Note that I have accounts at each of these firms and have personally tested their trading platforms, research, and other tools. Here’s a quick look at the top brokers.
Table of Contents:
Best Online Discount Brokers of 2020
- You Invest by J.P. Morgan: Best for free trades and cash bonuses
- Ally Invest: Best for new investors and those looking for a very easy website to navigate.
- TD Ameritrade: Ideal for more experienced traders looking for a rich set of tools and resources.
- E*TRADE offers trading platforms and tools for any investment style
- Fidelity: Best for those looking for a robust broker with offices nationwide.
Over the years I’ve learned three important things about brokerage firms.
First, there are a lot of them. You’ve probably heard of many discount sites that allow you to trade stocks online, but I’m guessing there are a lot of online brokers you’ve never heard of (Sogotrade may be one example).
Second, while on the surface they can all seem similar, when you dig deep into what these brokers offer, you’ll find big differences. For example, not all of them offer the same account types. With some you can’t buy mutual funds, while others offer more mutual funds than most. And the stock trading tools available to you vary from one discount broker to the next.
And the third thing I’ve learned is that the cost of these discount firms can be tricky to understand, and in the end, may not be the most important factor. Because I watch every dime we spend, it may seem odd that cost isn’t the most important factor to me (after all, we are talking about “discount” sites, not full-service brokerage firms). The reality, however, is that unless you are an active trader, the cost of a few trades a year will be small.
Summary Of The Best Online Discount Brokers
You Invest by J.P. Morgan
Backed by Chase, You Invest by J.P. Morgan is one of the top discount brokers to trade with. Stock trades, options trades and ETFs all have a fee of $0 and Chase has an online mobile app that makes trading a breeze.
New customers can open brokerage accounts, Traditional IRA’s or Roth IRA’s. Right now, You Invest by J.P. Morgan is offering a cash bonus for new accounts in the following amounts:
- $200 cash bonus when you deposit at least $25,000
- $350 cash bonus when you deposit at least $100,000
- $725 cash bonus when you deposit at least $250,000
(All accounts must be funded at these levels in the first 45 days and remain in the account for at least 90 days)
Disclosure – INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Ally Invest
I’ve banked at Ally for years. Its website is one of the easiest to use among all banks, including online banks. Its fees are low to non-existent, and its banking rates are some of the best you’ll find on deposit accounts. So it was no surprise that Ally brought the same consumer-friendly approach to investing.
At Ally Invest stock and ETF trades are just a flat fee of $4.95. For you options traders out there, Ally charges just $0.65 per contract plus a $4.95 base. If you have a $100,000+ average daily balance and/or more than 30 trades per quarter the cost per stock or ETF trade drops to $3.95 and options contracts fall to $0.50 + $3.95 base. It’s hard to imagine a lower cost.
Ally also offers a Cash Enhanced Managed Portfolio. Like other robe-advisors such as Betterment or Wealthfront, Ally Invest manages the portfolio, including dividend reinvestment and rebalancing. Ally charges 0% for the service. The minimum investment is just $100.
TD Ameritrade
The now least expensive discount broker on our list, TD Ameritrade, offers some of the best online trading tools. Its platform “Trade Architect” is my favorite portal to use, specifically designed for casual investors like myself. If you’re looking for a more hardcore approach, they also have a thinkorswim platform that offers more date, more 3rd party research and more functionality.
Again, TD Ameritrade decided to cater to both casual and advanced investors by creating two separate mobile apps.
- TD Ameritrade Mobile (for the casual investor)
- Mobile Trader (for the advanced investor)
TD Ameritrade Summary:
- Trade Stocks: $0 flat fee
- Trade Options: $0.65 per contract + $0 base
- Margin Rates: -1.50% to +1.25% of a base rate (base rate = 9.50% as of 2/27/2019)
- Broker Assist Fee: $25.00
- Mutual Funds (Load): $0
- Mutual Funds (No Load): $49.99
- Minimum Deposit: None
- Sign up Bonus: N/A
For more information check out our TD Ameritrade review or visit TD Ameritrade.
E*TRADE
E*TRADE has been on a buying spree. Back in 2014 TradeMonster and OptionsHouse merged. Now E*TRADE has acquired the combined entity. E*TRADE offers trading platforms and tools for any investment style. It offers low costs even for infrequent traders, like myself. E*TRADE also offers E*TRADE Pro for active traders. And of course, it offers an excellent mobile experience.
