With the rising popularity of index fund investing and robo-advisors, it may seem the trading of individual stocks is fast becoming a lost art. But tens of millions of investors continue to trade individual stocks and other securities, and that’s why it’s important to do so using the best online stock trading sites.
Whether it has to do with trading commissions, broker assistance, trading tools, or educational resources, finding the online stock trading site that will work best for you can improve your investment returns by thousands of dollars over the years. In this article, that’s exactly what we’re trying to help you do.
Our Selection Methodology
In determining the best online stock trading sites, we looked at 10 popular investment brokerages. We narrowed the list down to the five that provide the broadest range of services, as well as the most attractive pricing. After all, this is a list of stock trading sites, so fees matter.
Overall, we used the following criteria to determine the best online stock trading sites:
- Evaluations and ratings from major financial publications
- Platform pricing
- Range of investment options
- Quality of trading platform
- Availability of trading tools and educational resources
- Areas of broker specialization
Each of the five stock trading sites on this list excel in each of these categories. It came down to relative levels of strength in each, as well as exemplary performance in one or more areas.
Top 5 Best Online Stock Trading Sites
1. TD Ameritrade
TD Ameritrade might just have the best overall trading platform in the industry. It also has more than 360 branch locations in major metropolitan areas around the country.
TD Ameritrade is particularly strong with their trading platform. They offer overnight trading, on a “24/5” basis – trading 24 hours a day, five days per week. Their “thinkorswim” feature provides professional level trading technology, streaming real-time data, customizable charts and integrated one-click trading. They also offer Advanced Trading, investor education tools, and Technical Analysis (with more than 400 technical studies).
But perhaps most interesting is the TD Ameritrade paperMoney tool. It’s a virtual trading account that lets you test trading strategies before going live. It gives you two accounts, a virtual margin account in a virtual IRA, each with $100,000. It’s perfect either for a beginner or an advanced trader to test various investment strategies without the possibility of losing money in the process.
TD Ameritrade is at about the middle of the investment brokerage range, with a fee of $6.95 per trade for stocks and ETF’s, and $6.95 per trade for options, plus $0.75 per contract. There’s free trading of load mutual funds, and $49.99 per trade for no-load funds.
Related: Read TD Ameritrade Full Review
2. Ally Invest
Ally Invest has come up fast in the investment brokerage space, since its birth with the 2016 acquisition of TradeKing by Ally Bank, immediately rebranded into “Ally Invest”. TradeKing was an up-and-coming discount broker, and the investment service has only improved with the Ally take over.
They offer trading in stocks, bonds, options, Forex and futures. You can also trade in thousands of mutual funds and ETF’s.
Ally Invest is particularly well-suited to active traders, due to its low commission schedule. In addition to their usual low commissions of $4.95 per trade for stocks, options and ETF’s, they also offer special discount pricing for active traders. If you make more than 30 trades per quarter–or maintain a daily balance of $100,000 or more–the commission rate drops to $3.95 per trade. That can make a significant difference in the return on investment over many trades by an active investor.
They also have the advantage of the tie-in with Ally Bank, which offers some of the highest interest rates paid on online savings accounts, money market accounts and certificates of deposit. You can use bank assets as a high yield and totally safe allocation to go with your equity investments.
Ally Invest is also recognized for having one of the top trading platforms in the industry, as well as 24/7 customer service by both phone and live chat.
Related: Read Ally Invest full Review
3. Charles Schwab
Charles Schwab virtually invented the discount investment brokerage concept back in the 1970s. But they steadily added services to the point where they are a full-service broker, while still providing discount prices.
Charles Schwab offers everything Fidelity does, and is an even larger firm based on assets under management. But we gave Fidelity the nod due to their stronger position in mutual funds.
But Schwab has plenty of strengths of their own. Their training tools and broker support are second to none in the industry. Their fees are comparable to Fidelity’s, and so is their investment selection.
If you’re a trader, and especially a new trader, they offer some of the best educational and training resources on the web. They also offer the full range of investment products, including stocks, bonds, options, mutual funds and ETF’s. At $4.95 per trade, their commissions are at the low end of the investment broker range. They are however high on mutual fund commissions, at $76 per trade.
But one of the factors making Schwab one of the top firms in the industry is their robo-advisor platform. These days, virtually every major brokerage has one. But what makes their Schwab Intelligent Portfolios robo-advisor stand out is that it’s offered at no fee. The service invests your money in up to 20 different asset classes, including commodities and real estate. It’s a perfect option for a new trader who may want to keep some of his or her money in a professionally managed account, while breaking into self-directed trading at the same time. That’s a big advantage for any investor, but particularly a new investor. And even though we’re primarily evaluating stock trading sites based on actual trading features, it’s always a plus to have a good managed option as well. And one that’s free is even better!
But one area of particular benefit to new traders is customer service. Schwab has it available on a 24/7 basis, and it consistently gets high ratings from major financial media outlets. For example, in 2017, Charles Schwab was rated #1 in customer service by investor’s Business Daily.
