Brokerages ConsumerTop picks: Questrade, Scotia iTRADE

No matter what brokerage you use, sooner or later something will go wrong. Unfortunately, quality of service is hard to measure. Surviscor operates a Customer Email Responsiveness program and looks at hours of service and availability of features like live chat (which several brokerages have added in the last year) or “click to call” buttons.

Score one for Scotia iTRADE, which ranked very high for its prompt email responses and new live chat feature. Runner-up is Questrade, with responsive chat and call-back features. Just don’t email for help: average response time was 41 hours. Credential Direct, by contrast, often answers emails in under an hour, but its other contact options are limited. So decide which contact method you’re most likely to use and choose a brokerage that excels in that area.

Brokerages FeesTop picks: Varies with investor type

Except for deep discounters like Questrade and Virtual Brokers, commission structures at large brokerages look increasingly similar. Unless your account is tiny, most now offer equity commissions around $10 and waive annual fees.

Surviscor analyzes costs by creating investor profiles (ranging from passive to highly active) and calculating the total cost of 100 transactions. Except for highly active traders, these are often within a few dollars of each other. That doesn’t mean there are no cost differences, but the cheapest option depends entirely on the type of trading you do, and there’s no clear cost leader.

Questrade and Virtual Brokers offer the lowest stated commissions: both have various plans from which to choose, including a penny-per-share offering. They also offer free ETF purchases (regular commissions usually apply when selling). But read the fine print because commissions are not the only costs and pricing isn’t always transparent. Electronic Communication Network (ECN) fees, exchange fees that don’t apply at most other brokerages, can increase costs a lot. Both also offer free “snap quotes,” but to get Level 2 quotes—which show number of shares available at prices below the highest bid or above the lowest ask price—you’ll need to purchase data packages with monthly fees between $20 and $100. Other surprises to watch for: Questrade charges $9.95 for mutual fund purchases, which no one else does. And Qtrade charges an extra $4 on limit orders, as well as ECN fees.

For accounts of $25,000 or more, you won’t pay an annual fee at any brokerage. However, most charge $50 to $100 annually on small RRSPs and RESPs. Bargain hunters should read the fine print here, too: Questrade charges no annual account fees, but for balances under $5,000 you may be charged an inactivity fee of $19.95 per quarter unless you make at least one commissionable trade.

Brokerages Book KeepingTop picks:  BMO InvestorLine, RBC Direct Investing

Managing multiple accounts is challenging for DIY investors, so it helps if your brokerage does the heavy lifting. Consider features like integrated account balances, detailed histories, portfolio analytics and performance reports. Surviscor looks for online availability of statements, trade confirmations and tax slips.

RBC Direct Investing stands out for calculating rate of return across all accounts. (National Bank Direct and Questrade offer a similar feature, but an alarming number of others don’t.) RBC scores high for reports that drill down into fund holdings to determine overall asset mix and offers suggestions for diversifying or rebalancing. You can even enter your investing goals and get progress reports. BMO InvestorLine is a close second with similar portfolio analytics and online access to wide range of documents.

Brokerages Market IntelTop picks: Qtrade, TD Direct Investing

Active investors value features like watch lists, stock screeners, market news, analyst reports and tools for fundamental and technical analysis. This research often comes from third parties like Morningstar, Lipper or Recognia, so the quality is often similar, but brokerages differ in the depth and variety of tools offered free.

TD Direct Investing excels here, with a comprehensive research section that includes news and commentary (from popular media and in-house experts), in-depth market outlook reports, industry and sector-specific data, and several screening tools, including one for ETFs. Qtrade has a rich store of research tools, including multiple screeners and analyst recommendations.

Tricks of the trade

If moving between brokers, you pay transfer fees of $125 to $150. With $15,000, ask them to reimburse you.

With $250,000, banks roll out the red carpet. RBC’s Royal Circle and BMO’s 5 Star Program give extra research, fee waivers and a special line.

RBC Direct, CIBC Investor’s Edge and BMO InvestorLine have GIC inventories that customers can purchase online. At iTRADE and TD, you must buy GICs by phone.

Except at a few select brokerages, you can’t hold U.S. cash in registered accounts. But TD Direct allows “wash trades” with U.S. money market funds. Scotia iTRADE has a U.S.-friendly RRSP for $30 a quarter.

TD Direct’s cheap TD e-Series index funds have no commission and allow automatic contributions.

36 comments on “Canada’s best discount brokerages

  1. Do you have similar rankings for non-resident Canadians who live and work in Europe? Earnings are paid in Euros and investments are non-registered. I am struggling to find ratings for discount brokerages that meet our need. Thank you

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  2. I would not go back to banks when it comes to investing…too many at the top make the decisions for the banks on buying and selling..they only want to invest your money in their picks. Everything they look at is charts over the years. I guess their charts back in 2008 were a little off. We the customer saw it coming so the banks had lots of time to move the clients money to avoid some of the big loses, but their comment always is wait it out, that is why so many clients loss their money and it will happen again will they be prepared this time? Banks are only in the investments to make money for themselves. I find some like TD Waterhouse have got lazy the money sits they do not work with it but they will take their management fees out just like they banking fees.

