A surge in the trading of low cost financial stocks gave online brokers a big boost in August.

The big three - Charles Schwab Corp. (SCHW), TD Ameritrade Holding Corp. (AMTD), and E*Trade Financial Corp. (ETFC) - all posted double digit monthly gains in daily average revenue trades, or DARTs - a figure closely watched by analysts. Electronic trader Knight Capital Group Inc. (NITE) also posted a 7.7% sequential increase.

The rise in trading volumes at the four firms is unusual, given that summer is typically known for lighter activity as many traders are on vacation. Analysts say the data in August mainly reflects a movement toward beaten-down names - a trend which isn't likely to continue.

"Trading in active exchange-traded-funds and low-cost financials were up 39% and 139%, respectively, in August, with five individual stocks - Citigroup Inc. (C), Bank of America Corp. (BAC), American International Group Inc. (AIG), Fannie Mae (FNM), and Freddie Mac (FRE) accounting for up to 30% of NYSE exchange traded volume," wrote JMP Securities analyst Michael Hecht in a note to clients.

Industry watchers, such as Sandler O'Neill analyst Richard Repetto, don't expect trading to fall-off completely, but suffer from a "relatively slow start to the month."

Repetto is forecasting DARTs that are flat to a 5% decrease from August.

On Tuesday, Charles Schwab said its DARTs rose 15% from July and climbed 24% from a year ago, while TD Ameritrade's client trades rose 16% from last month and surged 71% from a year earlier. Rival E*Trade, which has been damaged from losses within its bank's mortgage portfolio, posted a monthly DART increase of 18% and said trades climbed 37% from a year ago.

Knight Capital August U.S. average daily trading volume climbed 7.7% from July on a dollar basis and surged 53% from a year earlier.

Investors continue to return to the market as the major stock indexes strengthen. However, damage from the financial crisis and market weakness earlier in the year still remain.

Charles Schwab Chief Financial Officer Joe Martinetto said investor engagement is encouraging, but said the company's revenue is under near-term pressure as trading activity lags second-quarter levels and short-term interest rates remain low.

Martinetto said he expects fee waivers resulting from declining yields in the company's money market mutual funds to rise to $80 million in the third quarter from $30 million in the prior quarter. As a result, the company expects asset-management and administration fees to drop sequentially by up to 8% to 10%. Lower rates also have reduced investment portfolio yields, which could result in a 2% to 4% reduction in third-quarter net interest revenue.

Schwab's total client assets rose 3% during the month as stock markets continued to rise and as net inflows were $8.5 billion. TD Ameritrade said its total client assets rose 3% from July, but fell 5% from a year earlier. E*Trade, which has taken steps to shore up its capital position, said its total client assets increased 2.6% from July but were down 13% from a year earlier at $142.3 billion.

Shares of Charles Schwab recently traded down 2.8% at $17.85. TD Ameritrade was off 1% at $19.49, while E*Trade rose 3.4% at $1.84.

-By Brett Philbin, Dow Jones Newswires; 212-416-2173; brett.philbin@dowjones.com and Mike Barris, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com