A discount broker provides reduced commissions on trades. While these rates are relatively inexpensive, discount brokers do not provide other services that full-service brokers typically would, like investment advice, analysis, and retirement planning. Many cost-conscious traders look for brokers with very low fees. This type of broker can also be attractive to more experienced traders who do not need investment advice or analysis. When looking at our top discount brokers, we overweighted the cost categories in our methodology and ensured that trading technology was still an important factor.

Best Discount Brokers

Our list of the top five discount brokers:

  • Interactive Brokers
  • Charles Schwab
  • TD Ameritrade
  • Fidelity Investments
  • Robinhood

Interactive Brokers

4.8
  • Account Minimum: $0
  • Fees: $0.005 per share for the standard platform, $0 for IBKR Lite
Read full review

Interactive Brokers' order routing system is likely to find you enough price improvement to offset any trading costs. Their toolset for frequent traders helps find appropriate trades. Interactive Brokers has also recently released its IBKR Lite platform. IBKR Lite clients pay no commission on U.S.-based equities, but they are restricted to the web-based Client Portal and IB's mobile apps.

Pros

  • Low trading costs and margin rates

  • The platform and services are geared for active traders

  • Clients can trade on 120 markets in 31 countries, using 23 currencies

  • Good charting and portfolio analysis

Cons

  • Small or inactive accounts are subject to additional fees

  • Mosaic, the primary platform, has a steep learning curve

  • Quotes stream on only one device at a time

Charles Schwab

4.5
  • Account Minimum: $0
  • Fees: Free stock, ETF and options trading commissions in the U.S., as of October 7th, 2019. $0.65 per options contract.
Read full review

Schwab eliminated its base commissions for stock and ETF transactions as well as its per-leg fee for options trades. Commissions are also eliminated for OTCBB (penny stock) transactions, which is a differentiator. Options trades are now $0.65 per contract, which is a large price cut for smaller multi-leg trades.

Pros

  • Advanced options tools and trading ideas are built into the StreetSmart Edge

  • Mobile web platforms and native mobile apps offer the same functionality


Cons

  • Some features are divided among different platforms


  • Push towards using a financial advisor


TD Ameritrade

4.4
  • Account Minimum: $0
  • Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2019. $0.65 per options contract.
Read full review

Previously the most expensive of the major online brokers, TD Ameritrade eliminated base trading commissions on equities, ETFs, and options for U.S.-based customers. Though they have cut trading commissions, their margin interest rates remain on the high end of the scale.

Pros

  • Extensive research capabilities and numerous news feeds keep you up to date

  • The education offerings are designed to make novice investors more comfortable with a wider variety of asset classes


  • Additional support channels have been developed using Facebook Messenger, WeChat, Twitter and others


Cons

  • As with other brokers with multiple platforms, clients may have to use more than one trading system to find all the tools they want to use


  • The website is so packed with content and tools that finding a particular item is difficult

Fidelity Investments

4.4
  • Account Minimum: $0
  • Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Read full review

In October of 2019, all U.S. stocks and exchange-traded funds (ETFs) no longer incur a commission, and the base per-leg charge for options trades has also been eliminated. Options trades are $0.65 per contract under Fidelity's new pricing.

What We Like

  • Excellent trade executions

  • Exchange-traded fund (ETF) research is detailed

  • Access to Active Trader Pro for all customers

What We Don't Like

  • Customers may have to switch among multiple platforms to utilize preferred tools

  • Non U.S. citizens or residents cannot open an account

Robinhood

4.3
  • Account Minimum: $0
  • Fees: $0
  • Best for: Low Costs and a sleek app
Read full review

Robinhood does not charge any trading commissions, but you pay a monthly fee up front for their Gold service, which gives you access to margin loans. Orders are not routed to get you the best possible price, so your actual trading costs are likely to be higher.

Pros

  • Stocks and options trade commission-free

  • Mobile app and website are very easy to use

Cons

  • Snapshot quotes only, no streaming

  • Very little research available

  • Trades may not be routed in the customer's best interest

What Do Brokers Charge To Trade?

Brokers can charge a variety of fees depending on the services they offer. Here are some fees you can typically expect at a brokerage:

  • Stock Trade Fee (per trade): Typically between $0.00 and $6.95
  • Stock Trade Fee (per share): Typically between $0.006 and $0.01
  • Broker-Assisted Trade Fee: Typically between $0.00 and $50.00
  • Mutual Fund Trade Fee: Typically between $0.00 and $50.00

Important

Some brokers charge a per-leg fee for options trades, so frequent spread traders might want to look for brokers who only charge a per-contract fee.

Rise of Free Trading

The landscape of the online brokerage industry has changed dramatically over the last few years, most notably with the change in costs for clients. As volatility returned in 2018 many investors retreated to the sidelines. As a result, brokers needed to make their platforms as attractive as possible to bring fearful investors back.

One method for doing so was by reducing commission fees which, in some cases, went as far as making trades completely free. As brokerages reduced costs, it caused a chain reaction. Brokers needed to remain competitive and lower their prices.

While most brokers were simply reducing costs for their clients, others were going a different route by completely eliminating commissions. One of the early pioneers of commission-free trades was Robinhood. Though they charge no commissions for trades, they make money in other ways, including payment for order flow and interest on cash in accounts.

Discount Brokers vs. Full-Service Brokers

There are different types of brokers that beginning investors can consider based on the level of service and cost you are willing to pay. A full-service, or traditional, broker can provide a deeper set of services and products than what a typical discount brokerage would. Full-service brokers can offer their clients financial and retirement planning as well as tax and investment advice. These additional services and features usually come at a steeper price.

If you are looking for a cheaper, more hands-on approach, a discount broker is a better choice. Discount brokers offer low-commission rates on trades and usually have web-based platforms or apps for you to manage your investments. Discount brokers are less expensive, but require you to pay close attention and educate yourself. Luckily, most discount brokers provide educational resources to help you learn to trade and invest.

Pros & Cons of Discount Brokers

Discount brokers can be ideal for those looking to save money, but if you are newer to the investment world and need more hands-on guidance they may not be worth it for you.

Pros

  • Lower cost

  • No need to worry about biased investment recommendations

  • Access to basic educational resources to help you do it yourself

Cons

  • No advice or guidance

  • Possible hidden fees

  • Less hands-on customer service

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.

In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.

Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.