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  3. I opened a brokerage account with TD Direct Investing three years ago. At the time, the local TD bank had a TD Direct Investing office and things went well. However, since cutting the TD Direct Investing positions at the TD branches, you are left dealing with the bank, who then submits to TD Direct Investing on your behalf. The local TD branck cannot open or modify any account, they can only submit on your behalf. To summarize, last year, when we opened an account for my wife, we ran into many complications with the local TD branch. When they mistakenly opened the wrong account type for my wife, we advised them to make the correction. It took two and a half months, many trips in person to the branch, and many calls to TD Investing. I stated to them on several occasions that this was terrible service and that their service delivery model was seriously flawed.

    My wife and I joined TD Direct Investing upon the recommendation of MoneySense. I would advise any new client to think twice before going to TD Direct Investing. There are many options available out there. Thank you for allowing me to voice my opinion.

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    • I agree about TD except it the opposite in Saskatchewan we had to do things by printing off forms and taking to the branch to validate signatures, who then proceeded to lecture on the folly of indexing and ETFs plus try to cross sell investment accounts. then half the transfers didn’t happen smoothly , the branch wasn’t interested and the call centre don’t follow through on faxes or call back. NOW we have a local TD Direct rep I am hoping it will get better ……..despite the fact he still seems intent on getting people to open branch HISA and chequing accounts as well as TD Direct

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    • I use TDW ‘Talkbroker’ as my eyesight gradually weakens. I’m sure others in the aging baby-boomer category appreciate this type of service. Do other brokerages offer the ability to make phone trades?
      On the negative side, one of my stocks was ‘re-domiciled’ from Australia to Canada and while other shareholders had their money ‘disappear’ from their accounts for three days while the transaction took place, the money in my account disappeared for seven weeks. I simply got the runaround from a dozen different people at TDW until the monies finally showed up back in my account. In that time, the shares dropped considerably and since I couldn’t sell them, I lost about $16,000. Very poor performance by TDW Siscount Brokerage.

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    • We have had the same experience with TD. Every time you have to go to the branch to open or change an account you will encounter complete incompetence. The TD bank employee have no idea how to complete requirements for TD Direct Investing. Setting up a Riff and Spousal Riff and partial transfer has taken 5 months and still not complete. Transfer forms have magically appeared or modified by them . No explanation or apology . That’s why I am looking for a new Discount Broker.

      Thanks for letting me voice my opinion and warning potential clients.

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      • I have been with TD Waterhouse since 1990. Today after work I went to open a new Trust account for my kids. It took 45 minutes, and the girl who assisted had to print over 10 pages, have me sign them, and then she said she had to FAX, yes FAX them back east. Then she said she made a mistake and was not able to correct it online so it would take a few days to correct and would involve me returning to the branch. She was very nice, and wanting to help, but clearly she was not equipped with the tools to do her job. Now I am very concerned that the FAX was sent to the right place.
        I’m simply disappointed that TD has not invested in technology. I was able to live with their poor website but as of today, I have decided that TD does not innovate, does not keep up with technology, and therefore presents a risk to investors.
        Anyone have experience in transferring to another broker?

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  4. Most important is peace of mind,” he says. “You don’t want surprises. If there is a problem with the account you want it fixed quickly”

    I agree 110% with this if new to ETFs and indexing your don’t want hassle with forms/ transfers in / LIRA addendums etc. The best for trouble shooting for clients have been Qtrade and Credential . if only Qtrade would scrap the ECN fees.

    TD eseries is brilliant for those starting out

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  5. You forgot information security. With the event heartbleed bug in the news, I’m surprised you didn’t mention it. Most of the big 5 bank brokerages offer 100% guarantee refunds if you’re account is hacked. Google SSL test, you’ll find a site that tests security and plug in the customer login page for each brokerage. One brokerage scores an F.

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    • Which discount brokerage Score F in security.

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  6. Banks have expensive transaction fees. It improved over the past years though. Active traders should have a look at Virtual Brokers. They have the best commission rate. I chose qtrade for my RRSP because of their large selection of funds and they have true us accounts

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  7. No, no no no no. Two words…Virtual Brokers. GOODBYE

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  8. Bmo has US$ capability..great if you like US dividends without exchange fees. I like their research better than TD. TD used to use Ford research, which was replaced by a convoluted ranking rating report, that adds little value. For some stocks Td provides Argus reports, which are very good.

