Best Online Brokerage Firms For Stock Trading (2021 Reviews)
What is actually the best online brokerage for you? If you’re not a financial expert, just choosing the brokerage that best suits your needs can be a difficult task. It all comes down to understanding what your needs are, and then selecting the brokerage that best fits those needs.
This detailed brokerage comparison tool helps you quickly choose the right brokerage that meets your requirements. It's as easy as entering a few simple pieces of information and we’ll sort through the top brokerages to let you know which one is best for you.
I have $ and want to trade
at a brokerage with the following features
Although you can't control market performance, you absolutely can control fees. In fact, even a 1% difference in fees can make a HUGE impact on your investment returns. Therefore it absolutely pays to make sure you minimize these fees as much as possible. Unfortunately there are a wide variety of fees to consider:
- Trade Commission - How much the brokerage charges either per trade or per share. Most brokerages charge per trade, regardless of how many shares you buy or sell. However, if you're an active trader then it may be worthwhile to look into brokerages that charge per share - these brokerages have fairly large volume requirements and minium monthly fees so it's not suitable for beginners but could be a good choice later on if you trade frequently with smallish share counts.
- Broker Assisted Trade Fee - This only applies if you basically call the brokerage to have a human place an order for you. As long as you use their online platform or native apps to place your orders, you won't be charged.
- Mutual Fund Trade Fee - Brokerages will charge extra to trade mutual funds. Be wary of "No Transaction Fee" funds (NTFs) as well though - they typically make their money on management fees that are baked into the fund.
- IRA Annual Fee - Some brokerages charge an annual fee to maintain an IRA account.
- IRA Account Closing Fee - Some brokerages charge an account closing fee if you want to shut down an IRA account.
Not all brokerages have the same offerings!
- 24/7 Support - It's often nice to just get a hold of support anytime to help you handle a problem. This is particularly important if you trade forex since those exchanges stay open around the clock.
- Retail Locations - Sometimes you just want the ability to walk into a brick and mortar store and talk to a live human being.
- Virtual Trading - For those just starting off, it's great to be able to start trading with fake money to better understand how things work and to test out trading strategies. Virtual trading allows you to practice on a live "sandbox" account without having to put actual money on the line.
- Checking and Savings Accounts - Some people like the convenience of having their banking accounts at the same institution as their brokerage to make money transfer easier.
- ATM Fee Reimbursement - If a brokerage offers checking accounts, sometimes they will allow you to use ATMs out of network and refund you the fee that the ATM charges.
- Commission Free ETFs - ETFs are exchange traded funds which try to track a basket of assets close to their net value over the course of a trading day - they basically allow you to diversify without having to research and manage a bunch of different instruments. Various brokerages have their own ETFs that they offer without a trade commission since they make a slight profit in the management fee of the fund.
- Clearing Company - These orgnizations make sure that a trade is settled accurately and in a timely manner, basically making sure that the shares you buy and sell are attributed properly. Some brokerages handle this themselves, others outsource it to another company.
|Name||24/7 Support||Retail Locations||Virtual Trading||Checking Account||Savings Account||ATM Fee Reimbursement||Commission Free ETFs||Clearing Company|
|Merrill Lynch and Pierce and Fenner & Smith|
|Wedbush and ML Pro and Interactive Brokers|
"Best Of" Awards
Each brokerage has their own specialty area where they excel - we've distilled their pros and cons into this handy awards page so you can dig deeper into the ones that offer what you're looking for.
Best Research Tools
Best for New Investors
Best Options Trading
Best Active Trading
Best International Trading
Best Customer Service
Best User Interface
Learn More About Online Brokerages
Brokerage Accounts are Best For...
- Retirement savings
- Passive investing
- Active trading
- Estate planning
- College savings
Pros and Cons
Brokerage accounts are used to buy and sell stocks, bonds, mutual funds, ETFs, and other investments. You can open an account as an individual, a joint account with another person, as a trust, as a custodian for a minor, or one of several other options.
There are generally no major downsides to opening an investment account. However, it is important to understand that unlike a bank account, investment accounts can lose value. If you invest well, your investments can infinitely grow. However, a bad investment can quickly drop to zero value.
For example, investments in Google or Amazon performed well in recent years. Investments in the infamous company Enron became nearly worthless when the company’s accounting scandal broke into the news and the company declared bankruptcy in December, 2001.
Most brokerage firms require a minimum balance to open a new account. For example, Charles Schwab requires a minimum $1,000 deposit to open a new account. This is waived, however, if you setup a recurring direct deposit of $100 per month or more. Competitor TradeKing has no minimum to open a new account.
