The Best Online Broker

With a variety of different prices, research capabilities, and hidden fees, how should you go about picking the best online broker? What are the most important factors to consider? Your choice of a broker will differ depending on your investment style and objectives.

Beginner Investor - You are an inexperienced investor and want a user-friendly broker to make long-term investments. What to look for in a broker:

  • Commission-free mutual funds and ETFs with low expense ratios
  • Customer service (with access to brick and mortar branches)
  • Easy to use online interface
  • Low account minimums and no account inactivity fees

Do-it-yourself Investor - You are familiar with investing and keep up to date on the markets. You track the performance of your investments and your goals are still long-term, but you take a more active role in managing your portfolio. What to look for in a broker:

  • Large variety of low-cost mutual funds and ETFs
  • Basic tools and research reports
  • Customer service and mobile access
  • Low commissions

Active Investor - You trade frequently and look to capitalize on short-term movements in the market. You are an extremely sophisticated investor and have a coherent strategy that actually warrants active trading. What to look for in a broker:

  • Low costs (trade commissions, price per option, exercise fees)
  • Asset class availability
  • Great trade execution (if you are an algorithmic trader) and after-hours trading
  • Sophisticated research, data analysis tools and real-time data

Best Broker for Beginners: TD Ameritrade

Easy to use with great customer service

  • 100+ ETFs and thousands of no transaction-fee mutual funds, 24/7 customer service, and an intuitive web interface
  • Commission Per Trade: $9.99
  • Account Minimum: $500
  • Promotion: Fund a new account with $2,000 to receive 60 days of free trades and up to $600
  • Sign up for TD Ameritrade

TD Ameritrade is also our pick for best overall broker for new investors because it has consistently high customer service ratings and offers a full suite of trading, research, and educational tools. They offer more than 100 commission-free ETFs and thousands of no-transaction fee mutual funds. For those who value in-person interaction, TD Ameritrade has over 100 branches across the U.S.

Runner-Ups: Scottrade & Charles Schwab

 
  • Integrated banking (checking, savings, mortgages) products for those who want to consolidate their financial management
  • Commission Per Trade: $8.95
  • Account Minimum: $1,000
  • Sign up for Charles Schwab
  • Over 500 brick and mortar branches, quality customer service
  • Commission Per Trade: $7.00
  • Account Minimum: $2,000
  • Promotion: Transfer your existing brokereage account and get reimbursed up to $100 of transfer fees
  • Sign up for Scottrade

Best Broker For DIY Investors: TradeKing

Provides similar tools and capabilities as larger brokers at half the cost

  • Improved stock and ETF screening capabilities, robust online investor forum
  • Commission Per Trade: $4.95
  • Account Minimum: None
  • Promotion: Refer a friend and both receive $50
  • Sign up for TradeKing

TradeKing offers similar tools and capabilities as its larger competitors, but commissions are far cheaper at $4.95 per trade. The company has a simple user interface and differentiates itself with an active community forum where investors share and discuss ideas. TradeKing’s research offerings have dramatically improved since its merger with Zecco. An investor looking for a lower-cost version of TD Ameritrade or Scottrade should consider TradeKing. One thing to watch out for is a $50 maintenance fee that TradeKing will slap on any accounts that have both an account balance less than $2,500 and have been inactive for a year.

Runner-Ups: E*Trade & TD Ameritrade

 
  • Offers over 90 commission-free ETFs from 3 fund families with no annual fees
  • Commission Per Trade: $9.99
  • Account Minimum: $500
  • Promotion: Trade free for 60 days + get up to $600 when you make an initial deposit of $10,000
  • Sign up for E*Trade
  • Great all-around platform with comprehensive research and analytics
  • Commission Per Trade: $9.99
  • Account Minimum: $500
  • Promotion: Fund a new account with $2,000 to receive 60 days of free trades and up to $600
  • Sign up for TD Ameritrade

Best Broker For Active Investors: Lightspeed

Cheapest trades, great execution, and no frills

  • Extremely low commissions with direct market access
  • Commission Per Trade: $0.0045 per share ($1 minimum per trade)
  • Account Minimum: $10,000
  • Promotion: 30 days of unlimited free options trading when you fund an account
  • Sign up for Lightspeed

Active traders want extremely low commissions, and Lightspeed provides that with ETF and stock commissions at $0.0045 per share and a $1 minimum per trade. Other deep-discount brokers like Interactive Brokers also have very low costs, but Lightspeed edges them out through better customer service.  Lightspeed provides direct access to ECNs and exchanges, which is important for active traders. Lightspeed also has a robust trading analytics platform, but it is very complex and has a very steep learning curve to master. Overall, Lightspeed is a great option for day traders and professional investors who need cheap executions, but if you only trade occasionally or use a buy-and-hold strategy, consider the other options above.

Runner-Ups: Optionshouse and Interactive Brokers

  • Focused on the retail options trader with professional-grade tools, customizable mobile apps
  • Commission Per Trade: $4.75
  • Account Minimum: $1,000
  • Promotion: When you fund a new account with $5,000, receive 100 free trades
  • Sign up for Optionshouse
  • Customizable trading platform that monitors the markets and alerts you of potential opportunities
  • Commission Per Trade: $0.0035 per share
  • Account Minimum: $10,000
  • Sign up for Interactive Brokers

Contributed by Joseph Egoian

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