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  9. You wrote, “Except at a few select brokerages, you can’t hold U.S. cash in registered accounts.” You forgot to mention BMO InvestorLine where you can hold US $ in any kind of registered accounts. That’s what I do. The only problem (with all brokers, in fact) is that if you hold cash, you won’t get a decent so-called “High Interest”. At BMO, I have 1.25% for cash in Can $ and a “stratospheric” 0.25% in US. Nothing to write to your mother about. So I prefer to stay cash in US… waiting for the opportunity in the market to make it grow. (I’m on the sideline at the moment, waiting for some sort of correction, which will happen from now to November.)

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  10. I have had some trade issues with TD Waterhouse. That was four months ago. They are still “investigating”!! The regulatory agencies are not as strict as the US counterpart. So it looks like you have to take your chances. I may move to Scotia iTrade

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  11. Questrade fee increases, yet again! I’m frustrated with this company. This time last year, I was able to transfer my shares from Computershare free of charge. Early in 2014, a fee of $100 was instituted. Now, that fee has increased to $300.

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  12. I’m another dissatisfied TD customer.

    Copy&paste of an email I just sent to TD:

    1) I can’t invest in GIC directly from the web.
    2) I waited 10 minutes to talk to a rep.
    3) Rep tells me it can’t be done during weekend.
    4) Rep can’t do a delayed order for Monday.

    I don’t appreciate wasting my time, and my money on phone bills.

    Furthermore, no update is done in real time. You can’t see the result of your transfers. Better write down everything before you proceed…

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  13. I have had and still do have excellent results with T.D.Bank,including Brokerage as well as other financial accounts.Phone calls also offer good info when requested.

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  14. VIRTUAL BROKERS I have dealt with this broker for a number of years. The administration is terrible! Their employees are very incompetent and it takes a long time to get anything done on the paper work end. However trading fees are very low.

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  15. I have not heard anything about Canadian Shareowners. I have found them to be very helpful and easy to use. It is also nice not to have my investments with a bank that I use. A little diversification here. Have you any thoughts on their cost structure?

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  16. I find all the comments about TD Direct interesting. I do find the number of time we are asked to call to start to be aggravating (they are not so Direct it seems). Just found out now that Norbert’s gambit is added to list of things we can’t do without calling as of November, which mean yet again waiting on hold during market hours, a TD rep trying to pronounce a name they can’t, and no additional value. maybe time to look elsewhere…

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  17. Credential Direct now charges $25 “internal transfer fee” for moving equities between accounts. INsane,

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  18. I have been with BMO Investorline for over 15 years. In the past year their service deteriorated to the level on totally unacceptable. Most problems are with online access and underlying trading system. Here is the list of problems, some of them are extremely critical:
    1. Poor security. Online login to your account taxes maximum of 6 characters in password and these passwords are not even case sensitive. Any teenage hacker can break-in to your account in less than 10 minutes. Trading passwords are more secure, but I am still uncomfortable that it is so easy to access client’s holdings – to me it’s a big privacy issue. I raise this issue with IL over 3 years ago and they told me that this will be fixed soon – nothing is done as of Jan 2015.
    2. Overloaded servers. Try logging in to your account around 9:30am or 4pm. It takes 2-3 failed attempts (with very “informative” errors like “The proxy server did not receive a timely response from the upstream server. Reference #1.ec2bf648.1422285118.ef29fd99” or “We’re sorry. The page you are looking for is currently unavailable. Please try again.”). This morning I couldn’t login to my account for 25 minutes. Even when you are successful with login it takes up to 3 minutes delay until you get to your portfolio page. Often, you get disconnected for no reason just because their servers cannot handle that many simultaneous connections. Typical response from IL support: “our investigation shows that there was no issue related to slower than normal website responsiveness”)
    3. Poor customer service. I reported a number of problems using their support system – the answers I received were either inappropriate (e.g. “we cannot confirm your complaint looking at our server logs) or plain stupid (“May be you should try another browser?”, “Close the session and login again, it may help”)
    4. Incorrect calculations of totals for market value and unrealized gains/losses. The numbers I see on the screen don’t correspond to reality – I have to manually export my portfolio page to Excel to get correct numbers. This problem is intermittent, but it occurred to me at least 4 times in the past month.
    5. In on one of my accounts I actively trade in options and in the past 3 months I encountered at least 5 days when I would not be able to see bid and ask for all my options for hours. Suddenly, all bid and ask values go to zero and even when you click on the option to trade you get zero values in trading screen. As you can imagine, this is totally unacceptable for options trader. I just love the answer I got from IL support (the screenshot was taken at the middle of the trading day and showed zeros for 15+ options, including GOOG, BX, CNQ, ENB, etc.): “With reference to the screenshot you had provided, the prices were reported accordingly as the option holdings had $0.00 bid”.
    At this point I had enough and will be moving to another discount brokerage. It is too bad as IL used to be the best in Canada. I don’t know who re-designed their interfaces a couple of years ago), but apparently it was designed and maintained so badly that they can no longer provide service to clients and they are obviously unable to fix these problems.

