With so many different types of online stock brokers available to investors, it can be tough to choose one that works best for you. That’s why we put these U.S.-based online brokers through a comprehensive review process that included hands-on research to determine the best in the industry.
Best Online Brokers and Trading Platforms for November 2020:
- Fidelity Investments: Best Overall
- TD Ameritrade: Best Broker for Beginners and Best Broker for Mobile
- tastyworks: Best Broker for Options and Best Broker for Low Costs
- Interactive Brokers: Best Broker for Advanced Traders and Best Broker for International Trading
- Charles Schwab: Best Broker for ETFs
Fidelity Investments: Best Overall
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Fidelity earned our top spot for the second year running by offering clients a well-rounded package of investing tools and excellent order executions. It has continued to quietly enhance key pieces of its mobile-responsive website while committing itself to lowering the cost of investing for its clients. Fidelity joined in the rush to cut equity and base options commissions to zero in October 2019 but remains devoted to offering top-quality research and education offerings to its clients. The firm also makes it easy for clients to earn interest by sweeping uninvested cash into a money market fund. Fidelity also shares the revenue it generates from its stock loan program, and allows clients to choose which stocks in their portfolios can be loaned out.
Fidelity provides excellent trade executions for investors. On average, over 96% of orders for Fidelity customers are executed at a price better than the national best bid or offer.
Fidelity offers a wealth of research and extensive pre-set and customizable asset screeners.
Your uninvested cash is automatically swept into a money market fund to help contribute to overall portfolio returns.
Some traders and sophisticated investors may have to use Fidelity’s web platform in addition to Active Trader Pro to access all the tools and research they require.
Non-U.S. citizens or residents cannot open an account.
Traders and investors must manually refresh the data when using the website.
Fidelity has a wide offering of securities, but no commodities or options on futures.
TD Ameritrade: Best for Beginners And Best Mobile App
- 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.
Best for Beginners: TD Ameritrade, one of the largest online brokers, has made significant efforts to market itself to beginner investors through social media. Work is still being done to further streamline its web and mobile experiences and make them more accessible to new users, but the resources new investors can already access are exceptional. Education is a key component of TD Ameritrade’s offerings. You’ll find expanded learning pathways, ranging from beginner to advanced, to help clients understand everything from basic investing concepts to extremely advanced derivatives strategies. You can open an account and poke around without making a deposit, and take advantage of all the learning opportunities until you’re comfortable. TD Ameritrade wants new investors to become more confident, and to trade additional asset classes as their skills grow.
Best for Mobile: TD Ameritrade focused its 2019 development efforts on its most active clients, who are mobile-first – and in many cases, mobile-only. TD Ameritrade’s thinkorswim mobile platform has extensive features for active traders and investors alike. The workflow for options, stocks, and futures is intuitive and powerful. You’ll find lots of bells and whistles that make the mobile app a complete solution for most trading purposes, including streaming real-time data and the ability to trade from charts. The regular mobile platform is almost identical in features to the website, so it’s an easy transition. TD Ameritrade clients can trade all asset classes offered by the firm on the mobile apps.
The education offerings are designed to make novice investors more comfortable.
TD Ameritrade offers in-person education at more than 280 offices as well as multiple training pathways available on its website and mobile apps.
TD Ameritrade optimized its traditional website for mobile browsers with a dashboard where clients can quickly access account details.
Streaming real-time data on thinkorswim’s mobile app is unlimited.
Some investors may have to use multiple platforms to utilize preferred tools.
TD Ameritrade offers one of the widest selections of account types, so new investors may be unsure of which account type to choose when opening an account. More support is needed to ensure customers are starting out with the correct account type.
Investors are paid a tiny rate of interest on uninvested cash (0.01-0.05%) unless they take action to move cash into money market funds.
tastyworks: Best Broker for Options and Best Broker for Low Costs
- Account Minimum: $0
- Fees: $0.00 stock trades, $1.00 to open options trades $0.00 to close
Best for Options: Tastyworks officers say that more than 90% of the trades placed by their customers are derivatives, so there are a lot of tools for options and futures traders. Everything is designed to help the trader evaluate volatility and the probability of profit. It’s all about making decisions and taking action. Executions are fast and the costs are low, capping commissions for opening orders for options on equities and futures at $10 per leg. As you build a position from a chart or from a volatility screener, a trade ticket is populated for you. There’s a video viewer embedded so you can keep an eye on the tastytrade network. Though a newcomer to options trading might be initially uncomfortable, those who understand the basic concepts will appreciate the content and features.
Best for Low Costs: The qualification for this award is simple: the lowest out-of-pocket costs. Tastyworks fits that bill well, as customers pay no commission to trade U.S. equities online, and there is no per-leg fee for options trades. Tastyworks has a unique fee structure for options trades, charging $1 per contract to open a position, while closing trades are free. In addition, there is a maximum of $10 per leg for options trades, so traders who place large spread orders are happy.
All of the tools you’ll need for analyzing and trading derivatives are built into the tastyworks platform.
The charting capabilities are uniquely tuned for the options trader.
There are hours of original video from tastytrade every weekday, offering up-to-the-minute trading ideas, plus a huge library of pre-recorded videos and shows.
Newcomers to trading and investing may be overwhelmed by the platform at first. There’s a learning curve to climb.
There is no fixed income trading (outside of ETFs that contain bonds) for those who want to allocate some of their assets to a more conservative asset class.
