Compare the Best Online Brokers for Stock Trading
Online trading makes it possible for almost anyone to invest in the stock market and to trade securities (stocks, options, etc.). Many brokerage firms offer self-directed online trading for investors in addition to products like financial advice, portfolio management, retirement accounts and more.
Those looking for brokers specifically so they can trade online have many choices. Potential investors should consider their current level of investing knowledge, long-term goals, their comfort with risk and the amount of professional advice they would like. When investors understand their options, they will be able to choose a broker who can help them achieve their financial goals.
Top 10 Best Rated Online Brokers
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Charles Schwab has been in business since 1973. The company offers extensive financial and investing services, including online trading, managed investment and retirement accounts, banking and credit cards.
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TD Ameritrade is one of America's leading financial companies, and it is based in Omaha, Nebraska. Today, the company offers customers advice about stock trading, investing, retirement planning and more.
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Scottrade, established in 1980, offers products and tools to meet most investors’ needs, including self-managed trading accounts, retirement accounts and more. The company’s headquarters are in St. Louis.
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Established in 1946, Fidelity offers many investment products, including online U.S. and international trading. The company is headquartered in Boston and has over 190 branch offices across the country.
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E*TRADE provides a variety of financial services. Established in 1982, E*TRADE has been in the online trading industry almost since the company’s inception. It is headquartered in New York City with offices in 17 states.
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Headquartered in Minneapolis, Ameriprise offers investment advice, wealth management, life insurance, annuities and retirement planning. It has been in business since 1894 and now manages more than $750 billion in assets.
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Vanguard is a client-owned investment firm with headquarters in Pennsylvania. It has been in business since 1975. Vanguard offers clients online brokerage services to expand their portfolios while saving for a long-term goal.
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Interactive Brokers, headquartered in Greenwich, Conn., has been in the stock exchange industry since 1977. It offers professional investors and those with moderate experience the ability to trade online or by phone.
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OptionsHouse by E*TRADE is a site for trading stocks, options and futures online. The Chicago-based company has been in business since 2005 and became affiliated with E*TRADE in 2016. It has tools for all levels of investors.
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Merrill Edge is a division of Bank of America that was created in 2010. It gives investors access to resources from both Bank of America and Merrill Lynch and offers brokerage tools and market research.
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What features should investors consider?
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.
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.
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.
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.
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.
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.
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.
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.
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?
Those who feel comfortable investing their money on their own should consider an online broker.
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.
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.
Online broker company reviews
TradeKing is an online brokerage firm that was founded in 2005 to facilitate online trading. Although the company now has additional services, it remains focused on online trading. It allows clients to either make their own trade or sign up for a managed portfolio. The company is headquartered in Fort Lauderdale, Fla., and is a subsidiary of Ally Financial Inc.
- Straightforward fees: TradeKing prides itself on having a simple and straightforward fee structure. Interested customers can see the fees for individual trades and the managed accounts.
- TradeKing Advisors: Consumers who are uncomfortable managing trades and investments themselves can sign up for a TradeKing Advisors account. These accounts are managed by professional brokers and personalized around each client’s level of comfort with risk.
- Education: The TradeKing website has an extensive Education Center to help consumers learn more about investing. Visitors to the website can select to learn by investment type, experience level or the market outlook. In addition to informational articles, the site features webinars and live events. Many of these tools are available for any investor, not only TradeKing clients.
- Research tools: TradeKing’s website offers several research tools that allow consumers to learn more about a company before making an investment. Only registered clients can access these tools.
- Trader Network: Account holders can interact with other investors on TradeKing’s Trader Network. They can share their experiences, seek advice and discuss strategies on the site.
- Best for: TradeKing is best for self-directed investors who want access to educational materials and hands-off investors who want a straightforward managed account.
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.
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.
- Free trial: Interested investors can begin the application for a new account to start a free 30-day trial of Interactive Brokers’ trading platform. If they like using the website, they can simply complete the application and fund their account.
