Investors should know the best online brokers to trade stocks with. Some online stock brokers are known for their award-winning customer service while others are known for inexpensive stock trades or powerful trading platforms. This guide will highlight some of the best brokers available today with tips and advice for choosing an online broker.
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Here are some of the best online brokers for stock trading in 2020.
1. TD Ameritrade
Stock Trades: $0 | Minimum Deposit: $0
Current Offer: Up to $375 cash credit with qualifying deposit
TD Ameritrade was ranked #1 Online Broker 2020 by StockBrokers.com*. TD Ameritrade charges $0 for regular stock and ETF trades and is best known for its trading platform, thinkorswim, alongside its outstanding learning center for beginners. Alongside #1 Overall, TD Ameritrade received top awards for its trading tools, mobile apps, research, customer service, and education. Full review.
Stock Trades: $0 | Minimum Deposit: $500
Current Offer: $0 commission equities & options + Best trading technology
TradeStation offers the most advanced desktop trading platform in the industry and is excellent for stocks, ETFs, options, and futures trading. Meanwhile, TradeStation’s web-based platform and mobile app offer $0 stock trades and are great for casual traders. What I love most about TradeStation is the true focus on traders. Whether you are a new trader just learning the ropes, a casual trader, or an active trader who day trades or swing trades, TradeStation has you covered. Full review.
Stock Trades: $0 | Minimum Deposit: $0
Current Offer: $0 Commissions for online stock, ETF, & options trades. Join E*TRADE today!
E*TRADE is best known for its Power E*TRADE platform for options trading, alongside its two mobile apps. The Power E*TRADE platform was rated the #1 platform for Options Trading. E*TRADE was also ranked #1 for Mobile Trading in the StockBrokers.com 2020 Review*. Like its closest competitors, E*TRADE now charges $0 per trade thanks to a broker pricing war that took place in October 2019. Full review.
4. Merrill Edge
Stock Trades: $6.95 | Minimum Deposit: $0
Merrill Edge is the online brokerage arm of Bank of America, which is open to all investors, regardless if they are a current banking customer. Alongside $0 trades, Merrill Edge offers excellent stock research (Merrill Edge was rated #1 for environmental, social, and governance “ESG” research). Also, Merrill Edge offers the best rewards program. Reward perks include credit card bonus cash back, savings interest bonuses, priority customer service, and more. My wife and I have personally been members of the program since it launched in 2014. It’s awesome. Full review.
Stock Trades: $0 | Minimum Deposit: $0
Fidelity focuses its customer experience on value. Beyond $0 trades and an ease of use website, Fidelity also finished #1 for research tools. It’s Viewpoint articles are top of class and Fidelity is the only online broker to offer 16 third-party research reports for individual equities. Full review.
Tips for Choosing an Online Brokerage
Having the best online broker to serve individual needs is very important for any investor. Consider these 12 key factors to help compare all stock brokers and ultimately find the best broker to suite your needs.
1. Trade Commissions
What does it cost to buy shares of stock? Does the fee change based on the type of order or size of order? Fortunately, today, trade commissions are essentially a “thing of the past” as the majority of brokers now offer $0 stock and ETF trades.
2. Customer Service
When picking up the phone or emailing a broker, is a well trained customer service representative ready to assist? How any investor is treated as a client is more important to some than others. But, even for those that don’t rely on customer support that often, to know that they have award winning service there when they need it is comforting.
3. Trading Tools
Trading successfully is a lot easier when investors have great tools at their disposal. A top stock broker should offer access to a wide variety of trade tools to help make the most of each and every trade. From real-time streaming quotes to last sale tickers, quality stock scanners, mobile trading apps, and level II quotes to name a few. Strong tools are essential for active investors.
4. Account Minimums
Some brokers allow you to open an account with no minimum deposit while others may require several thousand dollars. Also know that some brokers require higher minimums to gain access to premium platforms, functionality, and personalized support.
5. Market Research
A good online broker will provide a variety of market research tools. The rule of thumb here is simple: the more you pay per trade, the better the market research (both fundamental and technical) that is provided.
6. Investment Options
A online stock broker should offer access to not only trading stocks, but also a strong selection of no load mutual funds, commission free ETFs, and complex options. Other unique investment offerings to look for could include direct market routing, conditional orders, futures trading, and forex trading.
5. Other Fees
Fees beyond trade commissions include inactivity fees (common with active trading brokers such as Interactive Brokers, Lightspeed, and TradeStation) and IRA fees for having a retirement account. While most brokers do not charge predatory fees, it’s still important to do your due diligence. Just like a bank account, stock brokers also make a portion of their profits off miscellaneous fees.
8. Retirement Accounts
Funding a IRA, Roth IRA, or other retirement account with no annual fees is an extra perk many online brokers offer. There is no reason why you should pay an annual fee to have an retirement account. If managing your own portfolio is not of interest, all full-service brokers offer optional advisory services as well. Furthermore, robo-advisors are growing in popularity. Once again, the experience at larger established brokers is going to be superior to smaller brokers.
Larger online brokers offer banking and other financial services. This goes beyond money market accounts and CDs. Checking accounts, mortgages, debit cards, and credit cards can also be offered. The leader in this space is, hands down, Bank of America, Merrill Edge.
10. Account Security
Because of the web today, all online brokers invest heavily into account security. SSL websites (look for “https” at the beginning any URL) are used by most brokers and some are now even offering two-factor authentication (using your phone to confirm a code before logging in). Just like shopping online and choosing a trustworthy website to purchase from, the best bet is to choose a well-known, established broker for your portfolio.
11. Speed & Order Execution
For the active trader, execution speed and fill price are very important. I won’t get too in depth here but I have tested many of these brokers and there can be noticeable differences in trade execution times and quality. For the majority of investors, saving a penny per share on a 100 shares order isn’t the end of the world, but for active traders it is something to look into. To understand Order Execution, read this guide.
12. International Trading
For investors in the United States this is not a problem but for investors living outside the US, when comparing brokers it is important to make sure they offer service in your country. Here’s a good list of international brokers to start with.
Best Stock Brokers Summary
|Recommended for||Online Broker||Trade Cost||Rating|
|Overall||TD Ameritrade||$0||5 Stars|
|Day Trading||TradeStation||$0||4.5 Stars|
|Research||Merrill Edge||$0||4.5 Stars|
|Balanced Offering||Fidelity||$0||5 Stars|
|Options Trading||E*TRADE||$0||4.5 Stars|
|Retirement||Charles Schwab||$0||4.5 Stars|
|Banking||Merrill Edge||$0||4.5 Stars|
Questions & Help Choosing a Broker
If you need help deciding which broker to choose or have a broker specific question please feel free to email me and I will be happy to help.
Also, if you feel this guide was helpful for you please share it on Twitter, Facebook, Linkedin, or email it to a friend. This took many dozens of hours to put together so I appreciate your support!
* – The StockBrokers.com 2020 Online Broker Review included 15 brokers whom were each assessed within eight core categories: Commissions & Fees, Customer Service, Platforms & Tools, Research, Ease-of-Use, Offering of Investments, Education, and Mobile Trading.
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