The Best Online Stock Brokers
The information age has simplified a number of historically difficult processes, not the least of which include the buying and selling of stocks. But with so many options available, how should you assess which online stock broker is best? Here, we go through the top online stock brokers, detailing the pros and cons of each.
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Stock brokers act as middlemen between investors and stock exchanges. In the early days of the stock market, all buying and selling of stocks took place on a stock exchange between licensed brokers. Today, however, technology has replaced the famously colorful brokers of the past. This new technology makes trading stocks is an easy and efficient process – saving investors time and money. Yet unless you are buying or selling physical stock certificates, you still have to go through a stock broker in order to buy or sell on a stock exchange.
Years ago, trading stocks was a painful process. For most investors, it involved receiving price updates and placing trades over the phone. The process required time — a valuable commodity in the world of stock trading. It also cost money, as investors often paid high commissions on their trading orders.
Today, thanks to the expansion of the internet, computers, and smartphones, stock trading is relatively simple. Online stock brokers have replaced full-service brokerage firms for all but the most sophisticated institutional investors. These online brokers are designed with individual investors in mind, allowing you to trade stocks, bonds, options, ETFs, commodities, and other investments — from wherever you have an internet connection.
You can also access a number of tools to analyze trends, patterns, and receive alerts based on criteria you configure. And with recent changes to broker fee structures, more people are investing, with less fees.
There are a number of online stock brokers to choose from. Each of them have their own unique advantages.
In the end, the best online stock broker will depend on what you’re looking for. In this report, we go through the top online stock brokers so you can decide which one is best for you.
Best Online Stock Brokers
Some online stock brokers are best for beginners and offer a number of free educational resources. Others have slashed fees, with a priority on commission-free trading – a good fit for active traders. Several focus on offering diverse investments options across a wide variety of asset classes.
Whatever you’re looking for — whether that’s low fees, ease-of-use, customer support, or something else — this report has you covered.
1. Fidelity Investments – Lowest Cost Online Brokerage
- Excellent rating for trade executions and accuracy
- Detailed research and intelligence for ETF
- Easy for beginner traders
- Advanced options like Active Trader Pro
- High price improvement
- Customers may have to sign in to multiple platforms to access different trading tools
- Non-US citizens cannot open an account
Clients rank Fidelity high among online brokerages. The company has a long history as a discount broker and makes it easy for traders to buy and sell without paying too much in fees. You can also use a variety of tools to research and analyze market trends, and get advice from robo-advisor tools. Wealth Lab Pro is a testing tool that allows you to test out trading strategies.
In addition, Fidelity has no account minimum, and you won’t be charged any bank fees. When it comes to mutual funds, you can trade over 3,000 different funds without a transaction fee. As of October 2019, Fidelity stated that all US stocks and exchange-traded funds (ETFs) would no longer have a commission fee.
Fidelity has also been a leader in new areas of investing and technology. One new feature for cryptocurrency investing – a strategy more popular with younger generations – is allowing traders to connect their Fidelity brokerage accounts to their Coinbase cryptocurrency account so they can see all assets in one place.
If you’re looking for a simple entry into online trading and have some market knowledge, you can easily use Fidelity to set up your own portfolio. It’s also suitable for active or passive traders.
2. E*Trade – Most Advanced Online Trading Tools
E*Trade is one of the oldest discount brokers and was first major online broker to disrupt the old full-service broker order. The investment company offers a robust online platform for trading and market analysis, and a number of helpful tools.
- Streaming strategy options are available and easily understand using E*Trade’s tools
- Futures traders use E*Trades’ mobile futures ladder for higher gains
- Performance risk tools allow you to test your entire portfolio or just a single asset
- No commission fees charged for stock and ETF trades
- The advanced options tools are not available in the mobile version
- High margin rates
- No bank account integration
Since E*Trade has been around for a while, both advanced and beginner investors can use this platform for their interests. You can use desktop and mobile tools to access the exchange and make trades, but they have multiple market centers to provide higher speed and accuracy for trade execution. With the use of charting and robo-advisor tools, you can also use E*Trade to conduct research on investment products and trades.
E*Trade also sets itself apart by offering a variety of trading education tools even if you are not a customer. Since E*Trade eliminated commission fees on ETFs and equities, it’s easier than ever to trade on their platform, but it’s also one of the brokers with the highest margin interest rates.
In February 2020, Morgan Stanley announced its intention to acquire E*Trade, although the details are still being finalized.