E*TRADE Summary:
- Trade Stocks: $0
- Trade Options: $0 ($0.65 per contract or $0.50 per contract w/ 30+ trades per quarter)
- Margin Rates: Ranges from 7.00% to 10.50% based on debit balance
- Mutual Funds: $0 to $19.99 per trade
Read More: E*TRADE Review
Capital One Investing
Formerly ShareBuilder, Capital One Investing offers a full range of trading services. In addition to online trading, it also offers managed portfolios. While its fees are generally reasonable, its managed portfolios require a $25,000 minimum investment and charge 0.90% of assets under management. Due to the fees, we don’t recommend Capital One Investing’s managed portfolio.
Capital One Investing Summary:
- Trade Stocks: $6.95 flat fee
- Trade Options: $0.75 + $6.95 base
- Margin Rates: 5.20% to 8.20%
- Mutual Funds: $0 or $19.95
- Bonus: Up to $600 based on amount of deposit
Merrill Edge
Merrill Edge is one of my favorite platforms. In addition to online DIY investing, they offer a managed portfolio. You can invest with an advisor, if you so choose. And the website is incredibly easy to use.
Managed portfolios require a $5,000 minimum and cost 0.45% of assets under management. While this fee isn’t the lowest, it’s reasonable for those looking for some extra help.
- Trade Stocks: $6.95 flat fee
- Trade Options: $0.75 + $6.95 base
- Margin Rates: 5.50% to 9.625%
- Mutual Funds: $0 or $19.95
- Bonus: Up to $600 based on amount of deposit
How Much Will You Pay To Buy And Sell Equities Online
All of the firms make a point to advertise how much you pay to buy or sell stocks, mutual funds, options, or other equities. Today most trades at discount sites run from about $2.50 to $12 per trade. The key to remember, however, is that many of these firms charge additional fees, depending on how you use your account. These additional fees may include fees for large buy or sell orders, fees to buy or sell stocks trading at less than $1, account maintenance fees, account inactivity fees, and of course interest if you buy on margin.
Because these fees vary among discount brokers, the starting point is to understand how you will use your stock trading account. Will you trade frequently or just once or twice a month (or quarter)? Do you want to set up an automatic investment plan? Will you be buying stocks and mutual funds, or do you also plan to trade options? The answers to these questions will help you narrow the selection and ultimately pick the best broker for you investing needs.
Factors To Consider Other Than Cost
But just like most anything we buy, the cost is just one of many factors to consider. And the same is true when selecting a discount broker. So what are the factors besides cost that we should consider when selecting a discount stock broker? There are several, and they include ease of use, customer service, types of accounts offered, investing tools, type of investments you intend to buy, and account minimums. I’ve highlighted these and other factors below in the summary of the best online discount brokers. But just like cost, it’s important to know your investing goals when you evaluate your options. For example, account minimums may be a non-issue for you if you plan to invest a significant amount of money. Likewise, if you are looking for a specific account time (like an IRA), you can quickly eliminate those discount stock brokers that do not offer that account type.
Discount Broker Consolidation
Several brokers have acquired other online trading platforms. Ally Invest was previously TradeKing, until the online bank purchased the broker in 2016.TD Ameritrade has entered into an agreement to purchase Scottrade. E*Trade acquired OptionsHouse.
The flurry of acquisitions has left the industry in a state of flux. How smoothly will customer accounts transfer to their new home? How will the loss of competition in the space affect fees and features?
Time will tell. As the dust settles, we’ll continue to update this list.
Author Bio
Would you please provide a recommendation of a discount broker that facilitates stock trades on foreign exchanges, specifically Toronto, Australia, and Hong Kong?
Thanks,
Bill
Bill, there are several alternatives for discount brokers that enable you to buy stocks on foreign exchanges. In researching the alternatives, it is important to understand that for many of these brokers, you can’t buy foreign stocks online, you must use a broker assisted transaction. Still, the cost of the discount brokers is relatively low, depending on your trading volume.
That said, here are some alternatives:
Scottrade: Scottrade has foreign exchange trades and offer separate commission schedules for Canadian Orders versus other foreign stocks.
E*Trade: Etrade offers a global trading platform that covers exchanges in Canada, France, Germany, Hong Kong, Japan and the UK.
Try ChoiceTrade it offers
$5 plus
0.15 per contract or
$10 plus
0.00 per contract
Check out Interactive brokers, excellent tools, extremely low priced. Wonder why they arent on this list of brokers.
WHAT ABOUT INTERACTIVE BROKERS. OTHER THAN THE FACT THAT THEY DON’T SELL MUTUAL FUNDS. THEY GIVE GREAT FILLS AND ONLY CHARGE 1 PER TRADE.
I’ve been using Interactive Brokers for the past two years. They have a powerful system, incredibly quick fills and charge $1 per 100 shares round trip ($2 /100 shares for Canadian trades). You can trade in most international markets. They have great options and futures capability but seem to exist out of the spot light.
