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Best online brokers for stock trading

The best online broker for your investor type

The best online broker for your investor type

Which is the best online broker?

That depends a great deal on what type of investor you are:

  1. High-volume trader for whom low commissions are paramount
  2. New investor, looking to get started with a relatively small amount of money
  3. Serious investor doing your own investment research
  4. Margin investor ready to dial up the risk/reward characteristics of your portfolio
  5. Active investor for whom desktop and mobile experience is most important

MoneyRates.com presents its featured brokers below, followed by its Online Broker Feature Table (a side-by-side listing of broker characteristics) and recommendations for the best online brokers for each investor type.

(Note that the rates, features and/or other brokerage characteristics mentioned in this study are subject to change at any time at the sole discretion of the brokerage firm in question.)

Featured Brokers

Fees
$4.95 per trade

  • Among the industry’s lowest trading fees with no account opening minimum and no hidden fees
  • A wide variety of investment products built with the do-it-yourself investor in mind
  • In-depth research and market analysis tools to support all types of investment strategies
  • 100 commission-free ETFs
Fees
$0.01 per share

$3 minimum
  • From bare-bones to feature-rich, from desktop-based to mobile, Zacks Trade offers a cutting edge platform that fits the way you work
  • It’s a global economy, and Zacks Trade helps you make the most of it. Clients in more than 200 countries can trade on 19 international exchanges, all at competitive commissions and all from a single account
Fees
$6.95 per trade

  • Desktop, web, and mobile platforms are designed for performance and built for all levels of investors
  • Our $6.95 flat-rate commission on all equity trades gives you access to our award-winning investing and trading experience
  • Trade and invest how you want with access to a variety of investment choices
  • 24/7 account support and free access to trading specialists

Online Broker Feature Table
Brokerage FirmCommissionMaintenance/Inactivity FeesAccount Minimum

Research Capabilities Avg. Rating

Margin Interest Rate at $25,000Desktop Interface Efficiency RankingMobile App Average Rating (Out of 5)
Ally Invest$4.95$0$0N/A9.524.2
Charles Schwab$4.95$0$04.939.0714.45
E*TRADE$6.95$0$04.410.25164.3
Fidelity$4.95$0$04.959.0794.35
Firstrade$0.00$0$01.99123.1
Interactive BrokersN/A$0$10,0004.453.69103.95
Just2Trade$2.50$0$2,5000.9873.2
Lightspeed TradingN/A$0$25,0003.258.5141.8
Merrill Edge$6.95$0$04.939.523.1
Motifinvesting$4.95$10$0N/A10124.4
Robinhood$0.00$0$0N/AN/A24.7
Sogotrade$4.88$0$4503.59.75162.75
SpeedTrader$6.95$30$30,000N/A7160
Stash Invest$0.00$0$5N/AN/A24.5
T. Rowe Price$19.95$30$0N/A9.37164.55
TD Ameritrade$6.95$0$04.931023.95
TradeStation$5.00$100$2,0004.59.25144.45
USAA$8.95$0$3,000N/A10.5204.3
Vanguard$0.00$20$0N/A9104.4
ZacksTrade$3.00$0$2,500N/A5.6972.85
Note: Listed amounts and characteristics in the Online Broker Features Table are as of when this study was conducted, around the beginning of 2019. Amounts and characteristics are subject to change at any time at the sole discretion of the brokerage firm. Visit the brokerage’s website to verify terms and conditions.

1. Best online brokers for low commissions

Most brokers charge a flat rate per trade rather than basing the commission on the size of the trade. That works very well for people making large trades, but people who trade smaller amounts or trade very frequently need to pay close attention to the size of the flat-rate commission.

Competition among online brokers has driven commissions down to the point where some offer routine trading for absolutely no commission. Brokerage firms have found that they can make money from customer accounts in other ways such as securities lending. Under extreme circumstances, securities lending could expose investors to risks such as counter-party defaults or operational delays but, for the most part, it helps reduce costs for investors.

The following four online brokers are listed in alphabetical order because, with no charge for ordinary commissions, the four vie for the distinction of being the best broker for low commissions:

Firsttrade Bank
With no commissions on ordinary stock trades, mutual fund transactions or options trading, Firstrade represents a low-cost choice for a variety of investor needs.
Robinhood
Robinhood offers commission-free investing in stocks, ETFs, options, and cryptocurrencies – with some restrictions (visit the website for specifics). This can represent a low-cost way to access everything from conservative funds to speculative investments.
Stash Invest
With a subscription fee of $1 per month (or 0.25% for accounts of $5,000+), you can invest in fractional shares of stock with as little as $5 cash. This could be an affordable source of market access for very low-budget investors.
Vanguard
Vanguard offers commission-free online trading of many ETFs (even from other companies), many Vanguard ETFs and mutual funds, and for some of its large flagship accounts requiring deposits of $1 million or more. The pricing structure is complicated, however, so visit the website for particulars.

