IBKR is a top option for stock trading because of its low fees including for options contract fees. IBKR also offers extensive equity investments including mutual funds and fractional shares. IBKR Lite scored lower for ease of use by offering fewer research tools than competitors like Fidelity and Charles Schwab.
Many brokers also carry additional private insurance for the same purpose. Testing was led by a seasoned market professional with over 20 years of experience in the markets, both as a broker and a retail investor. We opened accounts at each of the 20 brokers in our survey to perform hands-on, granular testing of their platform and services. Categories were weighted by their relative importance for the best online broker overall, best for beginners and best for active traders. For example, commissions and fees counted for 20% of each broker’s score. You can buy stocks without a broker by using a dividend reinvestment plan, by investing in a direct stock purchase plan or by using a trading app on your smartphone.
- Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top online brokers and trading platforms.
- The scoring formulas take into account multiple data points for each financial product and service.
- You can use strategies like asset allocation and diversification to reduce the risk of you losing money, but you will never fully eliminate it without also eliminating your chances of making a decent return.
- Your online brokerage account will display your holdings (the assets you’ve purchased) as well as your cash balance (your buying power).
You’ll also have several different account-type options, including a variety of IRAs and education savings accounts as well as a solid research offering. Interactive Brokers is an ideal choice for investors focused on keeping costs to a minimum. Active traders using the Pro platform will pay $1 minimum commission (or a half-cent per share above 200 shares), while users in the Lite tier won’t pay commission on stocks or ETFs. You’ll also have access to about 19,000 no-fee mutual funds, tops in the industry, and you won’t have to worry about annoying account or transfer fees.
One login to eToro’s online brokerage platform gives users access to stock, ETF, and futures trading, as well as 21 physical crypto coins, all on the company’s intuitive and socially focused web-based and mobile platforms. & Co. in 1978 by its current chairman, Thomas Peterffy, the company pioneered the use of computers in trading. Eventually, Interactive Brokers Inc. was incorporated as a U.S. broker-dealer in 1993, and the company has since developed into one of the industry’s most complete online brokerage platforms. Interactive Brokers (IBKR) offers astonishing access to 150 markets in 34 countries and support for its services in 200 countries, all with funding and trading capabilities in up to 27 currencies. Our reviewers — who are investing writers and editors on NerdWallet’s content team — spend months compiling this list every year, extensively testing each brokerage account’s stock trading capabilities in our analysis. That way, we’re able to report on every aspect of the user experience, from funding a new brokerage account to actually placing trades.
Clients can also trade certain investments outside of traditional market hours. Pre-market orders start at 7 a.m., and after-market orders are accepted until 8 p.m. Fidelity was already a leader in low-cost commissions, but the company eliminated commissions in 2019 for U.S. stock, ETFs and options trades. As trading technology continues to advance, so too does the interest in algorithmic trading.
In addition to our review of Fidelity’s online brokerage platform, we’ve also reviewed the company’s robo-advisor service, Fidelity Go. While you can open a brokerage account for as little as $0, features, services, fee and commission structure, and technology will vary based on the platform you choose. It is important to compare the variables most important to your priorities as you consider the many options available to you. Opening an account grants you entry to a trading platform equipped with diverse investment tools. Online brokerage platforms differ, ranging from minimalist interfaces for basic trades to intricate platforms tailored for professionals. It stands out as an excellent, well-rounded platform that’s a great choice for active traders, long-term investors or people who are new to investing.
All research, writing and data collection at StockBrokers.com is done by humans, for humans. Fidelity allows investors to trade stocks, bonds, mutual funds, ETFs, options, forex, Bitcoin and Ethereum. The company also allows traders to purchase fractional shares, allowing investors to diversify into higher-cost stocks by buying a slice of a share rather than the full amount. Fidelity also supports trading in ADRs, or American depository receipts, which allow investors to purchase stock in overseas companies. In addition to those strong positives, Firstrade offers a wide range of no-transaction-fee mutual funds, more than 11,000, but the funds themselves may still charge sales commissions. The broker added the ability to purchase fractional shares of stock in December 2023, so that feature may appeal to newer investors.
Like Fidelity, Charles Schwab is a leader in providing research tools to regular investors, including equity ratings, stock charts and Schwab Stock Lists, which make it easy to find potential stock investments based on expert research. Another way of looking at that, however, is that a brokerage account sitting full of uninvested cash isn’t at risk of making any money either. You can use strategies like asset allocation and diversification to reduce the risk of you losing money, but you will never fully eliminate it without also eliminating your chances of making a decent return.
Index tracking ETFs, for example, offer greater diversification for your dollar than a single company stock because every share (and fractional share) of the ETF replicates an index made up of many companies in many different industries. You could also consider using options to leverage your dollars with a directional bet on the market or a specific stock, but this is a strategy best reserved for risk capital—not the whole of your limited investment capital. Once you’re ready to open an online brokerage account, remember that securities regulators require brokerages—whether they are full-service or online brokers—to know their clients. To open an account, then, you’ll need to provide information so the broker knows who you are and how much experience you have investing. We score each online broker against a set of criteria that factors in both the features offered and the actual user experience of using those features.
For more support on how to choose a broker, you can check out our guide to choosing a stock broker. Once you’ve made a decision on a broker, you can refer to our guide to opening a brokerage account. Yes, you can actually buy and sell stocks without a broker, but it is not a common approach these days.
Keep in mind that many online brokers now allow you to purchase fractional shares, or a slice of a stock rather than the full share. That will allow Securities Truly a Trustworthy Brokerage Firm you to get into the market with even smaller amounts of money. Most investors trade stocks and other investments through an online broker.
An online brokerage account is a specialized financial account that allows you to invest in a number of different assets, including stocks, exchange-traded funds (ETFs), mutual funds, bonds, options and more. And because it’s online, this kind of account allows you to access the market on your computer or mobile device without the help of a human advisor from a full-service brokerage. SoFi Active Investing does a lot right for newer investors, including no commissions on stocks, ETFs and options, though it does not offer mutual funds at all. SoFi’s fractional share plan allows clients to purchase partial shares of stock and reinvest any dividends in them, too, helping get all your money working for you.
You can lose more money than you actually deposit—and be obligated to pay it. So if you’re relatively new to investing and don’t plan to monitor your account regularly, it’s typically best to stick with a cash account. Impulse trading, especially amid market volatility, is a key risk for do-it-yourself investors who trade through an online broker. But you can defend yourself by taking advantage of an online broker’s educational resources and research tools, then maintaining your discipline. After you’ve opened the brokerage account, you’ll need to initiate a deposit or funds transfer to the brokerage firm, which typically takes just a few days — though certain circumstances may mean it takes longer.
Known for its cost leadership in the fund industry, Vanguard also offers commission-free trading in stocks and ETFs. You’ll also find more than 3,000 no-transaction-fee mutual funds available. But its mobile app is basic and doesn’t match the performance of industry leaders. You’re also only able to reach customer service Monday through Friday over the phone.