Top Brokers for Online Trading: Key Takeaways
- The best online brokers for stock trading…
- How to choose the right broker for you…
- What you need to open a brokerage account…
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Think the online broker you choose doesn’t matter? That as long as you have skills you’ll make good trades? Think again.
Some brokers carry fees that quickly eat into profits … or even limit the types of stocks you can trade. Others offer platforms that lag the market. Or they make charting so complicated, your entries and exits can suffer.
There’s a lot to consider when choosing a broker. Let’s dive in…
Table of Contents
- 1 What’s a Stockbroker?
- 2 How to Trade Stocks Online
- 3 Types of Stockbrokers
- 4 11 Top Brokers for Online Trading
- 4.1 Top Brokers for Online Trading #1: TD Ameritrade
- 4.2 Top Brokers for Online Trading #2: Fidelity
- 4.3 Top Brokers for Online Trading #3: Charles Schwab
- 4.4 Top Brokers for Online Trading #4: E-Trade
- 4.5 Top Brokers for Online Trading #5: Merrill Edge
- 4.6 Top Brokers for Online Trading #6: Interactive Brokers
- 4.7 Top Brokers for Online Trading #7: Robinhood
- 4.8 Top Brokers for Online Trading #8: Ally Invest
- 4.9 Top Brokers for Online Trading #9: Firstrade
- 4.10 Top Brokers for Online Trading #10: TradeStation
- 4.11 Top Brokers for Online Trading #11: Zacks Trade
- 5 How to Pick the Right Online Stock Broker for Beginners
- 6 What Do You Need to Open an Online Brokerage Account?
- 7 Top Brokers for Online Trading: Frequently Asked Questions
- 8 How Much Money Do I Need to Start Online Stock Trading?
- 9 Should I Just Choose the Cheapest Online Broker?
- 10 What Type of Brokerage Account Should I Choose?
- 11 Is My Money Insured With Online Brokers?
- 12 Can I Open a Brokerage Account With Bad Credit?
- 13 How Do I Decide If a Brokerage Firm Is Right for Me?
- 14 Top Brokers for Online Trading: Conclusion
- 15 One Platform. One System. Every Tool
What’s a Stockbroker?
Retail traders don’t have access to major exchanges. That’s why we need stockbrokers, aka brokers, to execute our trades. A broker buys and sells shares on your behalf.
Traders used to pay big bucks for these services. But competition among online brokers is fierce, so most offer commission-free trading … That can help traders get more out of trades.
How to Trade Stocks Online
Online brokers make it easy to get into trading.
The top brokers provide software with interactive charts and tools so you can trade from a desktop, smartphone, or laptop.
Platforms like Robinhood’s app are popular because users find them easy to use. Just tap a few buttons and boom — trade made.
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Types of Stockbrokers
There are two main types of brokers for online trading…
Discount brokers are the norm for most online traders.
The upside here is the lack of commission fees. Small-account traders don’t have to worry about the added cost of trades, which lowers the barrier to entry.
But there’s no such thing as a free trade.
One downside is that discount brokers typically don’t offer the same services as full-service brokers. It comes down to what you need.
A full-service broker will cost more, but for some traders, it’s the better way to go.
Full-service brokers can help you set up personalized plans. This isn’t the DIY service you get with discount brokers…
Full-service brokers also usually have better customer service. That’s huge for a lot of traders. If something goes wrong, you want to know you can get in touch with someone who can help.
11 Top Brokers for Online Trading
Here are 11 top brokers for online trading in no particular order. See something you like? Be sure to do more research.
Top Brokers for Online Trading #1: TD Ameritrade
If you’re an active trader, TD Ameritrade is a great place to start. And it’s commission-free … mostly.
TD Ameritrade’s thinkorswim platform provides decent charting options. You can also use it for paper trading. That can be useful for new traders who don’t want to blow their money figuring out a strategy.
TD Ameritrade has an app as well. I don’t think it’s the best, but it’s a way to check on your trades on the go.
The platform charges $6.95 for over-the-counter (OTC) trades. Keep that in mind if you plan on trading OTCs.
Top Brokers for Online Trading #2: Fidelity
Fidelity is a well-respected platform among traders because of the research and tools it offers.
Account-holders have access to a ton of market research, educational courses, and online resources.
That’s especially good for new traders. But even advanced traders can use extra guidance sometimes. The broker’s Active Trader Pro platform is considered one of the easier trading platforms to use.
Top Brokers for Online Trading #3: Charles Schwab
Charles Schwab is another well-established brokerage firm. It offers commission-free trading and some educational resources.
The platform also offers fractional shares for trading. So traders with smaller accounts can trade higher-priced stocks without breaking the bank…
You can trade with as little as $5. This gives traders access to both penny stocks and larger companies.
And Schwab has one of the best reputations to back it all up.
Top Brokers for Online Trading #4: E-Trade
E-Trade is a commission-free broker and a full-service broker with plenty of tools and services.
It offers a robust platform for traders of all levels of experience and has a user-friendly interface on both its website and app.
Its mobile app is supported by the Apple Watch and includes a handful of features that help make trading on the go easier.
The brokerage’s Power E-Trade platform has a clean interface and a range of tools for traders.
Top Brokers for Online Trading #5: Merrill Edge
Merrill Edge is primarily aimed at higher-income traders. But it offers some benefits for newbies.
Traders with a Bank of America account can access Merrill’s Global Research feature. That can be useful for researching individual stocks.
Even without a Bank of America account, Merrill Edge offers plenty. It also has a high customer service standard. That’s always useful for all traders.
Top Brokers for Online Trading #6: Interactive Brokers
Interactive Brokers gives traders market access to 33 different countries.
