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.
The Best Discount Stock Brokers:
- Best for Beginners: You Invest by J.P. Morgan & TD Ameritrade
- Best for Mobile – E*Trade
- Lowest Fees – M1 Finance, Robinhood
- Best for Active Traders – Interactive Brokers
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
Best Mobile App
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 that 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.