Choosing the right broker can make or break your trading journey. Although there’s no surefire way to make money in the stock market, you can maximize your profit potential and improve your trading skills by opting for a good brokerage firm that truly matches your goals and needs. Below is a list of the best trading sites and a guide to choosing the right broker.
The best online trading sites include:
- Charles Schwab
- TD Ameritrade
- Interactive Brokers
- Fidelity Investments
- Merrill Edge
- Ally Invest
What Are the Best Online Trading Sites?
Most online brokerage firms have the necessary systems and tools to enable you to trade stocks effectively and efficiently. However, they may differ in terms of trading platforms, additional features and services, research and educational materials, customer support, and fees. The following is a list of the best online trading sites.
Charles Schwab is a full-service investment firm that provides a wide array of services to both experienced traders and beginner investors. Aside from its wide selection of trading platforms, this broker also offers full banking capabilities. The brokerage firm recently eliminated commissions on stock and exchange-traded fund (ETF) trades. For options trades, it reduced its fee to just $0.65 per contract.
One area that Charles Schwab excels in is market research. It has its own proprietary rating system that tracks the performance of more than 3,000 stocks in the United States. The company also has several in-house experts who provide insights on a wide array of trading topics.
E*TRADE is a popular option among active traders, mainly because of its excellent trading platforms, such as E-TRADE Web, E-TRADE Pro, and Power E-TRADE. This broker used to charge a $6.95 trade commission for online stock, options, and ETF trades, but it recently dropped the fee. It offers an extensive range of investment options, from stocks and bonds to futures and mutual funds. Most of these investments don’t come with a transaction fee. Also, E*TRADE features a robo-advisor service called E-Trade Core Portfolio, which manages your portfolio for a yearly advisory fee of 0.3%.
TD Ameritrade is a great trading site for both beginner investors and active traders. Aside from its high-quality trading platforms, this broker offers zero commissions on stock, options, and ETF trades. In addition, it has no account minimums and provides extensive research data at no cost. Besides stocks, bonds, ETFs, and mutual funds, it also allows you to trade futures, forex, options, and IPOs. One drawback of TD Ameritrade is that it charges comparatively high fees for broker-assisted and short-term ETF trades.
With its wide array of tools and features, Interactive Brokers is a preferred choice among more advanced investors who are interested in tracking global investing trends. Customers aren’t limited to the United States market; they can also trade options, futures, and other equities from the stock exchanges of other countries, such as Japan, Australia, Italy, Mexico, and India.
When it comes to costs, you can choose between a tiered plan and fixed-rate plan. A tiered plan is ideal for frequent traders because it minimizes trading expenses, while a fixed-rate plan is suitable for occasional traders. Although it has taken measures to appeal to the mass market, such as introducing a robo-advisory service, Interactive Brokers may not be a good option for new investors.
TradeStation’s commitment to excellent customer service, top-notch market research, and high-quality trade executions makes it one of the best trading sites for active, technically minded traders. This broker requires a minimum of $500 to open an account, but it doesn’t charge commissions on trades completed on its mobile apps and web-based platforms. One disadvantage of TradeStation is that it doesn’t offer forex trading. Similar to Interactive Brokers, this site isn’t suitable for beginners, but it’s working hard to cater to the needs of mainstream traders.
Fidelity Investments is a great online trading site for all types of investors, regardless of experience. It provides plenty of educational resources for traders who want to conduct their own market research and improve their trading skills. This brokerage firm also charges zero commissions on stock, ETF, and options trades and offers a wide selection of mutual funds with no transaction fees.
Fidelity Investments has an advanced trading platform called Active Trader Pro, which is free to use for all customers. In the past, clients had to make a certain number of trades before they can access this platform. One of the downsides of this trading site is that it doesn’t allow non-United States citizens to open an account.
Merrill Edge is an excellent option for casual traders who are looking for a combination of strong market research and competitive prices. Owned by Bank of America, this online broker has over 2,500 locations across the United States and offers outstanding in-person customer support.
One primary drawback of Merrill Edge is that it charges a $2.95 fee per trade. However, traders who qualify for its Preferred Rewards program are eligible for unlimited free trades. Currently, the company offers a promotion that offers new customers 300 free stock and ETF trades for three months.
Formerly known as TradeKing, Ally Invest specifically caters to active traders. This trading site doesn’t charge commissions on stock, options, and ETF trades. Also, it doesn’t require any account balance minimum to get started. If you’re into options trading, you’ll be glad to know that this broker charges only $0.50 per contract. Previously, this rate was only available to those who had at least $100,000 in their accounts or traded 30 times or more per quarter.
Ally Invest offers more than 8,000 mutual funds, but it charges $9.95 per trade. If you’re planning to invest primarily in mutual funds, you may be better off choosing brokers that don’t charge any fees for mutual funds, such as Merrill Edge and Interactive Brokers.
Vanguard was founded in 1975 by Jack Bogle, who is credited with creating the first-ever index fund. This company offers zero commissions on United States treasury securities, Vanguard mutual funds, and Vanguard ETFs. For other stocks and ETFs, it charges a $7 fee per trade. One downside of Vanguard is that it doesn’t offer forex and futures trading.
Vanguard focuses primarily on self-directed investing, but it also has robo-advisors and managed portfolios. For managed portfolios, you can get a personal advisor to manage your investments for just an annual fee of 0.3%. To qualify for this service, you need to have at least $50,000 in your account. If you’re planning to invest for retirement, this broker is perfect for you. However, if you seek to become an active day trader, it’s advisable that you consider other online brokers.
Things to Consider When Choosing a Broker
With so many online trading sites available, choosing the right one can be a daunting task. However, you can narrow down your options by following these steps:
- Choose a broker that charges low fees: As a trader, one of your primary concerns is to keep as much of your investment returns as possible. Therefore, you should go for an online broker that charges low trading commissions and management fees.
- Consider your trading experience: If you’re new to online trading, it’s a good idea to select a broker that provides a trial account. This type of account allows you to practice trading before using actual money. If you have some trading experience, you should opt for a platform that has an abundance of technical and fundamental data and high-level educational materials.
- Opt for a broker with plenty of educational materials: If you’re a new trader, you should look for a trading site that has a comprehensive list of resources tailored towards beginners, such as how-to articles and glossaries. Since different people have different learning styles, the materials should be presented in a variety of formats, such as videos, podcasts, and written articles.
- Evaluate the broker’s trading platforms: Brokers typically list the tools and features of their trading platforms on their websites. Make sure you evaluate them thoroughly. If a trading site allows you to open an account for free, grab that opportunity to test its trading platforms. Try placing a trade to see if the process goes smoothly. Then, figure out what kind of data the platforms provide by clicking on every tab.
Choosing the right trading site is the first step to becoming a successful stock trader. After signing up with your preferred broker, you have to take full advantage of its educational and research materials to constantly improve your trading knowledge and skills. Also, you should try to master the trading platforms and familiarize yourself with all the available tools and features in the shortest time possible. If you want to learn more about stock trading, consider joining our free, seven-day RagingBull.com Bootcamp to get expert advice and tips from our millionaire trainers.