Besides profit and loss, any additional portfolio analysis requires setting up a login on a separate site.
Interactive Brokers: Best for Advanced Traders and Best for International Trading
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
Best for Advanced Traders: Interactive Brokers (IBKR) earns this award due to its wealth of tools for sophisticated investors and its wide pool of assets and markets. The firm makes a point of connecting to as many electronic exchanges as possible. You can trade equities, options, and futures around the world and around the clock. Interactive Brokers’ order execution engine stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate. The order routing algorithms seek out a speedy execution and can access hidden institutional order flows (dark pools) to execute large block orders. The wide array of order types include a variety of algorithms as well as conditional orders such as one-cancels-another and one-triggers-another. You can also set up conditional orders based on price, volume, daily P&L, margin cushion, number of shortable shares available, rebate available from the trading venue, and other factors.
Best for International Trading: Interactive Brokers is the best broker for international trading by a significant margin. Interactive Brokers allows investors to access 125 exchanges in 31 countries across the globe. This reach is combined with a massive inventory of assets and 60 different order types to plan your entry and exit from a position. Investors can also fund their account in their domestic currency and IBKR will handle the conversion at market rates when you want to buy assets denominated in a non-domestic currency. And, if all that were not enough, the quality of trading tools available through Traders Workstation (TWS) make it easy to execute multi-layered trades across international borders. Interactive Brokers has won this category two years running, and there is no sign of that changing in the near future.
IBKR’s order execution engine has what could be the smartest order router in the business.
Interactive Brokers connects clients to 135 markets in 33 countries and enables clients to trade stocks, options, futures, forex, bonds and funds from a single integrated account.
Algorithmic order types include VWAP (volume-weighted average price) and TWAP (time-weighted average price) as well as order types designed to minimize the trader’s impact on the price of a particular stock.
You can only have streaming data on one device at a time. This could be an issue for traders with a multi-device workflow.
The most advanced capabilities are restricted to IBKR Pro clients and trades on that plan are not commission free.
Most non-U.S. exchanges charge additional data fees that increase your trading costs.
Charles Schwab: Best for ETFs
- Account Minimum: $0
- Fees: Free stock, ETF trading, $0.65 per options contract
Money is increasingly flowing out of the mutual fund industry and into exchange-traded funds (ETFs). Some investors (and most robo-advisors) use ETFs exclusively to build a balanced portfolio meant to walk the optimal line between risk and reward. To determine the best online broker for investing in ETFs, we looked at research capabilities specific to finding the best ETFs for a customer’s specific purpose. Top-notch screeners, analyst reports, fundamental and technical data, and the ability to compare ETFs are the main components of this award.
Schwab is a full-service investment firm which offers services and technology to everyone from self-directed active traders to people who want the guidance of a financial advisor. It has a wide variety of platforms from which to choose, as well as full banking capabilities. It is, however, Schwab’s ETF screener on the StreetSmart Edge platform that will capture the attention of ETF investors. The StreetSmart Edge ETF screener has over 150 criteria that can combine fundamental, technical, and third party data. The ETF screener is extremely customizable and your criteria combinations can be saved for future re-use. Schwab’s news and research offerings overall were also among the deepest of all the brokerages we reviewed, sealing up this category for the industry giant.
The StreetSmart Edge ETF screener is the best among all online brokerages we reviewed.
There are 16 predefined screens for the ETF screener which can be customized according to client needs. Results can be turned into a watchlist, or exported. The ETF screener is available to both prospects (pre-login) and clients using StreetSmart Edge.
Schwab offers its clients free access to news feeds from BondSource, MarketEdge, Schwab Investing Insights Brief, Argus Research Alerts, Briefing.com, Morningstar Equity Research Alerts, Business Wire, PR Newswire, Credit Suisse, CFRA, and Vickers Insider Activity.
Premium third-party research is offered at a discounted price.
In contrast to the excellent ETF screener in StreetSmart Edge, the ETF screener on the Schwab.com website is very basic.
If you trade derivatives, most of the tools are on the StreetSmart Edge platform, but equities traders will wind up referring to technology on the standard website.
Schwab does not automatically sweep uninvested cash into a money market fund, and their base interest rate is extremely low.
What to Consider When Choosing an Online Broker
When you are choosing an online stock broker you have to think about your immediate needs as an investor. Are you a beginner? Maybe you need a broker that has great educational material about the stock market. Do you only have a small amount of money you can put aside to invest? Some online brokers allow for small minimum deposits which can be a great option for those with limited funds. Are you always on the go and in need of a robust mobile platform? Some online brokers have incredible mobile apps delivering nearly all the features that their desktop counterparts do.
Another important thing to consider is the distinction between investing and trading. When people talk about investing they generally mean the purchasing of assets to be held for a long period of time. These types of investments are usually made to reach a retirement goal or to put your money into assets that may grow faster than it would in a standard savings account accruing interest. Trading, on the other hand, most commonly involves the buying and selling of assets in short periods. Trading is generally considered riskier than investing.
All of these factors must be considered before choosing an online broker. Do you want to trade or invest? Do you want a great mobile app to check your portfolio wherever you are? What types of assets are you looking to invest in? Answering these questions is not always easy. You can check out our guide to choosing a stock broker to gain further insight so you can make a sound decision. Once you've made a decision on a broker, you can also check out our guide to opening a brokerage account.