Best Online Brokers for Buying and Selling Stocks

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With today’s digital innovations, investors are no longer limited to the brick-and-mortar brokerage firms that their parents used.

Instead, online brokers have enabled investors to go outside the boundaries of traditional trading institutions. By circumventing the proverbial middle man, individual investors can start investing in the stock market all on their own.

But how do you find the best online brokerage firm? And should you tackle investing alone?

They’re important questions, and the answers to them will determine which is the best online broker for you.

What Is a Brokerage Account and Can I Use It to Buy Stocks?

A brokerage account, including many of the apps that allow you to set up accounts, are investment accounts that allow you to invest in the stock market. The returns your investments generate are a form of taxable income. Yes, that’s right — you will be taxed on any income you earn from online stock trading.

The way it works is simple. Start by opening and funding an account with a cash deposit or ACH transfer. After your deposit funds clear, you can immediately begin purchasing stocks. Many online brokers will charge you a fee to make trades, even if you are purchasing for the first time.

You can then monitor the stocks you’ve purchased until you are ready to sell. If you choose to sell, you’ll have the option to keep the funds in your brokerage account [for future purchases], or you can transfer the balance back into your primary funding account.

How to Find the Best Online Broker for You

Learning how to start investing, especially if you’re a total beginner, can be overwhelming. Taking your money and investing it into the stock market is something a majority of people haven’t done on their own. Complicating things further is the fact that you’ll be responsible for preventing mistakes, doing your own research, and avoiding trading-oriented fees.

Then again, there’s the legitimate appeal of not having to pay a steep management fee for someone to invest your money.

For investors looking to buy and sell stocks, there are many online brokers to choose from. Depending on what your specific needs are, a broker that’s a great fit for someone else might not be the best choice for you.

The DollarSprout team has spent dozens of hours compiling research on all of the top brokers. We’ve sifted through each company’s pricing models, functionalities, online reviews, and more, and came up with a list of what we feel are the best online brokerages for stock trading.

Below are the highlights of our findings, along with links to more in-depth reviews and additional resources.

Comparing the Best Online Brokers

At a glance:

 

 

 

 

Open Account

 

 

 

$0

Cost per trade

$0

Account minimum

 

 

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Nimbus33 INC Rating

Founded in 1971, Charles Schwab is a full service investment firm. They offer a suite of investment options as well as several different types of accounts. They are a trusted name in the brokerage industry with fees and pricing now competitive with Vanguard, Fidelity, and other low cost brokerage firms. Their customer service can’t be beat.

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Pros:

 

• Long reputation of excellence
• No account minimums
• Many high performing Schwab ETF funds available that are free to trade
• Excellent customer service available 24 hours a day including live chat

 

 

Cons:

 

• If your fund does have a transaction fee, it could be high
• No current promotions to open account at this time

 

 

Best For:

 

Anyone who is looking for a low cost brokerage with great customer service.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade

$100

Account minimum

 

 

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DollarSprout Rating

Ally Invest is the investing portion of Ally Bank, an online only bank with no brick and mortar locations. Ally acquired Trade King in 2017 and now offers a suite of investment options. This platform is great for active day traders, but it’s also easy for a beginner to get started. Ally is well regarded in the financial space, and they have a good reputation.

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Pros:

 

Managed Accounts 

• No advisory fees.
• Automated investing.
• $100 account minimum.
• Interest-earning cash buffer.

Self-Directed Accounts

•  Commission-free trading on U.S. listed stocks and ETFs.
•  Transfer fee reimbursement.
•  $0 account minimum.
•  Up to $3,500 cash bonus.

 

 

Cons:

 

Managed Accounts 

• No tax loss harvesting.
• No human advisor.
• No physical branch.
• No existing promotions.

Self-Directed Accounts

• No automatic rebalancing.
• Mutual funds carry transaction fees.
• No human advisor.
• No physical branch.

 

 

Best For:

 

• Managed accounts are best for beginners looking for low-fee, completely automated investing.
• Self-directed accounts are best for active traders, forex traders, day traders, and options traders.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade

$100

Account minimum $500 minimum for IRAs

 

 

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DollarSprout Rating

M1 Finance is both an online brokerage and robo advisor. It has highly-rated interface, fund availability, and low costs. They offer investment portfolio templates you can choose from, and you can invest completely free.

