There have never been more options for traders looking to buy and sell stocks on the cheap. Heightened competition and industry consolidation has lead to pricing wars among online brokers, and commissions have now been falling for several years. From February 3, 2017 to March 6, 2017, Charles Schwab, Fidelity, TD Ameritrade and E-Trade all issued major cuts to their standard trading commissions.
With lower commissions across the board, it’s easy to assume there’s no difference between a $6.95 full-service broker and a $4.95 discount broker. However, for traders making just five trades per day, that extra $2 per trade can end up being $6,500 in extra fees over a five-year period.
While avoiding fees is important, many discount brokers offer bare-bones platforms and limited features. That’s fine for advanced traders who already know what they’re doing. But new investors looking to learn how to trade could be left high and dry if they choose the wrong discount broker.
At the end of the day, traders tend to get what they pay for when it comes to online brokers, and discount brokers are at a discount for a reason. However, there are a few hidden gems out there that offer both low commissions and top-tier features.
Best for Beginners
$4.95 volume discount available
- Active traders
- Beginners looking to start trading
- Low fees
- Penny stocks
Ally Invest (Formerly Tradeking) has recently taken the brokerage space by storm. They offer a simplistic yet powerful trading platform. They offer low commissions on trades and even offer volume discounts.
Fidelity is among the group of brokers that slashed commission rates earlier this year from $7.95 to only $4.95 per trade. Learning to trade can be an intimidating endeavor for new trader, but the Fidelity Learning Center gives new traders all the guidance they would ever need. Users can read in-depth articles on trading, personal finance and long-term investing strategies.
They can also watch helpful free webinars that explain simple approaches to fixed income investing, options, stocks, ETFs and even tax strategies. Users can attend the webinars live or simply watch them at their own convenience.
Fidelity also offers free one-on-one reviews of personal investment accounts and has over 190 branch locations where customers can come meet face-to-face with an investment professional. Customer service is also available online or on the phone 24/7.
See where we rank Fidelity: Best Online Stock Brokers for Beginners.
Best Mobile App
- Mobile traders
- Traders looking for research and data
- Investors looking for retirement planning guidance
Traders on the move can find everything they need to make winning trades on one of two award-winning E-Trade apps.
For the standard trader, the E-Trade mobile app provides all the functionality you would ever need and an easy-to-use interface.
App users get access to third-party research, live streams of CNBC TV and breaking market news alerts.
Advanced users can take advantage of the premium features that come for free in E-Trade’s OptionsHouse app.
The OptionsHouse app has professional-grade tools for stock and option traders, including customizable options chains and 4-legged chains.
Check out Benzinga’s recommended Best Investment Apps for a more comprehensive look at app options.
When it comes to discount brokers, it doesn’t get any better than free trades.
Low commissions are one thing, but Robinhood offers customers $0 trades.
For traders who prioritize minimizing fees above all else, Robinhood may be the perfect platform for you.
Traders can open a Robinhood account and pack their portfolio full of stocks and ETFs and not spend a single dime on commissions and fees.
Instead, Robinhood charges two fees every time you sell: a FINRA Trading Activity Fee of $0.000119 per share and a SEC fee of $23.10 per $1 million of principal.
Even among discount brokers, Robinhood takes low commissions to the extreme, and Robinhood also made our investment apps top list.
Best Tools and Research
One of the downsides of most discount brokers is that they don’t provide the same level of information and trading tools as their premium peers. With Fidelity, research and tools are never a problem. Fidelity provides traders with free market research from 20 different third-party providers. Users get access to analyst ratings, specialized ETF reports, equity summary scores and even mutual fund fact sheets. Traders also have access to Fidelity Viewpoints articles that help point them in the right direction.
When it comes to trading tools, Fidelity offers advanced traders access to Active Trader Pro, a fully customizable trading platform with real-time streaming quotes and market data updates. Traders can also use the Real-time Analytics tool, and Strategy Ideas and Trade Armour features to streamline and optimize their trading strategies.
Traders who trade at least 36 times per year and maintain an account balance of at least $25,000 get access to Wealth Lab Pro, an advanced strategy-testing tool which allows traders to backtest multiple strategies at once by utilizing up to 20 years of historical data. The best part is that all these advanced features are customizable for your own personal trading style.
Best For Active Traders
For day traders and other active traders who want to experience the feel of a Wall Street trading desk at a discount broker price, it doesn’t get any better than Interactive Brokers’ Trader Workstation.
Interactive Brokers was designed from the ground up to meet the needs of day traders.
See Related: Interactive Brokers Review
Day traders know more than any other traders the importance of minimizing fees, and Interactive Brokers charges just $0.005 per share for standard trades.
Interactive Brokers also offers a wide range of tools that are designed to give day traders that split-second advantage that is critical for their success, including programmable hotkeys, customizable order types and algorithmic trading support.
Best Options Trading
E-Trade became the place to go for option traders when it acquired OptionsHouse in 2016. The OptionsHouse online platform and mobile apps were designed specifically to cater to advanced options traders, but are so easy to use that even beginners can feel comfortable. The strategySEEK tool allows traders to search for profitable trading strategies by mining market data based on customizable criteria.
With TradeLAB, traders can explore all angles of an options trade on one screen, including profit/loss/break-even points and profitability probabilities. These tools allow option traders to get a feel for every potential outcome before they put a single dollar at risk.
Read our full E-Trade review.
When choosing the best discount broker, it never hurts to start off with a great deal. Traders looking for the best discount brokers are already prioritizing low commissions and fees. Fidelity has recognized that priority and is offering 300 commission-free trades for new traders who put at least $50,000 in their accounts. Traders who open an account with at least $100,000 get 500 free trades.
But perhaps the best deal Fidelity offers for uncertain potential customers is free guest access to its platform, including all its resources, tools and features. It’s one thing to read about what a discount broker has to offer, but it’s another thing to actually take the platform for a test drive for free with absolutely no commitment.
Read our review of Fidelity.
When it comes to discount brokers, Fidelity can’t be beat. After the recent price cut, Fidelity charges customers just $4.95 per stock trade and $4.95 plus $0.65 per option contract. Fidelity also doesn’t try to make up for low commissions by charging annual or inactivity fees. Traders get access to an awesome mobile app, retirement investors can choose from a selection of commission-free ETFs and mutual funds and new traders can benefit from Fidelity’s troves of market research and extensive customer support.
There’s a reason why Fidelity was named the best online broker of 2017 by both Barron’s and Kiplinger. Sure, there are cheaper commissions out there. But Fidelity offers traders more top-tier research and trading tools than any other discount broker, giving traders the most bang for their buck.
Read our review of Fidelity.