Charles Schwab has recently reduced its brokerage commission from $12.95 to $8.95 per trade. With individual traders sluggish last month, and low interest rates are continuing to bruise most discount brokerages firms like TradeKing and Zecco, do we think this latest move by Charles Schwab can lead to a price war?

First lets look at some facts about Stock Brokerage Firms:

Daily average trading activity at public online brokers fell as much as 10 percent from November to December, according to a Sandler O'Neill research note issued this week.

Meanwhile, low interest rates have forced Schwab, TD Ameritrade and others to waive fees on some managed funds, putting more pressure on company revenues.

According to Seth Dadds, an analyst at Baltimore-based equity research firm GARP Research "If one (company) cuts commissions, chances are something's going to happen with one of the others, that's typically what's happened in the past,"  it seems there is going to be massive price war with E-trade pricing at 12.99, Scottrade at $7 per trade and Fidelity at $19.99.

However if you look more closely, according to the analysts at CompareBroker we believe it is more of an adjustment Charles Schwab had to make to be more competitive. The online brokerage tools provided by Charles Schwab are much worse than the tools by E-trade, the brokerage firm recommended by us. In the simple portal market Charles Schwab is still very negatively priced against TradeKing's $4.95 per trade. So to conclude we would say if you want simple platform to start your trading practice TradeKing and Zecco would be your preferred options otherwise if you want all fancy tools go with E-trade, the most trusted and reliable name in brokerage industry.

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