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Pros:

 

• Free to trade
• Offers fractional investing and no hidden fees
• You can borrow against your portfolio in some instances
• Automates investing and rebalancing

 

 

Cons:

 

• They don’t  offer tax loss harvesting
• They only offer stocks and ETFs; no mutual funds

 

 

Best For:

 

Hands-off investors who want the benefit of a robo advisor with $0 per trade. Also, it’s best for people who want to invest in stocks and ETFs, not mutual funds.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade Also has “Fidelity Zero” index funds with no expense ratio and no minimum.

$0

Account minimum

 

 

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DollarSprout Rating

Fidelity is a well known, multinational financial services company that offers a variety of different types of financial products from credit cards to taxable investment accounts to retirement accounts. They are competitive with other low cost brokers like Charles Schwab and Vanguard.

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Pros:

 

• Did away with almost all account fees
• First broker to have mutual funds with no expense ratios
• Has significant research available to customers to learn from
• Great customer service and online tools

 

 

Cons:

 

• Fees are higher if you need the help of a broker to make a trade
• Some tools/products are only for active traders or people with large amounts invested

 

 

Best For:

 

People who want to invest for retirement and active investors as well. Also good for people looking for low cost funds.

 

 

 

 

 

 

Open Account

 

 

 

$5

Cost per stock trade

$500

Account minimum Higher minimum for options and futures trading

 

 

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DollarSprout Rating

Trade Station offers professional level trading for experienced investors, brokers, and day traders. They have a robust online platform with significant research and education available to their users.

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Pros:

 

• 35+ years of experience, with numerous awards
• Advanced level education and charting
• Comprehensive research available

 

 

Cons:

 

• Not designed for beginners
• Does not offer commission free ETFs
• Be wary of service charges and other fees

 

 

Best For:

 

Very experienced traders and investors.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade

$0

Account minimum

 

 

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DollarSprout Rating

TD Ameritrade is a large brokerage firm that offers many different types of accounts, stocks, ETFs, mutual funds, and more. They have brick-and-mortar offices and many different online tools and educational resources. They’re a well-known brokerage firm with a wide array of offerings and a positive reputation.

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Pros:

 

• Wide range of options
• Diverse trading platforms
• Lots of trading tools, education, and access to research
• No maintenance fees
• Good customer support

 

 

Cons:

 

• Trades are more expensive than some other competitors
• Some short-term trading fees (pay attention to the fine print when selling)

 

 

 

 

 

 

Open Account

 

 

 

$2-20

Cost per trade Vanguard branded ETFs are free to trade

$0

Account minimum Fund minimums start at $1,000

 

 

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DollarSprout Rating

Vanguard is one of the longest standing brokerage firms. Created by Jack Bogle in 1975, Vanguard has always been known for its low cost investing options and has served as a model for other low cost brokerage firms.

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Pros:

 

• Great selection of funds
• Low costs & good customer service
• Long time positive reputation in the industry

 

 

Cons:

 

• Geared more towards mutual funds, and you need anywhere from $1,000 to $3,000 for a fund minimum
• No checking or savings account offered

 

 

Best For:

 

All types of investors who are looking for a low cost brokerage firm with a variety of account options.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade

$500

Account minimum $0 for IRAs

 

 

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DollarSprout Rating

Etrade is a brokerage firm with three different trading platforms, so there is something for beginning investors all the way to active investors. They were among the first online brokers and also have significant data available to their customers. Note: If you make more than 30 trades per quarter as an active investor, the cost per trade drops to $4.95.

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Pros:

 

• Good mobile apps
• More than 4,400 no-transaction-fee mutual funds
• Over 250 commission-free ETFs
• 3 trading platforms

 

 

Cons:

 

• Not the lowest cost per trade
• Website can be hard to navigate

 

 

Best For:

 

Beginning investors and active traders who prefer commission free ETFs and access to research and data.

 

 

 

 

 

 

Open Account

 

 

 

$0

Cost per trade Includes stocks, ETFs, and options

$0

Account minimum

 

 

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DollarSprout Rating

Firstrade is a discount online brokerage firm that offers completely free trades with no account minimums. They have a powerful trading platform with no hidden fees. In addition to offering low cost investment options, they also offer educational resources, calculators, and more to their customers.

