Fueled by massive stock buybacks, growing earnings, and increasing consumer confidence, the market has been on a tear this past year and there are lots of reasons to expect stocks to continue their determined climb.
Whether you’re investing through an IRA, an individual trading account, or even trading the forex market, choose the best online trading brokerage and you’ll gain the edge you’ll need to grow your investments.
Best Online Stock Brokers:
- Best Overall: TD Ameritrade
- Best Affordable Broker: Charles Schwab
- Best for Usability: TradeStation
- Best for No-Transaction Mutual Funds: E*Trade
- Best Broker for Margin Trading: Interactive Brokers
- Best for Experienced Traders: Firstrade
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Why Use an Online Stock Brokerage?
For decades, investors consulted financial advisors or personal brokers to manage their investments. Financial advisors continue to provide value but for many investors, modern online brokerages provide all the tools needed to invest successfully — and to learn to identify your own opportunities.
Whether it’s an individual trading account or a trading account aimed at retirement planning, you’re building toward a brighter future.
Utilizing the tools available through an online brokerage gives you control over the direction of your investments — and it makes you more nimble.
If the market changes suddenly, you have the ability to react quickly. With a financial advisor or a firm, which may have hundreds or even thousands of clients, you may not have the same flexibility. Costs are another strong consideration.
Many financial advisors or money managers take a small percentage of your portfolio as a fee. In years where your market gains are smaller, these fees can make it harder to build your nest egg. Make no mistake, online brokerages charge fees as well.
However, the fees for online brokerages tend to center around per-trade costs as opposed to a fixed management fee, making trading costs less of a concern for traders who don’t trade in and out frequently.
In general, you can expect to pay between $4 to $10 per trade if you’re trading common equities or exchange-traded funds (ETFs). Discount trades are no longer the exclusive territory of no-frills online brokerages.
In the past two years, many top-tier names have lowered their trading fees considerably, bringing industry-leading research tools and cost-effective trading together. Add a few points to your gains (or more) by reducing your trading costs can add up to thousands over time. When it comes to investing in your future, no one has a greater vested interest than you.
First, Understand Your Stock Trading Goals
It’s important to know your goals and define your priorities before choosing a broker. If you’re a buy-and-hold investor and expect you’ll only have a few stocks or funds, research tools are probably a stronger consideration than saving a dollar per trade. An informed trading decision will have a larger impact on your investment account than an occasional dollar or two in trading fees.
However, if you trade frequently and follow financial news through multiple sources, you might place a higher priority on the cost of trading. A wide variety of investment options can be important as well. In general, you can expect to be able to trade all major stock and ETFs through any online broker.
Mutual funds are often available as well but the selection will vary from one broker to the next, particularly since some top brokers also sponsor their own portfolio of mutual funds. Saving for retirement, saving for education, or trading for the fun of it can steer your needs in different directions.
What to Look for in an Online Stock Broker
Depending on your experience level and how often you trade, you might have different priorities than others when choosing a broker. Technical traders may be less interested in whether a broker has a large selection of mutual funds than in how flexible the charting tools are, for example. Here are some of the common considerations:
- Research tools and news
- Trading tools and charts
- Wide selection of securities or funds
- Affordable fees and minimum investments
- Banking services, including automatic investing
- Positive customer reviews
What to Watch Out for in an Online Stock Broker
Unlike at the beach where a red flag warns of universal danger, some red flags for brokers might be a concern for some investors but not for others. Still, it’s always good to be aware of potential drawbacks before choosing an online broker.
- Account or Investment Minimums: Some brokers or funds may require a minimum investment amount. Account minimums or investment minimums can obviously be a concern if you don’t have enough money to meet the minimum requirements but minimum requirements can also limit your flexibility if your intention was to scale into an investment slowly rather than invest a larger amount. In particular, be wary of brokers or funds that charge fees if your balance falls below a certain value.