There are two things I look for that are hard to find in a discount (or any) broker. 1) Good and safe options for cash. When I don’t like the market, I sometimes go six or seven figures into cash. It’s important that that amount of money is earning something and is safe as it is well above FDIC and other guarantee limits. Scottrade is good in this respect. They break up your cash among several banks, if necessary, to keep full FDIC coverage. 2) Good bond trading capabilities on a commission and not a principal basis. Brokerage houses that trade bonds on a principal basis are generally ripping you off. E*Trade is not great, but good. Others have been very disappointing.
Any suggestions?
Thanks for the great reviews. When I did my research, I also chose Scottrade as my top choice for both an IRA and trading account.
I use Interactive Brokers (trading account) and E*Trade (IRAs). IB is good, but it’s definitely for the experienced trader. You need to know the exchanges, symbols, etc. Easy for stock trading, a lot less so for futures, options & Forex. You actually can’t trade Forex on IB until you take a little exam they have, and have prior experience. While good for position / short term trading, wouldn’t use them for day-trading – the user interface isn’t conducive to it. For quantities of options (10-50), E*Trade actually approaches or beats IB’s rates. E*Trade is good for IRAs / SEP-IRAs, as it’s easy to get your funds in when you need to.
Of all the brokerages i have checked .. i have found reliance money is the compnay which provides the lowest and cheapest brokerage amongst all the competitors..
Thanks for the tips. I use a comsec account to trade about once a month. I’d like to use E*trade or Scottrade as you recommend to save a few bucks (and encourage the CBA to be a bit more competitive). But how can I transfer the trades I’ve already made in comsec to a new online account? It doesn’t seem easy to switch between online brokers once you’ve invested some money.
If you choose to open an account with scottrade, you can get three free online trades (worth $21). Enter the code XEPG6413 in the box after selecting “referred by friend/received a promo code” on the application page.
I think SOGOTRADE is pretty good. It only cost $3 to make a trade (unlimited shares). They have good online and phone support, quick execution and a good inventory of shares that you can short! Oh and you only need $500 to open your account. You also get 100 free trades when you open your account. Can’t beat that.
For Toeser, I use Scottrade, and am looking for cheaper but with good support. Think or Swim is never mentioned in any of these articles, and they are $5/trade, and I forgot what they charge for options. They are real brokers, and give advice if nec., and do not charge extra for broker-assisted trades. So that’s good. BUT, I had to stop using them because their platform is so sophisticated and difficult, and it’s easy to make a mistake.
As far as bonds go, I made the mistake of puchasing bonds through Scottrade, and then found a bond broker, Hennion & Walsh(no-I do not work for them). It was cheaper to buy from them. Scottrade had to buy through a bond-broker, and charged extra fees.
Sue, thanks for the comment. I’ve been meaning to review Think or Swim, and will do so soon. You hit on the main problem, however. The Think or Swim platform is really designed for very sophisticated traders. For those of us that trade less frequently and take a more passive approach to investing, there are better options for online discount brokers. Interesting insight on bonds. I’ve bought all of my bonds through mutual funds. I assume you are buying individual bonds.
I’m looking for a brokerage firm which allow me to trade stocks listed in the Hong Kong Stock Exchange with my IRA account. Any recommendations?
Thanks,
Stephen
Interactive Brokers.
You state “Zecco was one of the pioneers of online discount stock brokers.” , the firm is approx. 5 years old ( online discount brokers started out inthe early 1980’s). What criteria are you using to define them as pioneers?
What this analysis completely ignores is margin interest rates. Sogo is reasonable but the rest of them charge exorbitant rates.
For low rates and reasonable commissions, look at investrade.com, interactivebrokers.com and tradingdirect.com. You may pay (literally) a few dollars more per trade but you will save many thousands on interest.
GLTA!
Just wanted to let you know, this Page(s) of information is the best I’ve ever come across to help me find solid, valid solutions to the problem of where to go to start investing my own money with Security, Expertise and Economy. Thank you, so-o MUCH !!! – – – CHIQUITA VIVA aka Gail Balcaen, Saskatoon, SK S7M OZ8 CANADA
I believe Thinkorswim.com is a great options trading broker. They have a great desktop platform and the data feeds are free with your trading account. If you are trading options, seriously consider thinkorswim.com, which was curently purchased by TD Ameritrade.
Hi,
I am kind a professional, but I stick to the equities. I am from Europe and interesting for Toronto and Germany. I like to day-trade, sell short, I want to skip additional cost like custodian fees. Any suggest?
Btw. If you trade with futures, could you trade them intraday and could you do that each day?
Tnx in advance!