The most recent MoneyRates.com Online Broker Survey found that the average flat-rate trading commission was $5.10. So by charging no commission on trades, the four firms above stand to save you over $5 every time you trade - and the more frequently you trade, the more money firms like these can save you.

>> Learn more about commissions

A brokerage commission is a charge for executing a securities transaction. The following are some basics to know about commissions:

  • Commissions are typically generated by activity, meaning the more you trade, the more you pay. When pursuing high-volume strategies like day trading, keep in mind that incurring a higher volume of commissions may make it harder for you to earn a positive return.
  • While online brokerage commissions are typically quoted as a set dollar amount (such as $4.95 per trade), a key figure to pay attention to is what that commission will represent as a percentage of your trade. The higher the percentage, the harder it is for your investments to come out ahead.
  • When figuring out commission costs, plan on what the "round-trip cost” will be, meaning the cost of both buying and selling the security. In other words, ultimately you will need to pay two commissions for each security.

2. Best online brokers for beginners

Cost can be a significant barrier for investors trying to get started. A high minimum-investment requirement may shut out smaller investors while high commissions or fees represent a higher percentage of small accounts and thus take a deeper bite. Investing is tough enough without high costs making it even more difficult to earn a decent return.

To consider which online brokers are most welcoming to new investors, MoneyRates.com focused on firms that make a point of lowering the cost barrier and looked at these factors:

1. Commission rates

MoneyRates.com found that it can cost from zero to $19.95 to place a trade, so shopping around can make a big difference.

2. Maintenance/inactivity fees

These are fees the broker may charge month after month. Maintenance fees are charged regardless of your activity in the account. Inactivity fees are charged as a way of earning revenue from customers who didn't trade in a given month - something that may be more likely for some newer investors.

Fortunately, most online brokers do not charge maintenance or inactivity fees, but those who do have these fees charge as much as $99.95 per month. This could represent an especially onerous expense for smaller accounts.

3. Minimum account size

Our review found several online brokers with no minimum account size; but in other cases, minimums were as high as $30,000. If you are looking to start small, you are better off avoiding brokers with account minimums.

MoneyRates.com reviewed all 20 brokers based on each of the criteria mentioned above to identify the best online brokers for new investors. These two firms were notable because they charge no commissions, no monthly maintenance or inactivity fees, and have no minimum account size. It doesn't get any more accessible to new investors than that:

Firsttrade Bank
With no commissions, monthly maintenance fees, inactivity fees or minimum account size, Firstrade offers you the opportunity to start small without having brokerage charges eat up your investment capital.
Robinhood
Like Firstrade, Robinhood represents an attractive entry point for smaller investors because they have no commissions, monthly maintenance fees, inactivity fees or minimum account size.

>> More basic information for new investors

New investors typically have a lot to learn. Even getting a handle on basic terminology can make your head spin. Here are some definitions of frequently used investing terms for starters:

  • What is a stockbroker?

    A stockbroker, or registered representative, is a financial professional licensed to perform the buying and selling of stocks on behalf of individuals and companies. They are authorized to sell a variety of financial products – stocks, bonds, options, and mutual funds – and typically charge a commission on each transaction for their service in executing a client’s orders.

  • What is a mutual fund?

    A mutual fund is a financial product that allows individuals to pool their investments in professionally managed portfolios that provide a greater level of diversity in the market. Each share in a mutual fund could represent a number of different holdings in stocks and bonds of various companies or government entities.

  • What is a dividend?

    A dividend is a payment made to distribute the profits of a corporation to its shareholders. Dividends may be paid to the shareholder in cash or in the form of further shares of stock. Not all stocks pay dividends.

  • What is the total return?

    The money you make or lose from a stock will be a function of any dividends paid and the change in the stock's price from when you bought it to when you sold it. This combination of income and price change is known as the total return.

3. Best online brokers for research capabilities

Serious investors try to gain an edge by doing their own investment research, and some online brokers do more than others to facilitate this.

Research capabilities available from online brokers can be anything from trading simulators to fundamental company research. Evaluating research capabilities can be a somewhat subjective exercise, so MoneyRates.com went to three different sources - Kiplinger, Barron's and TheStreet.com - and came up with a composite ranking based on information from all three.

This analysis yielded a close race, with a top-ranked firm followed by a three-way tie for second:

Fidelity
Fidelity garnered near-perfect ratings from both Kiplinger and Barron's for its research capabilities to take the top spot.
Charles Schwab
With strong ratings from Kiplinger and Barron's and a full suite of the research capabilities listed by TheStreet.com, Charles Schwab offers a good combination of quality and quantity for people who want to research investments. 2. (tie) Merrill Edge
Merrill Edge
Merrill Edge mirrored Charles Schwab's ratings across all three sources; so they, too, offer stock researchers an attractive combination of quantity and quality of resources.
TD Ameritrade
Ameritrade's ratings matched those of Charles Schwab and Merrill Edge, making it yet another good option to consider for quality and quantity of research tools.