3. TD Ameritrade – Best Overall for Every Kind of Trader
TD Ameritrade is often ranked at the top of online brokers because they offer both full-service and discount options. Whether you’re a very active trader or just want to build a nest egg passively, TD offers an online exchange where you can trade and test trading strategies on multiple platforms. The amount of research tools and options can be overwhelming if you are new to trading.
- Extensive research options and numerous news feeds to customize and stay active on trends
- Educational courses to help new investors get more comfortable
- Additional support offered through Facebook Messenger, WeChat, Twitter, and more
- No commission fees on stock or ETF trades
- Desktop and mobile apps not consistent with tools, so you may have to log in to the website to get the most options
- Website can be overwhelming to navigate without using a guide or getting customer service help
TD Ameritrade offers a downloadable platform called “thinkorswim” that allows you to create a completely custom portfolio, and you can set up different layouts, trading defaults, and news feeds to inform you on current trends. TD’s website also has a customizable dashboard. However, this can often be overwhelming to first-time or new traders. The company has been working on streamlining its online tools.
There are over 300 types of ETFs and over 12,000 mutual funds available on TD Ameritrade. Options trading can be done through thinkorswim, which lets you trade on any spread that you want to create with up to 8 legs. Forex and international exchanges are also available, but you may need to sign up for a live broker to do so.
Overall, TD Ameritrade does have the best of both worlds when it comes to discount brokerage and low-cost trading, as well as research and education tools. They’ve recently expanded their customer service to help clients get more familiar and comfortable with their platform’s tools as well.
Though the details are still being worked out, keep in mind that Charles Schwab is set to acquire TD Ameritrade. The deal is expected to close in the second half of 2020.
4. Acorns – Best for Beginners With No Investment Experience
Acorns takes all the guesswork out of investing by helping you round up purchases to the nearest dollar and investing that change into a portfolio. By using a combination of discount broker options and robo-advisors, Acorns helps passive, hands-off investors create a nest egg over time.
- Great for investors who want to earn money for savings with very little risk
- Customizable for your trading preferences without getting too deep into investment knowledge
- While it’s made for passive earning, you can also add or withdraw lump sums and set up automatic deposits
- Automated investments are made for you in ETFs based on recommendations from your personal information, but you can choose to invest in any portfolio you like
- Everything is accessible through their mobile app
- In a world of no-fee commissions, Acorns does charge you fees including $5 to open an account and $1 to $3 in monthly fees
- Your account is also taxable, unlike a tax-advantaged account
- Little range of investment products
We wanted to include Acorns because it’s received pretty high reviews from customers, as well as some lower ratings due to their account fees. Overall, Acorns may only be right for those who truly just want to passively learn about investing and don’t want to learn about online trading exchanges in greater detail. There are some things that you should know about this investment app.
For those who have no experience with trading and don’t want to learn, Acorns offers a simple way to “grow your money” passively. You don’t even have to fund the account manually, as everything is automated. With that said, their monthly fees are a little high if you are only investing in change, and you may not grow your account as fast. In addition, you may potentially pay taxes on any dividends you earn from stocks.
5. Charles Schwab – Best for Full-Service and Online Broker Needs
With no account minimum and lots of trading tools, Charles Schwab is one of the best when it comes to online trading with full-service options. They do not charge any stock, ETF, or options trading commission fees in the US.
- Charles Schwab offers a guarantee that allows any client to get a refund if they are unhappy with fee-based services
- Use the StreetSmart Edge platform to get more options and trading ideas
- Mobile web and app platforms offer the same tools and functionality
- No commission fees on stocks, ETF, and options
- Full service options are more expensive because you have access to a live broker
- Schwab often pushes clients towards full-service advisors, which can lower investor confidence
- Margin rates are higher than average
Overall, Charles Schwab does what other online brokers cannot do. They have streamlined mobile and desktop platforms to offer the same range of tools and trading options. You can also get the guidance of a financial advisor for an additional charge, or you can use their system to trade on your own. Schwab also provides full banking capabilities for its investors.
With StreetSmart Edge, you can simulate trades using real-time news and data with customized charts. This lets you see projections of stock performance so you can make informed decisions. However, they suffer slightly in trading technology and execution of orders since they use wheel-based routing. While it’s generally accurate, traders may find that their stocks and multiple-exchange options are routed to third-party wholesalers.
If you want the best of both worlds in a truly intuitive online broker tool, Charles Schwab has it all. Investors should only be careful of not falling into paying for full-service advisors if they use the trading tools and can manage their own portfolios.