- Maintenance or Inactivity Fees: If you’re a buy-and-hold investor, imagine how frustrating it can be to see fees charged to your account for maintenance or due to inactivity. It pays to read the fine print. Maintenance or inactivity fees can become silent partners who take a percentage of your investment earnings without contributing value.
- Premium Research Access and Premium Features: It can also be frustrating to learn that some features advertised by an online broker are locked behind a paywall. Competition has made many features — which previously had been premium features — free through many leading online brokerages. Unless the type of trading you do is highly specialized or you need a less commonly-used charting method to time your trades perfectly, there likely isn’t a need to pay for premium services.
- Margin Fees: It should go without saying the traders who choose to trade on margin (credit) should understand the costs involved and the possible risks. High margin fees for some online brokers can create a headwind that may be difficult to overcome.
The Best Online Stock Brokers
All brokerages were carefully chosen based on the criteria above, meaning only the best of the best are listed below. Scroll down to compare our favorites.
1. Best Overall: TD Ameritrade
While TD Ameritrade isn’t the least expensive online brokerage, the platform has a lot to offer. Tools abound for seasoned investors and traders, with nearly 400 charting indicators and analysis tools, more than double the amount available through well-known competitors. Having more options is great but most investors will only utilize a handful of these tools.
TD Ameritrade thinkorswim
Originally an independent platform, thinkorswim was acquired by TD Ameritrade in 2009 and is now regarded as one of the best trading platforms in the business. Beginning investors may prefer TD Ameritrade’s simpler Trade Architect platform.
Trading demos, instructional videos, and online courses are available for all users. Unique to thinkorswim is a virtual trading environment that allows traders to test their trades and timing with paperMoney. Thinkorswim is available as a desktop or mobile app and “paperMoney” has a free trial if you’d like to test the platform before committing to an investment account.
As with most other online brokerages, TD Ameritrade went commission-free for stocks and ETFs in late-2019. Both active and passive investors alike can now enjoy high volume trading without paying commission fees.
|Stocks||$0 per trade|
|ETFs||$0 per trade|
|Options||$0.65 per contract + $0 per trade|
|Futures||$2.25 per contract|
|Mutual Funds||No-load $49.99, Load $0, No Transaction Fee $0|
|Bonds||Net yield basis|
2. Charles Schwab
Schwab commits to making online stock trading affordable for you. It offers $0 online equity commissions for:
- U.S. stocks: This includes over-the-counter stocks (OTCs), IPOs and more.
- Fractional shares: You can own any company in the S&P 500 for as little as $5 with Schwab Stock Slices. Instead of buying a whole share of stock, you can buy a fractional share or a partial share. It’s a simple, low-cost way to invest in a little slice of the S&P 500.
- International stocks: You can trade American Depositary Receipts (ADRs), foreign ordinaries and Canadian stocks.
Don’t miss out on Schwab’s stock research and trading tools, designed for both new and experienced investors.
- Advanced screeners and Schwab Stock Lists help you find ideas, compare multiple stocks and create customized searches based on different strategies, ratings and more.
- Evaluate your stock choices with Schwab and 3rd-party research from Briefing.com, Credit Suisse, Morningstar and Market Edge
- Schwab Equity Ratings indicates Schwab’s 12-month outlook on over 3,000 U.S.-traded stocks.
Your trading just got easier with Schwab’s intuitive All-in-One Trade Ticket, its Gain/Loss Analyzer, real-time streaming quotes, advanced charting tools, knowledgeable trade assistance and more.
Are you an options trader? Schwab could be your go-to for trading options for a number of reasons, but technology is the No. 1 reason that helps you trade. You’ll be amazed by Schwab’s array of tools:
- Schwab’s Idea Hub combs the market for trade ideas.
- Schwab’s Trade and Probability Calculator helps you assess potential risk, reward and pricing scenarios.
- You can place single, multi-leg and conditional orders using the intuitive All-in-One Trade Ticket.
- Schwab’s Walk Limit order type works your options orders for you, automatically adjusting the limit price across specified time criteria and price increments to try to obtain a favorable execution price.
