Best Online Broker Quick Guide
|Broker||Best for||Price per trade||Promotion||Full Review|
|TD Ameritrade||Reliability & Quality||$9.99||Trade free for 60 days||See review|
|Options House||Price & options||$4.95||100 free trades||See review|
|Firstrade||Simplicity||$6.95||Trade free for 30 days||See review|
|Scottrade||N/A||$6.95||30 days free trading||No review|
|Trade King||Best deal||$4.95||$100 in free trades||See review|
|Motif Investing||Passive investing||$9.99/month||Free trial||See review|
|Charles Schwab||Large investors||$6.95||$500 bonus||No review yet|
|eTrade||Alternative investments||$9.99||$500 bonus||No review yet|
|Merril Lynch||Research||$6.95||$600 bonus||No review yet|
|Fidelity||Research||$7.95||60 free trades||No review yet|
The best overall online stock broker for beginners is Trade King in our opinion. They are right in line, or even cheaper, than most online brokers, but still offer nearly the same value and reliability. If you are planning on trading for a long time, Trade King offers a great desktop and mobile platform with a wide variety of educational products as well as trading products. Their mobile app beats all brokers with similar prices and their customers have high rates of satisfaction.Try Trade King
The concept and definition of a stock broker has rapidly changed with the advent of the internet. Just a few decades ago, a broker was someone who represented you, the individual buyer, at the stock trading table. If someone wanted to purchase shares of a companies stock, let’s say Microsoft, they would call up their broker, who would find a party interested in selling their shares of Microsoft stock and make the purchase for them. The best stock market brokers would also advice their clients on good stocks to purchase and when it might be time to sell.
Fast forward to today when most people are making online stock market trades from their laptop, or even their smartphone. Today’s brokers are called online stock market brokers or online trading platforms because or they do everything the brokers of the past did, but all online. Most of the best online stock brokers provide tools that you can use to research stocks, build stock charts, perform fundamental analysis and more. They all charge differently for the brokerage services they perform, with the average price each trading platform charges being somewhere between $5 and $10.
It is important to try and find the best online stock broker for your situation because it is not easy to bounce between brokers. Most will require social security numbers and sizable deposits to open an account. There is also a lot of paperwork that needs to be done during tax season and if you have used multiple online trading brokers throughout the year you will find yourself regretting it at tax season.
One of our favorite platforms, TD Ameritrade, has an incredible tax center that can connect directly with Turbo Tax and make taxes significantly easier. This is an example of the kind of thing that you will want to look for when choosing which online broker best fits your needs.
Things to Consider When Beginners Choose a Broker
Price per trade. Price isn’t everything, but if you plan on trading even somewhat actively on the stock market you will realize very quickly how much you can rack up in broker fees. Most brokers charge a fee each time you buy, and each time you sell shares of a single stock. These online brokers charge anywhere from 0$ to $40 per trade. Don’t be fooled into thinking the broker that charges nothing is going to offer the same services as the one that charges $40. Free trading is available, but extremely limited.
Hours. The stock market has regular trading hours which are from 9:30 am to 4:00 pm ET. They also have before hours and after hours trading, though less investors tend to participate in this. Sometimes you will want to sell out of a stock before the regular trading hours begin, or buy into a stock before they begin. Let’s pretend a company has earnings that are released and they are much better than stock market analysts could have guessed. Earnings are usually released after regular trading hours, but if your broker allows after-hours trading you can purchase shares potentially before the price spikes the next day, and then sell into the spike the next day for a quick profit. The same may happen if they release bad news and you can sometimes sell before the massive dip.
Mobility. As a beginning trader you will likely not be trading stocks full time in the beginning, or ever. This means you will be at your job or at school during the main trading hours. Luckily, with smartphones today, the best online stock market brokers have built apps that show charts, offer fundamental analysis tools, and can make trades in real time. You will want to make sure your broker has a good app, and that it works all the time. Check the reviews on the app in your app store. Imagine if a stock spiked 100% and your app stocked working, and before you could sell the price had dropped back down. Sounds impossible, but it happens all the time due to momentum.
