Platform & Tools
Fees & Commissions
Education & Resources
Best Online Stock Brokerages
Why Choose Online Stock Trading?
We spent over 80 hours testing 10 different stock platforms, getting demos from the brokers and using the platforms ourselves. We’re novice traders so we looked for services that are easy to use and that provide educational resources so you can learn investing basics before you place your first trade.
We recommend TD Ameritrade as the best online stock broker. It has some of the most comprehensive tools we tested, including the best mobile app as well a wide range of commission-free ETFs ideal for new investors who want to keep trading costs down. The makes TD Ameritrade one of the best places for beginners.
Fidelity is another excellent choice, offering low pricing and customizable screening tools that provide an equity summary score that lets you gauge potential at a glance. The one downside to choosing Fidelity is that it mandates an initial deposit of $2,500, a requirement many other brokers don’t have.
Beginning investors will find Merrill Edge’s educational offerings especially useful. It has three different tracks for beginning, intermediate and expert investors. We found the webinars and training videos particularly helpful in getting us up to speed.
How We Compared Stock Brokers
With a few exceptions, we were provided test accounts from each of the brokers we reviewed. While we couldn’t place actual trades, this gave us the opportunity to see what kinds of tools each trading platform has. We looked at the mobile trading apps, educational offerings and platform training.
Pricing was another factor we looked at, though in the last year, all the brokers we reviewed have reduced their commissions to between $4.95 and $6.95. Most of these brokers don’t require any minimum deposit to get started. Some do, and that amount ranges from $500 to $2,500. High-balance or high-frequency traders can become eligible for pricing discounts.
When evaluating how easy a platform is to use, we considered several questions. How easy is it to make watchlists? Could we set up alerts and customize them? What kinds of screening tools are available to help find potential investments? How well do the charting tools work and what technical indicators can you use?
We prefer platforms that are intuitive, with a customizable layout that lets you control which tools are front and center each time you open the program. One of the most vital things is a quick, easily accessible order process. Markets change quickly, and being able to get an order as soon as you can is an important part of maximizing your investments.
Stock brokers that received high grades filled all those criteria, often including third-party tools like Recognia that help you screen for stocks and ETFs to invest in, and Morningstar which offers news updates and investment recommendations. We gave low grades to stock brokers that were difficult to use, had weak tools and in some cases had more steps to fund your account.
We checked out the mobile apps for each broker. The best apps are very close to the desktop versions, giving you the same tools to monitor securities and place trades.
What Can I Invest In?
One of the exciting parts about investing is the many opportunities to grow your money. There are many ways to invest, but here are some of the most important.
Stocks: This is the most fundamental type of investment and forms the base of any investing portfolio. When you buy a share of stock you’re buying a portion of the company issuing it. Manystocks will also issue dividends, which are a portion of the company’s earnings. Typically stocks from long established companies offer dividends while start-ups don’t.
Mutual Funds: When you put money into a mutual fund you’ll be investing along with other people, pooling money together Mutual funds are actively managed, which means a manager makes the decision on which companies the fund will buy shares to invest in. Mutual funds are a simple way to access a diversified portfolio, but they can have high fees.
Index Funds: Index funds are a subset of mutual funds, but instead of being professionally managed, the fund will buy and sell in tandem with a market index, such as the S&P 500. Since index funds are passively managed, you pay less in fees. Index funds also tend to outperform mutual funds in the long term, making them an attractive part of retirement accounts.
ETFs: An ETF, or exchange traded fund, is an index fund that trades like a stock. What this means is you buy shares like you would a stock, but like an index fund it tracks a broader index (like the S&P 500) and not a single company. ETFs are quickly becoming one of the most popular investment tools, with over $3 trillion of assets.
Options: An option is a more complex type of investment, one that carries the potential for more risk. Options are contracts that give you the right to buy or sell at a certain price on a set date. Options are versatile and allow savvy investors to speculate on future performance or hedge against losses. These are complicated investments not suited for those just starting off.
Other Investments: Bonds are another low-risk investment type. Bonds are issued by governments or companies to raise money for various project. So by investing in a bond you in essence loan the organization money. Forex is a riskier type of investment where you speculate on the changes in a currency’s exchange rate. It requires large amounts of money to profit off of these small changes. Futures are like options in that you are speculating on the future performance of a stock or commodity. But trading in futures means you must buy or sell the asset when it hits the predetermined price or the expiration date arrives.
How to Start Investing
All these investment options can be overwhelming, making it difficult to find a place to start. We can’t recommend specific investments, but we can give some advice on what to think about before you buy.
No investment is 100 percent safe. Markets rise and markets fall, but there are ways to insulate your portfolio from excess risk. Diversifying is one of the most clichéd investing tips, but it’s a cliché for a reason. By investing in a wide range of stocks and bonds, you spread your money around and can better absorb the loss if one of your positions goes south.
This isn’t to say that risk is inherently bad. In the right situation, it can pay off handsomely. Putting a stop-loss on your positions so they sell when they reach a certain price can be a good way to hedge against big losses.
What If I Don’t Have Time to Invest?
When you think about stock trading, you might picture a bunch of frenzied traders at the stock market. It seems like to be a trader you need to constantly be on top of the markets, always watching to make sure everything’s alright.
Active traders certainly need to keep a closer eye on the market, especially if they’re trading on small fluctuations. But most casual investors benefit from buy and hold strategies. This means you find the securities you want to invest in, buy them and then let them sit.
Still, if you feel intimidated by the vastness of the stock market, you can make use of robo-advisors to make the decisions for you. Robo-advisors are relatively new tools that make investing decisions based on algorithms that consider your financial situation.
There are several app-based robo-advisors, such as Betterment and Wealthfront, which we didn’t review because they don’t quite fit here. In the past few years, many of the larger brokers like TD Ameritrade, Fidelity and Merrill Edge have begun offering their own robo-advisors.
Enrolling in a robo-advisor requires you to fill out a form with information about your income, risk tolerance and investment goals. Robo-advisors typically have an initial deposit requirement, usually a couple thousand dollars, and charge a percentage of the money you invest.
There’s no one right way to invest. Ultimately it comes down to your tolerance for risk and the amount of time you want to dedicate to it. Each of the stock brokers we reviewed offers tools and resources to help you perfect your own investment strategy and reach your financial goals.