- Education: All interested consumers can visit the Interactive Brokers website to learn about trading and investments through webinars, short videos, live events, apps, widgets and more. These resources will be most helpful to investors with some previous knowledge of investing and financial terms.
- International trading: Those who want to trade in international markets can do so using Interactive Brokers. The site allows users to trade on exchanges in 24 countries, and clients can find their accounts with multiple currencies.
- Multiple platforms: In addition to trading from smartphones, clients can choose from two desktop platforms, both of which provide the same research tools. One of the platforms is an HTML-based system that has fewer features, making it easier to navigate for newer customers.
- Broker assisted trading: Those who are away from their computers or do not have a mobile Internet connection can call Interactive Brokers’ Trade Desk to make trades. Brokers at the trade desk can also help with complex orders if the client needs additional help.
- Best for: Interactive Brokers is best for professional investors and those with some prior knowledge of the stock market, especially those ready to make a larger investment.
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.
- Best for: OptionsHouse is best for self-directed investors, especially those interested in options trading.
Merrill Edge was created in 2010 and is a division of Bank of America. The brokerage firm merged Bank of America’s online investing tools with insights and research from Merrill Lynch. It offers a wide variety of investment products that are appropriate for all investors regardless of their finance knowledge. Special perks are available for those with large accounts.
- Bank of America: Because Bank of America owns Merrill Edge, customers with a Bank of America account can easily transfer funds back and forth between their bank account and their investment account. Customers who maintain a balance of $20,000 across their affiliated accounts receive special rewards and discounts.
- Guided and Managed Accounts: Investors who want additional help building their stock portfolio can choose a Guided Account or a Managed Account. Guided Accounts gives investors access to Merrill Lynch portfolio managers. Professionals fully run Managed Accounts, so consumers don’t need to do any work.
- Customer service: Merrill Edge customer service representatives are available by phone and online 24/7.
- Research tools: Clients have access to several stock research tools, including a search tool with advanced features to help clients find the kind of investment stocks they’re looking for. The site also features free informational and news articles about the stock market.
- Education: The Merrill Edge website has a section for investor education. Visitors can browse by experience level, topic or format. Many of these resources are available for free to all consumers.
- Best for: Merrill Edge is best for existing Bank of America customers as well as those ready to invest $20,000; however, self-directed investors with smaller sums will find many of their services helpful as well.
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.
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.
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.
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.
- Best for: optionsXpress has tools making it a good choice for any level of investor, but it is best for self-directed investors.
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.
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.
- No commission trades: Robinhood does not charge investors anything to purchase a stock using their platform. Instead, the company generates profits by collecting interest on the cash in your Robinhood account. This feature saves consumers money every time they make a trade.
- App interface: As of October 2016, Robinhood only allows clients to make trades using their smartphone app. The app is easy to use, making it simple to make traders. The company plans to introduce a web platform in the future.
- Robinhood Instant: With a Robinhood Instant account, clients can trade on margins and make trades with funds that haven’t been cleared in the account yet. This means a customer could sell one stock and instantly use the profit to purchase another stock without waiting for the funds to be deposited in their account.
- Watchlist: Clients can set up a watchlist in the app to monitor the real time activity of stocks in their portfolio or other stocks they’re following. From the app they can also see news about the company and company statistics.
- Sign up: Signing up for a Robinhood account takes less than 5 minutes, and the account can be approved almost instantly. Funding the account can be done in the app or online, and there is no minimum funding amount.
- Best for: Robinhood is best for self-directed investors who are comfortable learning about and researching the stock market on a different site.
Scottrade is an investment firm that offers many types of financial services and investing options to clients, including self-directed online trading. The company was founded in 1980 and is headquartered in St. Louis. It serves more than three million clients.
Information in this guide is general in nature and is intended for informational purposes only; it is not legal, health, investment or tax advice. ConsumerAffairs.com makes no representation as to the accuracy of the information provided and assumes no liability for any damages or loss arising from its use.