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  19. I am posting this in early 2015 — Questrade seems to have a horrible service reputation. Why is it that sites like Financial Post, Globe and Mail, and Moneysense are giving them good service reviews while there are so many bad reviews of them online?

    Sorry, but not only is this making me distrust Questrade, it’s also making me begin to distrust site like this one deeply, and I’m hesitating to come back.

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    • Horrible reputation based on what? While they might not have the greatest customer service, Since joining about a month ago, I’ve been pleasantly surprised. I’m primarily with RBC DI, but felt it was a good option to open up a Questrade accout, especially if I am going to be making frequent ETF contributions as it’s probably the better option to mutual funds, unless you plan on going with TD E-Series, which I also own as well. I do find that Questrade’s GUI layout is much faster and easier to use then RBC Direct’s both on the mobile app as well as on the desktop website. Quotes load up much faster, and everything seems pretty good for what I use it for.

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  20. Do you know which brokerage (if any) allows you to set up a systematic investment plan online? For example, I would like to invest a fixed amount into a mutual fund on a monthly basis. Scotia iTRADE offers this, but you need so send them a form via regular mail, which I don’t find convenient. Does any brokerage offer this directly through their webpage?

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  21. Credential has also started charging $25/qtr on RESP accounts <$15K. The RESP is a joint account, other accounts are single (RRSP and TFSA which exceeds the $15K limit) and they won't consider this other account when looking at the RESP. Frustrated with this fee schedule change; I [wrongfully] assumed they would take my other assets into consideration and the RESP wouldn't be subject to account fees. I don't make enough trades per year across all accounts for the reduced commission costs to offset the account fees. Angry enough with Credential that I'm shopping for another brokerage which is why I'm here.

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  22. There is an error on this page regarding purchasing GIC’s. The article mentions your not able to purchase GIC’s online using TD, you must phone in. In fact I purchased Gic’s online using TD with no problem.

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  23. I was thinking of opening an account with a discount online brokerage.

    But, after reading the comments of the incompetent service, and also checking all the fees charged (for example, I notice no one ever mentions the estate fees these groups charge which are never levied by any other banking group I know of……and here Virtual Brokers gets a nod- no fee),
    I am starting to wonder whether paying a full-service broker or staying with mutual funds might be worth it.

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  24. Stay as far away from VB as possible. These guys are the worst! I wanted to buy a specific MF and I contacted them about it before signing up. They said it was available. After I signed up, their trade desk tells me “Sorry, it’s actually not available”. Then I try to close my accounts and they don’t let me take back all my money. They keep a “minimum balance” in there. When I call and complain, they say they’ll “resolve it”. A month later, I still don’t get the remainder back and when I check my VB account, I see the money’s been charged as “Inactivity Fee”. I try calling them and can’t even get through to their horrible customer service.
    Worst experience … ever!

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  25. Bank investor online accounts are all very poor, especially TD Webbroker!

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  26. TD Webbroker is implementing a new format which has so many glitches that it crashes my iPad, something no other website has done in a year. Tax documents were not visible online but we’re still sent to CRA, which has me redoing my 2014 return now that CRA finally got around to evaluating it. Only the first of several page statements are visible on the iPad although they are on a Windows desktop computer. I am looking for a new discount broker, even though the local TD branch support person is great and most of the telephone support people are also. The web programmers are the problem as I see it.

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  27. TD WebBroker is down too often in fast markets. Investors can suffer greatly by being denied access and slow response time to talkbroker

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  28. For a small investor I got completely hosed by Scotiaitrade when they took over Itrade. My fees increased by over 200%. There should be rules in place so consumers are protected from this when large banks take over small discount operations like this. there should be a grace period for small investors like me to opt out without paying the outrageous fees to do so. I don’t have 50K to invest to get their discounted fees.

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  29. TD webbroker is one of the worst trading platforms and the customer service is a joke. last week i tried to call them but hung up after waiting 25 min. this week i called and it took 27 min for them to answer. not acceptable during trading hours like the 25 min waiting. i tried to sell some options but the order kept freezing up. said pending cancel when i never cancelled the order. so i waited for 27 min but the lady had to direct me to another worker who actually had a options license. so i waited again. he said it expired worthless then i told him to look at the date it is still active. then he said i put in the wrong increments , which i did not. i put in increment of a penny which is normal, i was not even looking for fractions just one penny increment (or one dollar . option traders know what i mean)

    then he said the order expires at the end of day and i tried to change it. i told him i did not change it at all. even if i did try to change the order should it freeze up until evening? trading is hard enough but when your broker works against you or doesnt function as it should then its unbearable. im moving my funds to another brokeragefirm

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