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Pros:

 

• Stocks, options, and mutual funds are all free to trade
• More than 700 ETF options
• Training tools
• No minimum deposits
• International accounts allowed

 

 

Cons:

 

• Customers report customer service could use improvement
• No managed portfolios available

 

 

Best For:

 

Investors who want free trades and prefer a hands-off approach. International investors.

 

 

 

 

 

 

Open Account

 

 

 

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Cost per trade

$0

Account minimum

 

 

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DollarSprout Rating

Merrill Edge is a brokerage firm and a subsidiary of Bank of America, so it’s helpful to people who are Bank of America customers who want to keep their accounts with the same bank. They do offer up to 100 free trades per month if you meet certain qualifications such as having a Merrill Edge balance of $25,000 or more or a BoA balance of $25,000 or more.

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Pros:

 

• Integrates with Bank of America and many online investing tools
• First 100 trades free if you meet certain account minimum requirements

 

 

Cons:

 

• High margin fees
• Slow trading time
• it’s $29.95 to get a representative to assist you with a trade

 

 

Best For:

 

Current Bank of America customers and customers who plan on having at least $25,000 in their account (to access up to 100 free trades.)

 

 

 

 

 

 

Open Account

 

 

 

$1.00-1%

Cost per trade

$0

Account minimum

 

 

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DollarSprout Rating

Interactive Brokers is a sophisticated trading platform which benefits those who are active traders. They offer lower commissions than other top brokerage firms, but their fee structures truly benefit those who are advanced traders.

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Pros:

 

• For high volume traders, the fees are low
• Good mobile app with solid education offerings
• Sophisticated trading platform

 

 

Cons:

 

• Limited account type offerings
• Too many fees for less active traders
• Difficult to navigate for a new investor

 

 

Best For:

 

Very frequent traders, advanced traders.

 

 

What should you look for in an online broker?

Here are some questions you should always ask before deciding on an online brokerage for investing:

What About Online Investment Apps?

If you want to go further than just exploring the best online brokerages, and would like to explore an area where younger investors are flocking to, check out our research on the best investment apps.

At a glance:

• Acorns – Best overall
• Stash – Best for values-based investing
• Betterment – Best investing app for long term investors
• M1 Finance – Best commission free investing app
• Ally Invest – Best app for do-it-yourself investors
• Fundrise – Best real estate investment app
• Stockpile – Best for buying fractional shares
• Robinhood – Best for options and crypto trading

Each of these apps and services are specialized and meet the needs of a different kind of trader.

To get started with one, you’ll need a well-balanced investing strategy; one that considers your entire financial outlook.

If you do not have a sound fiscal budget in place, an area where many younger, inexperienced investors struggle, you’ll end up pouring too much money into rigid investment accounts (with penalized withdrawals), instead of servicing high interest debt or paying essential bills.

Getting Started is the Most Important Step

If this is your first time investing, not to worry. With so many trading platforms available, including ones that require no minimum balance and no trading fees, you can learn on your own and use our resources to guide you every step of the way.

Investing with an online broker, even one of the best online brokers, doesn’t guarantee anything — the stock market is not an exact science. Instead, the stock market sways and shifts every single day and is deeply impacted by a myriad of factors that range from everything between politics, news, weather, and the actions of other traders.

The more time your investments must mature, the more money you will end up having in retirement. That means that the best time to start is now, even if you start small. The rise of mobile has made tracking and growing your money easier than ever.

With any one of the investment apps listed above, it’s easier than ever to get started with investing today.

How DollarSprout Rates Online Brokers

The Editorial Team at DollarSprout looks at multiple factors when determining a 1-5 star rating for online brokers. Here are the most important factors that weigh into our ratings:

• Cost per trade
• Availability of commission free ETFs
• Access to research
• Fees, and the likelihood that a user will incur them
• Account balance requirements
• Customer service
• Mobile app reviews

In addition to assigning a 1-5 star rating for each broker we research, we also aim to find the best broker for certain types of investors, such as:

• Best broker for beginner investors
• Best broker for active traders
• Best broker for index fund investors
• Etc.