They offer a wealth of investment tools, including Schwab Proprietary Research, which provides access to stock ratings, fundamental research, custom screeners, and much more:
Related: Read Charles Schwab Full Review
E*TRADE is another investment broker that’s coming up fast. E*TRADE made a deep plunge into options trading with the 2017 acquisition of OptionsHouse, a platform that specialized in that investment niche. In fact, E*TRADE has largely kept the OptionsHouse platform intact, while adding its own specific services to the mix.
Much like other investment brokerage firms on this list, you can hold the widest variety of investments through E*TRADE. And while options are their strong suit, they’re also a major force with funds, offering more than 9,000 mutual funds, including more than 4,000 no-load funds with no transaction fees. They also offer a wide variety of target date mutual funds.
With fees, E*TRADE is about the middle of the range of the major investment brokerages. They charge $6.95 per trade for stocks and ETF’s, and $19.99 per trade for mutual funds. For options, they charge the base fee of $6.95 per trade, plus $0.75 per contract.
However, if you make more than 30 trades per quarter, the fee structure drops. Stocks and ETF’s are traded at $4.95 per trade, while options are $4.95, plus $0.50 per contract.
Customer service is available on a 24/7 basis, by phone, email and live chat. They also have more than 30 local branches in major metropolitan areas around the country.
The trading platform is one of the best in the industry, particularly in regard to options trading:
Related: Read E*TRADE Full Review
We’d like to say this was an easy choice, but it was anything but. It’s a matter of choosing between five very good investment brokerages, and Fidelity won the top spot by no more than a nose.
Fidelity is one of the world’s largest investment brokerage firms, with nearly $2.5 trillion in assets under management. The company started out as a mutual fund family, which is still one of its specializations. But it branched out into general brokerage services, and we feel it’s become the best in the business.
The platform offers something for every investor. You can trade virtually any type of investment, but perhaps what Fidelity is best known for is funds, particularly their own Fidelity Funds. They have some of the best known and established mutual funds in the industry, including the $100 billion-plus Fidelity Contra Fund. And in addition to the Fidelity Funds, they offer thousands more from other fund families.
With the popularity of fund investing–and the fact that Fidelity is the second largest fund provider (after Vanguard)–gives them the nod over the competition.
They also offer all those investment options with trading fees that are at the lower end of the entire industry. Their basic trading fees for stocks, options and ETF’s are at the lower end of the investment brokerage fee range, at $4.95 per trade. Mutual fund commissions are $49.95 per trade, but they offer hundreds of funds commission-free.
Their Active Trader Pro trading platform is one of the best in the industry, and they provide abundant trading tools and educational resources. Fidelity also provides specific tools for mutual fund investors. The Search and Screen by Fund Family tool provides an entire list of all funds available, broken down by fund family. It lists fund performance for one, three, five and 10 years, as well as expense ratios and MorningStar ratings:
Fidelity also enables you to choose funds by specific sector, and provides a list of the highest (four and five star) funds, as rated by MorningStar.
They offer 24/7 customer service, as well as more than 140 brick and mortar branches around the country, a rarity in what is increasingly an online broker universe. As well, Fidelity consistently rates highly among popular financial publications, like Barron’s, Kiplinger, and Investor’s Business Daily.
Related: Read Fidelity® Rewards Visa Signature® Card Review
Best Online Trading Websites For
Every one of the five brokerage firms on this list is one of the best in the industry, and worthy of investigation, or even as the destination for your investment portfolio. Each is good on multiple fronts. But we’ve identified specific categories where each stands out above the rest.
Here are the categories in which we believe each broker is very likely the best in the industry:
- Active traders: Ally Invest
- Stocks AND funds: Fidelity
- New traders: Charles Schwab
- Options trading: E*TRADE
- Best trading platform: TD Ameritrade
Factors to Consider
There are a lot of good investment brokerage firms available, including every company on this list. But no matter what you hear about a particular platform, the most important consideration is working with one that best suits your needs as an investor.
Some factors to consider:
- If you primarily invest in funds, selecting an investment broker with a wide selection of funds will be more important than choosing the broker who has the lowest trading fees.
- Similarly, if you’re mostly a buy-and-hold investor, specific investment analysis tools may be more important to you than choosing the broker with the lowest fees.
- If you’re a new investor, you might want to go with a firm that offers a combination of strong educational and training tools, excellent customer service, and a virtual trading account that will allow you to learn the ropes without using real money.
- If you’re an active trader, commission fees will be very important, since they will affect the net return on your trading activities. As well, you’ll need a trading platform that will facilitate high-frequency trading.
- For options traders, look closely at the features and tools available at a brokerage specifically for options trading. A platform that’s considered best-in-class based on individual stocks, funds or even low fees may not be your best choice.
Final thoughts on the Best Online Trading Sites
Though we’ve specifically designed this article to discuss the best online trading sites, any of the five would also be suitable for just about any other investment related purpose. Use this list as a starting point for your search.
And no matter how much you may hear that Broker X is the “best”, whether it’s from friends, the financial media, or the Internet, always remember that’s a general assumption, based on the “average investor”. The best online trading sites are the best online trading sites for you. Make sure the one you choose is right for you. You’ll be investing your hard earned money through the broker, and you’ll want to do that with a platform that will optimize your returns.Topics: Investing