Some firms also have a minimum balance to access special account types and features. TD Ameritrade does not have a minimum to open a new account, but requires a $2,000 balance to access advanced features like margin and options trading.
Fees and Commissions
Opening Fee - Most brokerage firms do not charge an account opening fee. You should not have to pay a brokerage to give them your money!
Closing Fee - Some brokerage firms do not charge a fee when transferring out an account, but it is not uncommon to see fees around $50-$75.
Maintenance Fee - Standard brokerage accounts do not charge any maintenance fees to keep the account open. Some brokerages charge a fee that is waived if you meet minimum balance or activity requirements.
Withdrawal / Transfer Fee - You should not have to pay any fees to withdraw cash from your account. Most firms do not charge a fee to transfer out specific assets. However, if you are transferring out all assets in the account, fees are not uncommon.
Trade Commission - Firms commonly charge around $10 per trade when buying and selling stocks. TradeKing is notably on the lower end with a $4.95 trade fee. Loyal3 offers fewer investment options than most firms, but allows you to buy and sell with no trade fee. Mutual fund fees vary widely. The biggest brokerage firms offer trades for a limited set of funds at no charge. For other funds, fees up to $50 are common.
Supported Account Types
Brokerages offer accounts that have different tax rules depending on how you set them up and plan to use them. A standard brokerage account allows buying and selling securities with capital gains taxes required on investment gains.
You can also open up retirement investment accounts. IRAs, Roth IRAs, and other retirement specific accounts offer tax advantages over a standard brokerage account.
How to Open An Account (Setup Process)
Most brokerage firms offer a simple, online account opening process. Expect to spend about ten minutes filling out the online forms. You can also request paper copies to send in by mail. Firms with physical branch locations typically offer the ability to open a new account in person as well.
To open a new account, you will be required to submit your contact information, social security number, and sometimes a photo ID to verify your identity. If you get stuck or have trouble along the way, you can get support by phone or online chat.
Once your new account is open, you will have to fund the account. The fastest method to fund a new account is a wire, but wires generally come with fees from your bank. The easiest and fastest method to fund an account is with an electronic funds transfer, sometimes called an EFT or ACH. Those generally take 2-3 days to clear. You can also send in a paper check or drop one off at a branch. Large deposits by check can be held for a short period until the funds clear from your bank account.
Brokerage accounts offer a wide range of trading platforms. You can generally trade online or by phone, but expect to pay additional fees for trades by phone.
Orders generally fill instantly during regular trading hours. After hours trading is available at some investment firms. Those trades may not fill as quickly. Settlement after entering a trade generally takes three business days.
Margin trading is a type of trade where you borrow funds to buy and sell stocks from your brokerage. This takes special approval and is designed for experienced traders. Similarly, short selling typically requires approval as there is a potential for unlimited losses.
Available Mutual/Index Funds?
Before signing up for a new brokerage account, review the list of available mutual funds and any fee-free mutual fund options. For example, Charles Schwab offers its Select List of funds with no trade fees. Most large brokerages offer a similar options for their own funds and sometimes for select fund families.
Research and Tools
Each brokerage firms offers different levels of access to investment research and reports. Large firms often have their own research in addition to reports from major reporting firms like S&P, Morningstar, Zacks, Ned Davis Research, and others.
Advisory / Investor Education
Some brokerage companies offer limited or no support, while others offer access to professional investment advisors. Depending on your investing experience, this may or may not be important to you. Look into this before opening a new account.
Support and Customer Service
Nearly all brokerage firms offer support via phone, email, and sometimes through chat support. Savvy web users should be able to do nearly anything in their accounts without additional support, but it is good to know how to reach customer service should you need help in the future.
Your financial security is incredibly important. In an age of regular security breaches, you are right to be concerned about security with an online brokerage. Brokerages use the highest levels of online security and encryption to ensure your data is safe.
Even with the best security, however, some breaches do occur from time to time. To protect yourself, ensure you use a unique, challenging password on each online account, particularly when they are tied to your money.
Uptime and Stability
Most online brokerage firms have nearly perfect uptime and stability. Downtime during trading hours can prevent your orders from executing. While some brokerage firms have experienced downtime in the past, it is not common for brokerage websites to go down.
Before signing up for a new account, a quick Google News search will tell you if your chosen firm has been plagued with downtime issues in recent years.
Ease of Use
Each online brokerage has its own unique experience. Virtually all of them offer screenshots or walkthroughs of their trading systems. Take a look at your top contenders and pick the one that you like best. After all, you are the one who is going to be using it so you should choose a service you will enjoy.