>> Define your research capability needs

The type of research capabilities you look for from a broker should be based on what kind of investor you are. Here are some options:

  • Macro analysis

    Macro analysis provides big-picture insights to trends affecting the economy in general. This can give an investor perspective on the environment in which stocks and other investments will be operating with respect to things like economic growth, inflation and foreign trade.

  • Company reports

    Company reports provide information on specific companies, such as their financial condition, business strategy and competitive environment

  • Technical analysis

    Technical analysis seeks to identify patterns in stock trading and price movements in the hope that this will provide insight into future activity

When choosing a broker, think about how you plan to make investment decisions so you can choose a brokerage firm that will provide you with the type of information you need.

4. Best online brokers for margin investors

Margin investing is a high-risk activity that only sophisticated investors with a high tolerance for volatility and potential loss should consider.

Margin investing means using borrowed money to buy investments. This increases the amount of money you have available to invest, making any gains or losses disproportionately large relative to your net investment (your total investment minus what you owe on your margin loan).

A key issue affecting the returns earned from margin investing is the interest rate you pay on the money you borrow. This becomes a hurdle you must clear in order to make money – i.e., the return on your investments must recoup the margin interest charges in order for you just to break even.

The margin interest rate is a key issue for margin investors. Margin rates tend to vary according to the amount you borrow; so to evaluate all the brokers on a level playing field, MoneyRates.com compared margin rates on a $25,000 margin balance. Based on this, the following were found to be the best online brokers for margin investors:

Interactive Brokers
At 3.69 percent, the margin interest rate charged by Interactive Brokers represents a substantial savings over the category average of 8.73 percent.
Zacks Trade
While not as low as that of Interactive Brokers, Zacks Trade's margin rate of 5.69 percent is also significantly lower than the average.

>> Basic information about using margin

Margin investing is a high-risk strategy that should only be pursued by experienced investors who understand the risk/reward dynamics involved. Here are some key issues:

  • Margin investing is a form of leverage, meaning that it amplifies both gains and losses to your portfolio
  • The margin interest rate you pay on the money you borrow becomes a hurdle you must clear in order to make money - i.e., the return on your investments must recoup the margin interest charges in order for you just to break even.
  • If the value of your securities in a margin account declines, you may be faced with a margin call. This is a requirement to deposit additional money into the account or else some or all of your investments may be liquidated. This means it is a good idea for margin investors to have additional money available so they don't face being forced to sell investments under adverse circumstances.

5. Best online brokers for desktop and mobile experience

The usefulness of an online broker to an active investor relies greatly on how easy to use their digital interfaces are. MoneyRates.com looked at both desktop interfaces and mobile apps to rate the best online brokerage digital experience.

For desktop interfaces, MoneyRates.com measured how long it took to find basic information an investor choosing a broker would want to know (commissions, fees, minimums and margin rates) to see how efficient each site was to use.

For mobile apps, MoneyRates.com relied on user ratings from the Apple and Android app stores. The average rating from each app store was combined to come up with an overall ranking for mobile apps.

Based on a combination of desktop and mobile scores, the following brokers were found to have the best digital interfaces:

Robinhood
Robinhood’s mobile trading platform had the highest average score from the two app stores, and their desktop interface tied for second as the most efficient to use.
Tie Charles Schwab
The Charles Schwab desktop site was found to be the most efficient to use, and their mobile app earned the fourth-highest average score from app-store users.
Tie Stash Invest
Stash was tied with Robinhood (and three others) for having the second-most efficient desktop interface, and their mobile app earned the third-highest average rating on the two major app stores.

>> How to evaluate online broker digital experience

How should you evaluate the digital experience of brokers you are considering? Think about the following:

  • Ease of use

    Speed and accuracy are fundamental necessities for implementing any investment strategy. Look for a digital interface that makes relevant information readily available and provides a clear platform for trade execution.

  • Compatibility

    Will you be accessing your account on a laptop, a mobile device or both? Brokerage sites can display and function differently on different devices, so make sure you pick a broker whose site performs well on the type of device you are most likely to use.

  • Relevant features

    Some brokerage sites have an impressive array of bells and whistles, but having too many features can become a distraction if you don't plan to use them. Think through what the nature of your interactions with the broker's site are likely to be and choose a broker whose site will facilitate your research and trading activities.

Whether your priority is low commissions, robust research resources or any other of the categories above, the variety of characteristics presented on this page can help you gauge whether an online broker would make a good match for your needs.

Then, as you evolve as an investor and your needs change, check back with MoneyRates to see how online brokers have adapted in this rapidly changing field.