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Find the Best Online Brokers

by Clark Kendall Personal Finance Expert

Many brokerage firms offer self-directed online trading for investors in addition to products like financial advice, portfolio management, retirement accounts and more. Use our guide to research the best online broker for you. These online trading companies makes it possible for almost anyone to invest in the stock market and trade securities.

Potential investors should consider their current level of investing knowledge, long-term goals, comfort with risk and the amount of professional advice they would like. When investors understand their options, they are able to choose a broker who can help them achieve their financial goals.

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What should investors consider when choosing an online broker?

Platform

When choosing an online broker for trading, consider the look and feel of the website and trading platform. Make sure you’re comfortable using the site before funding your account.

  • Demo: Many sites offer a demo version of their trading platform so you can try it out before creating and funding an account.
  • Ease of use: Make sure the website is easy to use and that you can find any tools and features that are important to you.
  • Speed: There likely won’t be much difference between the speed at which sites can make trades, but any differences that do exist can have significant financial repercussions if prices change quickly. Look for a site that talks about the platform speed.
  • Best-execution: Brokers are legally obligated to provide clients with the best price for any particular stock at the moment the purchase is completed. The speed at which a platform operates contributes to the best price, as do the ways the sites place trades. Order execution is less important if you will be placing limited orders, meaning you request to buy or sell a certain number of particular securities when the price reaches your specified point.

Costs

When you trade stock online, you generally pay fees in addition to the price of the stock. Fees vary by site and account type. To get the best deal, read website fine print carefully so you’re not surprised by hidden fees.

  • Commissions: Commissions are the most common fees associated with trading stocks and other securities online. Brokers usually charge fees per trade, so the more often you trade, the more money you’ll spend.
  • Inactivity fee: Some sites charge inactivity fees if you do not trade often enough. There may be a requirement to make a minimum number of commission-based trades every month, quarter or year. If you don’t make the minimum number, you’ll be charged a fee.
  • Initial deposit: If you do not want to invest a significant amount of money, you must choose a site that does not require an initial deposit amount. Some companies will let you open an account and begin making trades with only enough in your account to cover the commission and the stock price, while other sites require you to deposit thousands of dollars before you can begin trading.

Consumer education

If you’re new to online trading, look for a broker that will help you learn about the stock market and investing. If you plan to make trades without the assistance of a professional broker, make sure the resources available are designed for investors with your level of knowledge and experience.

  • Educational articles: Most frequently, online investment sites provide informative articles. These articles and resources may be very in-depth or relatively basic, and they might use highly technical language or be aimed at novice investors.
  • Live webinars: Some sites host live webinars with experts. These sites might be helpful if you want to learn a lot and hear from experts. Webinars are typically free for account holders.
  • Local workshops: Brokers with traditional brick-and-mortar locations may host workshops for account holders. Workshops are not held at all locations, so check whether the location nearest you offers this benefit before signing up for an account.
  • Instructional videos: Sites with more in-depth educational resources include videos that explain topics, actions and how to use the trading platform. If you’re an auditory learner, look for a site with video resources.

Investing advice

If you plan to make trades without the assistance of a professional broker or with only minimal guidance from one, make sure you have access to reliable investing and market information. Some sites provide this information for free while others charge you to access it.

  • Research tools: Many sites have live updates to track stock prices. Having this tool built into your trading platform might help you make decisions more quickly, which could have financial benefits when prices are changing quickly. If you are investing for the long term and aren’t planning to make trades every day based on split-second decisions, you can use Yahoo Finance, Google Finance, MarketWatch or a variety of other finance websites to find the same information for free.
  • News: Sites often feature a news section where you can see the latest market news. It may be convenient to see news stories on your trading site, but the same information is available for many other sources. If you don’t plan to visit your trading site daily, this isn’t a feature worth paying for.
  • Investing options: Those who want the option to get professional advice should look for a company that offers multiple financial services. These services might include having occasional advising conversations, requesting market research, meeting with a broker to review your portfolio or having a professional take over all the management of your portfolio with a managed account. Fees for all of these services vary by company.

Customer service

If you have any problems with your account, you’ll need to contact customer service. Choose a company that offers convenient options for getting in touch with representatives.

  • Hours: If you plan to make trades after business hours, look for a platform with 24-hour customer service. Regardless of when you’ll want to contact the company, make sure the company’s website clearly lists their hours of operation.
  • Contact options: Most companies offer customer support by phone, e-mail and online chats. If you prefer one of these options over the other, try contacting the company with a question before you sign up for an account using that option.
  • Fraudulent activity: Some companies offer protection for consumers whose accounts are accessed by unauthorized parties. These brokers will replace the funds or securities stolen as long as you’ve followed all their best practices for security and privacy.

Offline options

If you’re frequently away from your computer or an Internet connection, choose a broker that allows you to make trades in other ways.

  • Phone: Many companies will place trades for you by phone. There may be additional fees for this service, but it can be helpful if you don’t want to wait until you’re at a computer to make a trade.
  • Local offices: If the brokerage firm has brick-and-mortar locations, you can often make trades by going to a local branch. This option will be helpful if you’d like to talk to an advisor before making a trade, but that may incur an additional cost.

What are different types of online brokers?

Online trading focused

The Internet made it possible for people to trade from their home computers. Many online brokers went into business to serve specifically those who wanted to trade stock online without going to a financial advisor. Although these companies may have expanded to offer additional services, they remain focused on online stock, options and futures trading.

Full service

More traditional brokers and financial firms entered the online trading business to attract new customers. These brokers offer traditional investment options, retirement accounts, managed accounts and more. Those who want to trade securities online can usually get a wide variety of support levels from these firms.

