Best Online Brokerage Accounts for Stock Trading: May 2024

How to choose the best online broker

There are a lot of factors to consider when selecting a brokerage account, and the decision will likely come down to individual priorities. Some investors are willing to pay higher fees for a state-of-the-art platform; others count costs above all else. Some may want to stick with the largest brokerage firms with heavy name recognition; others may be more interested in sifting through the smaller brokers to find the perfect fit for them.

But no matter which brokerage account you choose in the end, the search typically starts in the same place: knowing your investment goals.

Factors to consider

Start by answering a few questions: Are you hoping to invest in a few individual stocks? Looking for an account for long-term investments like mutual funds or index funds? Or are you interested in day trading or more advanced investment strategies, such as options?

Once you know the types of investments you’re interested in, you can start evaluating brokers based on a few factors, including:

• Commissions.

• Reliability.

• Account minimum.

• Account fees.

• Pricing and execution.

• Tools, education and features.

• Promotions.

Commissions

Brokers generally offer a similar menu of investment options: individual stocks, options, mutual funds, exchange-traded funds and bonds. Some will also offer access to cryptocurrencies, futures trading and foreign currency exchange markets.

Commissions or other trade fees are rare among online brokers these days, but they can pop up on certain investments.

• Individual stocks: Some brokers still charge a commission to buy and sell stocks, either per trade or per share. However, the vast majority of online brokers now charge no commission.

• Options: Options trades often incur the stock trade commission (if charged by the broker), plus a per-contract fee, which usually runs between 15 cents and $1.50. See NerdWallet’s list of the best brokers for options trading — several have recently eliminated their contract fee completely.

• Mutual funds: Some brokers charge a fee to purchase mutual funds. You can limit mutual fund transaction costs or avoid them completely by selecting a broker that offers no-transaction-fee mutual funds. (Mutual funds also carry internal fees called expense ratios. These are charged not by the broker, but by the fund itself.) See the ranking of best brokers for mutual funds.

• ETFs: ETFs trade like a stock and are purchased for a share price. Most brokers offer ETFs with no commission. Here’s a list of the best brokers for ETF investors.

• Cryptocurrencies: More and more brokerages are starting to offer access to a few cryptocurrencies, but be sure you understand the risks and fee structures that may be associated with these trades. See our list of the best crypto platforms.

• Bonds: You can purchase bond mutual funds and ETFs at no charge by using no-transaction-fee mutual funds and commission-free ETFs. Brokers may charge a fee to purchase individual bonds, with a minimum and maximum charge. Some brokers offer access to U.S. Treasurys at no fee. See our list of the best brokers for investing in bonds.

Reliability

There’s a wide range of brokers out there. Some have been around for decades, while others are relatively new to the scene. That doesn’t mean these newcomers are untrustworthy — if they’re handling trades for other people, then they’re regulated by the Securities and Exchange Commission and are members of a self-regulatory body, such as the Financial Industry Regulatory Authority — but it does mean they may be unproven during a variety of stock market scenarios.

Take the GameStop trading frenzy of early 2021, for example. In that instance, we saw many brokerages restrict trading in some form, while others didn’t. Why? It’s pretty complicated and likely wasn’t uniform across all brokerages, but in short, the largest, most established brokerages had enough cash on hand to guarantee that their clients’ trades would go through — a guarantee that regulators require. The brokers that didn't have sufficient cash to cover capital requirements had to impose trading restrictions.

If this is concerning to you, you may want to consider investing with a large institution. But if all you need is a no-frills investment account, then trimmed-down apps or smaller brokers are likely fine for you.

Investment minimums

You can find plenty of highly ranked brokers with no account minimum. But some brokers do require a minimum initial investment, and it can skew toward $500 or more. Many mutual funds also require similar minimum investments, which means even if you're able to open a brokerage account with a small amount of money, it could be a struggle to actually invest it.

Account fees

You may not be able to avoid account fees completely, but you can certainly minimize them. Most brokers will charge a fee for transferring out investments or cash, or for closing your account. If you’re transferring to another broker, that new company may offer to reimburse your transfer fees, at least up to a limit.

Most other fees can be sidestepped by simply choosing a broker that doesn’t charge them, or by opting out of services that cost extra. Common fees to watch out for include annual fees, inactivity fees, trading platform subscriptions and extra charges for research or data.

» Learn more about brokerage fees and how to minimize them

Pricing and execution

It’s now commonplace for brokerages to offer free trades, so that cost isn’t as much of a consideration. However, for active traders who want their trade executed at the best price available — even if that’s a difference of a few pennies — the controversial practice of payment for order flow, whether or not the brokerage accepts it and how much they charge for it may be a factor in which brokerage you choose.

