Best Brokerage Accounts for Online Stock Trading

How to choose the best online broker for you

To sift through brokerage accounts, look first at the following key factors:

Commissions

Commissions or other stock trading trade fees are rare among online brokers these days, but they can still pop up on stock options trades as a per-contract fee. If charged, this fee usually runs between around $.50 to $.65. See our list of the best brokers for options trading if you're focused on trading stock options — several stock brokers have eliminated their contract fee completely.

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 for closing your account entirely. If you’re transferring to another broker, that new brokerage firm 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

Execution quality

Most casual stock traders won't notice differences in execution quality between brokers, as they tend to be relatively minor, especially if you're placing few trades. But active traders, particularly those who trade large quantities of shares frequently, often do. For our reviews, we look at each broker's self-reported execution quality, which is defined as the percent of a broker's orders that are executed at or better than the National Best Bed and Offer.

Tools, education and research

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, which entails regularly investing over time. (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.

Interest rate on uninvested cash

Even if you've carefully selected investments, idle cash can start to accrue in your brokerage account from activities like dividend payments. Though the Federal Reserve has started to cut interest rates, overall rates remain high — it still pays to consider what rate your brokerage firm pays on this uninvested cash.

Brokerage accounts are increasingly competing in this area, with some paying 4% or more. However, many companies still don't pay interest on uninvested cash at all. The hitch: Not all brokerage firms publish this rate — in fact, they tend to bury it in the details, especially if the offered rate is low or 0%. We've compiled a list of the best brokerage interest rates, updated monthly.

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.

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 relatively new brokerage firms are likely fine for you.

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

Nerdy perspective

How to switch online brokers

Switching to a new broker is quick and easy, and in most cases, the entire process can be handled online.

Here's a quick three-step process to transfer your investments to a new online broker:

1. Find your most recent brokerage account statement, then open an account at the new broker. You can do this online, and you'll need to supply details like your address, income, birthday and Social Security number.

2. Initiate the transfer process through the new broker. You'll likely be asked to fill out a form online that initiates an ACAT, or Automated Customer Account Transfer. This is where you'll need your brokerage account statement — you'll have to supply things like your old account number. Your new online broker will use that information to confirm that your investments can be transferred in-kind, which means you don't have to sell them. This is often the case with most stocks, ETFs and mutual funds. If the new brokerage doesn't support one of your investments, you can sell it and transfer the cash instead.

3. Play the waiting game. It can take up to seven days to complete the transfer — your brokerage firm will give you a more specific timeline. Once the transfer is complete, you'll be notified and you can begin trading.

Frequently asked questions

What is a brokerage account?

In many ways, brokerage accounts are like bank accounts with a bit more freedom — once you've deposited money into a brokerage account, you can use that money to purchase investments that aren't available in a typical bank account, including individual stocks, mutual funds and exchange-traded funds.

Traditional brokerage accounts are sometimes called taxable accounts, because the capital gains in your account — the investment income — may be taxable each year.

What type of online brokerage account should I choose?

Your account choices boil down to a taxable brokerage account or a tax-favored retirement account, such as an IRA. Part of the decision depends on what you're investing for. Retirement accounts are intended for retirement, and there can be penalties if you take your money out too early. (If you're new to this, we’ve got you covered in our guide to IRAs.) If you're investing for a shorter-term goal, generally a brokerage account will be best.

How much money do I need to open an account at an online broker?

Not much. Note that many of the online brokers above have no account minimum. 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, or, if your brokerage firm offers them, a fractional share. Read our article on how to buy stocks for step-by-step instructions on placing that first trade.

Another option for investing smaller amounts of money is 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 (some brokers even offer fractional shares of ETFs, too). All of the online brokers on our list offer ETFs.

What’s the difference between a full-service broker and an online broker? Which is best?

The difference between a full-service broker and an online broker comes down to the level of service and how much you want to pay for that service. None of the brokers on our list are full-service brokers; they are all discount online brokerage firms.

Traditional full-service brokers do more than assist with the buying and selling of stocks or bonds. They often offer a wide array of services and products, including investing and tax advice and regular portfolio updates. However, they can charge substantial fees and transaction costs that can erode long-term investment gains.

If you have more money than time, a full-service broker (or a financial advisor) may be for you. For most investors, however, it can pay to simply open a brokerage account at an online broker such as the ones we've listed here. These brokers allow you to buy stocks yourself through their websites or trading platforms, often with no fee or commission.

Is the cheapest broker always the best 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 — such as access to a range of investments and the quality of the research — may be more valuable than saving a few bucks when purchasing shares. You might also want to consider platforms. If that's important to you, we have a separate list of brokers with the best trading platforms.

Is my money insured at brokerage firms?

Your money is indeed insured but only against the unlikely event a brokerage firm or investment company fails. SIPC insurance covers up to $500,000 for lost or missing assets; within that, $250,000 can be applied to cash that is not yet invested. What it doesn't cover is a loss in the value of your investments.

How quickly can I start trading with an online broker?

After you’ve opened the brokerage account, you’ll need to initiate a deposit or fund transfer to the brokerage firm, which typically takes just a few days — though certain circumstances may mean it takes longer. For example, if you're transferring investments from another brokerage account rather than moving around cash, that may extend the timeframe.