It offers fast trade execution and a powerful trading platform … But it’s more complex than others on this list … I don’t think the interface isn’t as clean as with other brokers.
Customer service isn’t its selling point either. But it just started handling smaller accounts and may need some time to adjust.
Top Brokers for Online Trading #7: Robinhood
Robinhood’s been under a lot of scrutiny lately. It’s come up short on many occasions.
But it’s also changed the game for day traders. This broker is probably the biggest reason why other online trading brokers offer commission-free trading. It also has an easy-to-use app, which a lot of traders use.
On the flip side, it doesn’t have the best customer support. And Robinhood seems to process transactions slower than other brokers.
It’s a decent place to start, but I think anyone with more experience would be happier elsewhere.
Top Brokers for Online Trading #8: Ally Invest
Ally Invest is part of the larger Ally Financial umbrella. This means traders with an Ally Bank account can move money seamlessly.
Otherwise, fund transfers can be slow … but that’s something many online brokers seem to have in common.
Ally Invest offers useful tools and a good mobile trading platform. It’s also known for having great customer service.
Top Brokers for Online Trading #9: Firstrade
I can already hear some of you yelling at me for including this on the list. So why is it here? Mostly because it’s on a lot of lists.
Beyond that, Firstrade is a solid option for Chinese-speaking traders. It offers 24/7 support, a mobile trading platform, and an easy-to-use website.
That said, it’s still not the best place for active traders, however…
Top Brokers for Online Trading #10: TradeStation
TradeStation is a go-to option for active day traders thanks to its desktop platform.
Users enjoy its research and tools for stock analysis, although some consider the trading plans confusing…
Newbies may find better options elsewhere.
Top Brokers for Online Trading #11: Zacks Trade
Zacks Trade is a good option for international traders. It’s available in over 91 exchanges across 19 countries.
It offers free research subscriptions and newswires, and both its online and mobile platforms are solid.
The downside is that it requires a $2,500 account minimum and a $0.01 fee per share in trades with a $1 minimum. That could make this platform a non-starter for some newer traders.
How to Pick the Right Online Stock Broker for Beginners
There are many factors new traders should consider before choosing a broker…
Don’t let juicy incentives to join a platform cloud your judgment. To keep your money safe, it’s usually best to choose a broker that’s been around the block a few times.
New brokers go through growing pains. You probably don’t want to be the mistake they learn from.
They also often have less money to operate, which can delay trades. Older, more established brokers are less likely to face those issues.
Your needs should always guide your decisions. Every trader wants and needs different things out of an online broker.
There are tons of brokerage options out there. Take time to figure out what matters most to you before jumping in.
Most brokers offer commission-free trading on stocks now, but that doesn’t mean there aren’t fees. Again, do your research. Know what you’re trading and how before you look at fee structures. Brokers have to make money somehow. Remember that.
And make sure that the broker you choose allows you to make the trades that fit your trading plan.
What Online Broker Has the Lowest Fees?
Most online platforms available today offer zero commissions on trades. That’s something you can easily research on a broker’s website.
When choosing a broker, look for the platform that suits you best in terms of tools and research instead of fees. Even platforms that charge more fees may better suit some traders depending on their needs.
What Do You Need to Open an Online Brokerage Account?
Different brokers require different things. What you’ll need also depends on whether you open a cash account or a margin account.
In general, to open a brokerage account, you’ll need:
- Social Security number, date of birth, and government-issued ID to prove your identity
- Valid mailing and email addresses so they can contact you
- Employment information
- Funding method, like a bank account
Many brokers will also use this information to help you set up trading goals.
Social Security Number (SSN)
Any financial service requires an SSN. That’s how companies confirm your identity (and how the government makes sure you pay taxes).
This is another part of the identification process. It also allows brokers to verify your mailing address among other things.
How else will you put money into your brokerage account? This usually involves a transfer from your bank account and can take a few days.
Top Brokers for Online Trading: Frequently Asked Questions
We’ve covered a lot, but there are always more questions. Let’s break it down more…
How Much Money Do I Need to Start Online Stock Trading?
These days, most brokers let you open an account with almost any amount. This is a big part of what’s made trading more accessible to everyone.
Should I Just Choose the Cheapest Online Broker?
Most brokers these days are cheap. So forget that aspect and go for the broker that you think will best serve your trading needs.
What Type of Brokerage Account Should I Choose?
Again, this depends on your needs and trading style. A full-service broker is usually best if you like great customer service. If you’re just looking for a platform to trade on, a discount broker may be OK for you.
Is My Money Insured With Online Brokers?
You can expect your money to be as safe with a licensed brokerage as with a bank. The Securities Investor Protection Corporation protects up to $500,000 per customer and $250,000 in uninvested cash. The SIPC protects in case of fraudulent withdrawals.
Can I Open a Brokerage Account With Bad Credit?
That depends. If you transfer cash from a bank account into your brokerage account, your credit is of no concern to stock brokers. If you want to use margin, however, your broker will likely run a credit check.
How Do I Decide If a Brokerage Firm Is Right for Me?
Determine what’s important to you. Do you want fractional trading and no deposit minimum? Do you need heavy-duty analysis tools and easy-to-use software? No broker’s perfect, so find one that best fits your trading style.
Top Brokers for Online Trading: Conclusion
Choosing a broker for online trading is a key part of the process for day traders. But there’s no rush. Dig in, do the research, and find your broker.
Are the brokers on this list great options for you? Maybe. But it depends on what you want and need. Don’t rush into the decision. It’s where you’ll put your money and spend time researching…
Of course, there are other ways to do your research, like with StocksToTrade. And our platform offers broker integration. Check it out today. Try StocksToTrade for 14 days for only $7!
What’s on your list of top brokers for online trading? Let me know with a comment below!
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