Reliability. When something like your savings or 401(k) is at stake, you don’t want a glitchy software that may or may not work when things get crazy. A lot of times when either a single stock, or the entire market is making a lot of trades, brokers with less servers may just stop working. Usually it is the cheap to free brokers that have this issue. If you choose a broker that is free, expect lag time, server downtime, and strange glitches (like one day showing $0 in your account).
Additional fees. Some broker charge additional fees for thinks like low account balances, deposits, or innumerable other things. Go through the online stock broker’s terms and make sure you will not regret your decision on your first trade. Fees you want to be especially wary of are fees on margin trading, fees for low account balances, or annual fees. Most online stock brokers that charge fees outside of the regular trading fees (or margin fees if you trade on the margin) should probably be avoided as a majority of them offer simple fees structures and surprise fees are never a good thing.
Software. Most online stock broker’s platforms, excluding the free ones, offer some sort of software that can be used to find stocks to buy and to sell. Some of these brokers have incredible services that can search the entire market for stocks with any parameters you choose. This helps you to be able to find your niche and figure out which types of trades or chart formations work best for you and capitalize on them over and over. Some softwares allows you to set them to automatically buy certain stocks when they hit certain prices, or alert you so that you can make the decision.
Additional useful feature that some brokers provide is the direct website trading. This means you don’t have to use your own computer, as long as you have internet access, you can login into your trading account and execute trades using your broker’s website.
Taxes. Let’s face it, no one likes paying taxes, but even worse than paying them is all of the work that goes into figuring out how much you owe. Whether you are a profitable market trader or not, there will be tax consequences that come with investing in the stock market. The best online broker’s will include tax centers that make doing taxes a breeze. Our favorite online platform in this category is TD Ameritrade. They have deals with many online tax companies to make the process so painless you will not even realize it is there.
Cash return. You will likely not have all of your money invested in stocks all the time. If you do, there is probably an issue and you will miss out on some good opportunities. Some brokers will offer you interest based on cash levels in your account, though it is currently pretty low. If you are going to have a lot of money sitting in an account though, why not make a little interest. You will probably make a similar amount to your savings account, making your broker a potentially good place to actually put your savings, even if you don’t invest.
Perks. Quite a few online stock market brokers will offer some great perks for beginners. Some of these include free trades, which can be important when you start investing and don’t have a lot of money to invest. This is usually with a time limit or a certain number of trades. We prefer the numbered trades because as a beginner you will probably be purchasing stock more occasionally. If you choose TradeKing and get $100 free trades, you will be set for a couple months at least. Play it right and you could trade free your first year with a solid online trading platform. Other brokers will offer free courses, trading apps, or other perks.
Customer Service. Few people have lived their life without encountering at least one company with lackadaisical customer support. Online brokers are no different, and when your savings, 401(k), or IRA is involved it is extremely important to choose a platform with good customer service. Most platforms offer some sort of support, but one of the most important things to consider will be availability and timing. Be careful to look at reviews for customer support, and if many users are reporting long waits to speak to a rep then it may be time to reconsider that broker. Don’t be the person that has to watch their account balance drop every second while their online broker platform is frozen and they have no ability to get out of a stock that is falling.
Best Value Brokers
Best Online Platform
Best Mobile App
Choosing the best online stock broker is an extremely hard thing to do. The real answer is likely that no one broker is the best. Rather, most brokers have a few categories that they excel at, and a few that they are weaker in. It is important to stop and think about how often you will be trading and what your trading strategy will be (are you going to hold stocks, trade momentum, etc.). Once you have a good idea of these things then you can choose the best broker for your situation. If you are a beginner, then it is our opinion that the best online trading site for beginners it TD Ameritrade because of its reliability and simplicity. It is a little more expensive, but as a beginner you will likely not be making a lot of trades anyway.