So what is payment for order flow? It gets a bit complicated, but here’s a high-level overview.

Payment for order flow

When you place a trade with a broker, that broker may send the trade over to a third-party market maker — basically a large financial institution or bank — that actually conducts the trade, connecting buyers and sellers. Market makers earn their money by buying a security from a seller, then turning around and selling it to another buyer for slightly more, often for a difference of just pennies. But when done on a huge scale, those pennies can add up to major revenue for the market maker.

It’s in a market maker’s best interest for brokers to send them as many trades as possible, and they may be willing to pay brokers to send trades their way to accomplish this. And if the broker accepts those payments and routes trades to the paying market maker, the broker is said to accept payment for order flow.

Is payment for order flow bad?

Some brokerages, such as Merrill Edge, promote the fact that they don’t take payment for order flow, highlighting that market makers actually compete to get their orders. However, proponents of payment for order flow argue that the payment they receive from market makers enables them to keep trading costs down for retail investors.

But brokers that don’t take payment for order flow argue that client trades will be executed at better prices because the broker routes the trade based on the best available price. Critics of the payment for order flow system say that it can become a conflict of interest for brokers; that is, they may route trades to a market maker that pays them the most, even if it means a worse execution price for the trader.

Bottom line: If execution price is a concern for you, be sure to look into the quality of a broker’s execution before diving in. We factor both PFOF and execution quality into our reviews of each broker. But if you’re a new investor, you don’t plan to trade that often and you’re focused on long-term returns, execution price shouldn’t be much of a concern.

Tools, education and features

If you’re new to investing, it may be best to look for a brokerage that offers free educational resources, such as live webinars, thorough how-to guides, video tutorials, glossaries and more.

And, if you’re interested in continued learning around advanced trading strategies, be sure to research how well the broker supports its clients in helping them understand the risks of such strategies. This may mean guidance from an on-call customer support team, a live chat function or clear and in-depth instructions on how to use these investment products responsibly.

Another great feature to look for is fractional shares, which let investors purchase stock or ETFs by the dollar amount, rather than by the number of shares. This is especially helpful for investors who don’t have much money to invest but want to build a diversified portfolio, or are looking to set up a dollar-cost averaging strategy. (Learn more about fractional shares.)

Active traders may want a little more out of their brokerage account. Some brokers offer highly customizable downloadable platforms with in-depth analysis tools, or access to additional research and data for an extra cost. If these aren’t the types of tools and resources you’ll need, be sure to avoid paying extra for them.

Promotions

Online brokers, like many companies, frequently entice new customers with deals, such as a cash bonus on certain deposit amounts. It isn’t wise to choose a broker solely on its promotional offer — a high commission over the long term could easily wipe out any initial bonus or savings — but if you’re stuck between two options, a promotion may sway you one way or the other.

» Get a bonus: View the best brokerage promotions right now

Frequently asked questions about brokerage accounts

How much money do I need to start?

Not much. Note that many of the online brokers above have no account minimums for both taxable brokerage accounts and IRAs. Once you open an account, all it takes to get started is enough money to cover the cost of a single share of a stock and the trading commission, if charged. 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 you to get into the market with even smaller amounts of money.

Need more guidance? Read our article on how to buy stocks for step-by-step instructions on placing that first trade.

Should I just choose the cheapest online broker?

Trading costs definitely matter to active and high-volume traders, but many brokers offer commission-free trades of stocks and ETFs. A few online brokers have also eliminated fees for options contracts. Other factors — access to a range of investments, the quality of the research — may be more valuable than saving a few bucks when you purchase shares. You might also want to consider platforms — we have a separate list of brokers with the best trading platforms.

How can I diversify with little money?

One easy way is to invest in exchange-traded funds. ETFs are essentially mutual funds that are bought and sold just like individual stocks on a stock market exchange. Like mutual funds, each ETF contains a basket of stocks (sometimes hundreds) that adhere to particular criteria (e.g., shares of companies that are part of a stock market index like the S&P 500). Unlike mutual funds, which can have high investment minimums, investors can purchase as little as one share of an ETF at a time. All of the online brokers on our list offer ETFs.

Is my money insured at brokerage firms?

Your money is indeed insured, but only against the unlikely event a brokerage firm or investment company goes under. A broker’s SIPC coverage (Securities Investor Protection Corporation) doesn't cover any loss in value of your investments.

What type of online brokerage account should I choose?

Your account choices boil down to a taxable brokerage account versus tax-favored retirement account, such as an IRA. Our guide to brokerage accounts goes into more detail about what’s involved in setting up a taxable account. Opening an IRA involves choosing which type, such as a Roth IRA, traditional IRA or SEP IRA. If you're new to this, we’ve got you covered in our guide to IRAs.

How quickly can I start trading at these online brokers?