6. Interactive Brokers – Best for Active Traders
If you are an active trader and want a high-caliber investment platform with lots of tools and experienced advisors, Interactive Brokers is for you. In addition, it’s one of the best platforms for investors who like to trade on margin since it has the cheapest rates.
- Low margin interest rates
- Platform is geared towards day traders and very active traders
- Clients may trade on 120 markets in over 30 countries using 23 currency types
- Excellent analysis tools to advance your portfolio
- IBKR charges fees including $0.005 per share for standard platform
- Must earn at least $10 in commissions per month for accounts under $100,000 or you will be charged the difference up to $10
- Not for traders who have less than $2000 to invest
Interactive Brokers offers a lot of options for those who are very active and love trading on a daily or weekly basis. If you like to follow the trends and need a lot of tools or you want to trade on margin, this is the best online brokerage for you.
However, it’s definitely not the platform to go to if you have never traded before and do not know how to use market data. With that said, you’ll get real-time monitoring, customizable charts, and streaming news feeds.
While the platform does have fees, they are quite low and match the needs of an active trader who is trading on margin rates. In addition, they advertise stock and exchange-traded funds (ETFs) at $1, but their pricing is based on an individual share cost of $0.005 per share. If you are trading more than 200 shares, then you’ll go above the $1 incentive rate.
They also have low-tiered pricing for those traders who want to maximize their shares by trading over 300,000 or more. You also get a low rate for options at $0.65 per contract and no-transaction mutual funds.
In conclusion, active traders benefit the most from Interactive Broker’s platform, and they also have mobile app options. While it’s not the best online broker for beginners, you can earn quite a bit more with your portfolio using their options and lower margin interest rates.
Online Brokers: Which Features Matter Most?
When it comes to choosing the best online broker, you have to decide upfront what type of investor you want to be.
Some brokerage firms allow you to easily trade stocks and funds, and you can open retirement accounts for passive earnings. However, there are also some brokerage firms that charge high interest rates on margins, which isn’t good if you want to be an active trader.
Most online brokers have eliminated commission fees on trading individual stocks and ETFs in the US, but you still may get caught on cost per trade. We break down all of the features that matter most in our online broker investment guide.
Cost per Trade
Online brokers may advertise zero commission fees on stocks and ETFs, but they may charge more for options and mutual funds. They may also have account fees or minimum investment deposits. Many of the major online brokers stopped charging commissions in October 2019.
Variety of Investment Products
Low to zero commission fees don’t matter if the online brokerage does not have the right options for you. Most brokers have the ability to help you invest in any asset you want, whether it’s stocks, bonds, ETFs, mutual funds, real estate investment trusts, options, futures, and other securities.
Then, there are brokerages that want to only be good at niche services, such as stocks and ETFs only or mutual funds only. This goes only with deciding what type of investor you want to be, so you need to decide the investments that work with your portfolio.
Initial Deposit Investment Requirements
What are the account minimums? What is the initial investment deposit amount? In some cases, you only have to deposit $100 to $500 while others request over $1,000 to $20,000 to get started.
If you don’t have much capital or you’re new to investing, then you may want to work with a broker that does not require you to invest more than a few hundred dollars. Fidelity and Ally Invest also have no minimum required options.
Can You Set Up Retirement Accounts?
Most people simply want to build a nest egg with their investment earnings. While some online brokerage firms offer retirement account set up, others do not have any options for IRAs or Roth IRAs.
It’s important to check this before you sign on. If you don’t see any options for IRAs, Roth IRAs, or even a 529 account for college funds, then you may want to look elsewhere.
Full-Service Options or Robo-Advisors?
Online brokers may offer a live broker to help you manage the portfolio. If this is the case, they likely offer guidance on how to allocate your assets.
They may offer to periodically rebalance your accounts to maintain your specified risk tolerance. The best robo-advisor platforms offer “automatic rebalancing”, which may be the best option if you like hands-off investments.
Direct investment advice is also available through full-service online brokerages. If you don’t want to trade completely on your own, then you want a broker who can advise you on the trends and offer tips on your current portfolio.
Online brokers typically charge little-to-no fees because they don’t offer a live broker, but they may have a robo-advisor who provides you with some tips and online tools for analysis.
Separately from full-service options, how satisfied are customers with the service? Charles Schwab offers a money back guarantee on all fee-based services to assist customers when something goes wrong. Other online brokers are hard to get a hold of or don’t have a phone number to call.
Before you jump into any brokerage firm, you need to make sure that it’s easy to call and get help when something goes wrong. You may want to do a practice call to see how fast support is able to figure out your problem via live chat or call up their customer service line to see how responsive they are.