Hello,
I’m very high on Scottrade. I have been with them for over 10 years with out any troubles at all. If you would like to try them out you can get 3 free trades just to see if you like them They have a good streamer.. They are all anybody would ever need.
Happy trading !!!
Lyn
Lyn, I’ve been with Scottrade now for about 3 years and have been very happy with them, too.
Scottrade is fine but they don’t honor their agreements in fact they without notice (and never contacting) us voided a long standing limited trading authorization for no reason other than they were updating their accounts and the LTA was old. They didn’t care that the owner signed it a long time ago and can’t easily sign a new document or visit a branch. They didn’t care. Their privacy and security or oak of, like many other firms allows them to send customers partial account #s via email. I don’t think this is a good idea but most brokerages are arrogant and don’t listen. As far as TD Ameritrade buying Scottrade well they closed many Scottrade branches and the local one near our home i.e. the one I waited years to get in my town from any discount broker.
Bill,
TDAmeritrade is one of the best on-line discount brokers. One feature that makes them high on the list is their no fee list of ETFs where you can purchase as little as one share for no cost. They also have the longest list of ETFs with this feature. You do have to hold your purchases for more than 30-days to avoid a $19 early trading fee. That is a small penalty for having access to a list of 100+ outstanding ETFs.
My husband and I are in T. Rowe Price funds. I am retired (60), and my husband will retire in august. He is 57. We were told to kick up domestic value stock (20%). Any recommendations?
Marilyn, increasing domestic value stock seems like an odd suggestion. Not that it is “wrong,” but rather that without more context, it’s difficult to evaluate. Do you have more details you can provide.
I have managed to save pretty well, and the thought of investing have stayed on the back burner for some time. Now, I am ready to invest, yet all I read is “…dark pools,…large institutional high frequency trading,…algorithms,…..the market is rigged…”.
It’s interesting how our SEC never sees anything. Example: Bernie ‘Madoff’, for years scalped investors for billions, under the nose of the SEC. Now, the flash crash. Yet again, our SEC stands and hears, and sees nothing.
I may dig my hole and ‘safely’ bury my money, yet again.
Dale, if that’s all you read, you need to read something else! Yes, there are bad people and bad investments on Wall Street. But there are also great businesses with great management that make excellent investments.
Hello Rob,
Thanks for sharing such a vast wealth of information. I Notice yours research/publication was back in 2009. Would you rate those company the same way today. Are there any new companies you would like to add to the list?
Jenny, Scottrade is still my favorite, but I’ll work on updating the post.
What about Robinhood? It offers free stock trading… Obviously nothing is truly free, but at first glance, they don’t seem to make money directly off of me, unless I keep cash just sitting in my investment account instead of the market… Can you comment?
K, Robinhood does offer free trades. That might be ideal for an active trader. For those who trade at most occasionally, however, the trading costs are not the most important factor.
I have been with Scottrade about 8 years and Capital One Investments since Sharebuilder ING about 15 years. I really like Capital Once Investments user interface the best very clean easy to navigate and ties in really nice with Capital One 360 checking. I will miss very much my Capital One Investment account user interface. We have a smaller amount invested in Charles Schwab because we like their bank ATM where they reimburse all ATM fees and no foreign transaction fees. We are considering moving everything to Charles Schwab. I don’t like their user interfaces as much but the customer service is good and they have a local office nearby. Their website user interface is not bad it’s just not as clean and simple as Capital One Investments but now that that is going to E*TRADE which one is better? Also my Scottrade account is going to TD Ameritrade any day now – I’m going to let it go to TD Ameritrade just to see what their interface is like but probably move it to Charles Schwab. Anyone have any comments on Charles Schwab user interface compared to Fidelity or TD Ameritrade, or E*Trade?
It’s actually very complicated in this active life to listen news on Television, so
I only use the web for that purpose, and get the most recent news.
What do you think about Chase U invest. I am worried about hidden fees
Thanks for the great reviews. When I did my research, I also chose Scottrade as my top choice for both an IRA and trading account.
WHAT IS THE BEST BROKERAGE THAT ALLOWS YOU TO TAKE ”BOX POSITIONS” ? TD AMERTRADE DOSE NOT… LOOKING TO SWITCH..
THANK YOU FOR HELP.
MUCH APPRECIATED
JOHN PACE
Looking for the discount brokers that give the best TAX paperwork, help you/make reporting easiest! That’d be a great article, although tougher to research.
Great article Rob! I’m curious for your opinion, last week, I came across this article (https://thefinancefriday.com/2019/09/20/6-best-investment-apps/), in this article (even though it’s targeted towards British/EU investors) it mentions Degiro, I’m curious as to your opinion on it.
Thanks,
Gary