Financial advisors

Both brokers who focus on online trading and full-service companies often employ financial advisors to assist customers when necessary. There is usually a fee for working with an advisor. If you plan to work with an advisor extensively, determine whether they are a fiduciary, meaning they are legally bound to work in your best interest.

Platform only

Brokers that merely provide a platform for online trading are the most basic choice for investors seeking online trading options. These brokers keep their costs down by offering a bare-bones service.

Who should have an online broker?

Self-directed investors

Those who feel comfortable investing their money on their own should consider an online broker.

Hands-off investors

Those who do not want to manage their own investments at all can still choose an online broker, especially if they find the Internet brokers’ advising service fees to be cheaper.

Semi-involved investors

Investors who want to be involved in the management of their money and make some of their own choices about which securities to choose will like the flexibility of firms with the option for online trading as well as financial advisors’ services.

Not sure how to choose?

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    Author reviews for online brokers

    Fidelity Investments

    Fidelity Investments is a privately-held full-service financial firm that offers an extensive range of investment options, including online trading, retirement accounts, IRAs, mutual funds, life insurance and more. The company has been in business since 1946 and now serves more than 25 million individual investors. It is headquartered in Boston with locations across the United States.

    Read more about Fidelity Investments
    Interactive Brokers

    Interactive Brokers has roots going back to 1977. It now has nearly 1,000 employees working in offices around the world. It allows individuals and professional brokers to access and trade stocks and other securities electronically.

    Read 6 Reviews
    OptionsHouse

    OptionsHouse is an online trading focused broker for all levels of investors. It offers trades with flat, upfront fees. The company was founded in 2005 and became a part of the E*TRADE family in 2016. It is headquartered in Chicago.

    • Clear fees: Interested consumers can easily see all OptionsHouse’s fees on the company’s website. Most charges are flat fees and are not based on the trade amount.
    • Platform: The OptionsHouse trading platform incorporates proprietary software designed to help investors make trades quickly. The site also has several tools and resources to help clients learn how to use the site.
    • Research tools: Account holders have access to several tools to help them make the best decisions for their investing strategy. The platform itself has prediction tools and information, and the site features webinars and a blog to educate clients.
    • Options: OptionsHouse offers option trades for only 50 cents plus the flat $4.94 base fee. Some of the platform’s resources are specifically for understanding options.
    • Account types: OptionsHouse offers multiple types of accounts. Choices include individual, joint and business accounts as well as education accounts and trusts.
    Charles Schwab & Co.

    Charles Schwab offers a wide range of financial services and products, including online trading for all levels of investors. The publicly-traded company was founded in 1973 and is headquartered in San Francisco. The full-service firm has offices across the country to provide investors with support for whatever type of brokerage service they have.

    Read more about Charles Schwab & Co.
    e*Trade

    E*TRADE is an online brokerage firm that offers consumers several financial tools for investing. Their online trading platform offers both a simple, easy-to-use interface as well as a more detailed and complex system for more advanced investors. E*TRADE was founded in 1982 and made its first electronic trade the following year.

    Read 450 Reviews
    TD Ameritrade

    TD Ameritrade, founded in 1975 as First Securities Omaha, is a full-service brokerage firm. It is still headquartered in Omaha, Neb. and now holds $774 billion in investor assets. It offers many types of investment and financial products for all levels of investors. Clients can work with agents in local branches or only trade stocks online.

    Read 335 Reviews
    OptionsXpress

    optionsXpress is an online broker that allows self-directed investors to trade stocks, futures, options, mutual funds and more online. It launched in 2000 and became a part of Charles Schwab in 2011. The company is headquartered in Chicago.

    • Local workshops: optionsXpress clients can attend educational workshops at their local Charles Schwab offices. Interested consumers can see a list of workshops and locations on the Charles Schwab website.
    • Education: The optionsXpress website has educational resources for those who want to learn more about stock, options and futures trading. Interested customers can register for live webinars, watch on-demand videos and receive daily e-mails about the futures market.
    • Virtual trading account: Individuals who would like to practice trading before investing real money can sign up for a free virtual trading account. They will have access to $25,000 in virtual money to make trades to experiment with trading stocks, futures, options and more.
    • Research tools: Investors have access to several tools to research stocks, options and more before they make a purchase. Tools include historical charts to assess volatility, calculators to see how the asset would perform in different scenarios and other tools to help traders get investment ideas.
    • Customer service: optionsXpress clients can reach customer service agents during extended business hours through online chats or by phone. Those seeking help with futures trading can get help 24 hours a day during the week. These representatives can assist with making trades and using the platform, but they do not offer investing advice.
    Ameriprise Financial

    Ameriprise is an investment firm with an extensive range of online services. It was founded in 1894 in Minneapolis, where it is still headquartered. The company manages $750 billion in assets for over two million clients. Those with an Ameriprise brokerage account can make online trades of stocks and EFTs in their online account.

    Read 391 Reviews
    Robinhood

    Robinhood was established in 2012 when the founders set out to remove the unnecessary costs associated with online trading. The app-based trading platform is free and lets consumers make trades without paying a commission. The fast-growing startup aims to disrupt the online brokerage industry.

    Read 21 Reviews

    Compare Reviews for Top Online Brokers

    by Clark Kendall Personal Finance Expert

    Clark Kendall has over 30 years of domestic and international investment and wealth management experience, focused on serving Middle-Class Millionaires. He is a Chartered Financial Analyst (CFA), Accredited Estate Planner (AEP) and Certified Financial Planner (CFP). He is the president and CEO of Kendall Capital in Washington, D.C., and a member of the Washington Society of Chartered Financial Analysts.

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