- You can use StreetSmart Edge on Schwab.com or through Schwab mobile apps.
Not into stock trading or options? Maybe you’re a passive investor who just needs a plan to boost your retirement savings. Schwab can guide you through all your life phases, from planning for retirement to how to handle your money during retirement.
Schwab boils it down to four steps:
- Understand your current situation. You can use Schwab’s Retirement Savings Calculator to understand where you are now in your savings and where you want to end up.
- Define your retirement savings plan. Learn your key savings strategies, then estimate your needs in retirement.
- Schwab helps you create a portfolio that fits you and that reflects your long-term goals and risk tolerance.
- Consider your plan options, whether you have a 401(k), 403(b), 457 or other qualified plan, a Traditional IRA or a Roth IRA for tax-advantaged growth or an Individual 401(k), a SEP-IRA or a profit-sharing plan if you have your own business.
3. Best for Usability and Education: TradeStation
TradeStation’s platform used to only be best for professional traders who needed a highly technical platform. Now, with TradeStation’s new TS GO account option, novice traders will have access to professional-grade stock screeners and extensive educational and development tools to help them develop as investors.
Another strength of TradeStation is the number of offerings available to trade. From stocks to ETFs to futures contracts to cryptocurrencies, TradeStation offers a wide variety of tradable assets. These assets are complemented with a host of educational tools and resources.
Furthermore, as is the case with other brokerages on this list. TradeStation offers $0 commissions on stocks and most ETFs.
4. Best for No-Transaction-Fee Mutual Funds: E*Trade
E-Trade is one of the best known online brokers — and with good reason. E-trade is competitive in most areas, including cost per trade and types of tradable securities, but E-Trade stands apart from the pack when it comes to its selection of no-transaction-fee mutual funds. The brokerage boasts an estimated 4,400 mutual funds that are available without a transaction fee.
Powerful filters allow you to drill down to the types of funds that fit your investment goals. With so many options, there’s likely to be something to please everyone — unless you just don’t like mutual funds. If that’s the case, E-Trade has over 150 commission-free ETFs available for you, which tend to have much lower management costs than mutual funds. Online trading is available through E-Trade web, which offers all the basics and a few extras. E-Trade also offers a full-featured trading platform called E-Trade Pro.
However, the advanced platform is only available to accounts with over $250,000 or that have more than 30 stock or option trades per quarter.
5. Best for Advanced Traders: Interactive Brokers
Home to Trader Workstation (TWS), one of the best platforms in the entire industry, Interactive Brokers is perfect for serious traders with advanced knowledge. With both inactivity fees and an intricate pricing system, IB should only be used by investors who trade frequently.
Along TWS, Interactive Brokers lets investors trade from their Apple or Android device, as their mobile platform provides excellent quality, several news feeds, accounts, watch lists, trading options, notifications, and more.
If you’re serious about the trades your making, Interactive Brokers is everything you’re looking for in a broker. Their low margin rates, low commission on high-volume trades, high interest paid to idle cash in your trading account, and elite tools and platform offers a unique experience to the right type of investor.
6. Best for Experienced Traders: FirsTrade
Firstrade is a solid choice amongst the dizzying array of brokerages in the market; all fees are set to mirror (or beat) robo-advisor pricing. In fact, Firstrade offers free trades on most of what it offers.
You can monitor your portfolio’s performance easily with the Firstrade mobile trading app, which offers a more dexterous option compared to a desktop. You’ll be exposed to a touch ID screen for iOS devices, equity ratings and fundamental data, advanced charts, comprehensive dashboard and improved research and trading interface.
Since the advent of Firstrade’s fairly recent Navigator, it’s possible to manage your account, place orders, get market updates and do research, all almost simultaneously. The single screen allows traders to immediately intuitively grasp Firstrade Navigator’s account dashboard. Take note, however, that a lot of the options available on Navigator are geared toward active traders.