In 1994, trading stocks online became available to investors for the first time. WealthWEB, later acquired by TD Ameritrade was the first time a casual investor could initiative an online stock exchange trade. The business has evolved over the last 21 years to include dozens of online brokerage firms, cheaper trade fees and commissions, simplified ease-of-use, and market research available to any investor.
We believe there are 6 top online brokerage firms that are worthy of your time, and many of these depend on what type of investor you are. Below we describe what we believe to be the best online stock trading company available, depending on your investing behavior and experience. Behold, MarketQuote’s 6 Best Online Brokerages:
(1) Hands Off, Under $50,000 Portfolio
You are a casual investor with minimal experience buying stocks. You want a steady return, and will be holding your buys for long periods of time.
OptionsHouse is the company for you. Low commission fees at $4.95. $0 minimum account balance required. Decent tools for analysis, below average trade speed, but if you’re making one trade in a mutual fund every quarter… does speed really matter? OptionsHouse gets the job done, and doesn’t charge very much for their service.
(2) Hands On, Under $50,000 Portfolio
You want to become a regular trader. Sure, you Googled “How to Buy A Stock” last year, but now you read the WSJ and regularly watch CNBC. You created a “fantasy” portfolio on Yahoo! Finance 9 months ago, and MAN do you wish that was real money now! You’re past the point of asking your financial advisor friend for the best stocks to buy, and you’re doing your own research.
TD Ameritrade is your stock brokerage, my friend. If you’re reading this article, the $500 account minimum better not be scaring you. Their commission per trade is a little high at $9.99, but they have some of the highest quality research available for casual investors. You can also tell they invested heavily in the technology behind it all. It’s a clean, user-friendly design that leaves most of the others in the dust.
(3) You Trade Often, with a Portfolio Ranging from $50,000 – $300,000
Your day job is tech or marketing or something non-financial, but you can hold your own at the dinner table with guys who have worked at Smith Barney for 6 years. Suddenly friends are coming to you with “hey, what are the best stocks?” and “any good stock tips this month?”.
E-Trade is the brokerage firm for you. They have a higher commission per trade as well at $9.99, but they have great options for commission-free ETFs. Technically, TD Ameritrade has more ETFs, but they are all hand-picked by Morningstar. E-Trade diversifies among 3 different fund families. E-Trade is also one of the best for customer service among the “value” brokerage firms. Built online, with tech being their biggest priority, their site might not be as “pretty” as TD Ameritrade, but it’s built for speed. E-Trade has fantastic real-time reporting and analytics, and has some of the highest rated security in the business.
(4) You Trade Often, with a Portfolio Over $300,000
Whether you made your money in the stock market on elsewhere, this is a lot of money we’re talking about and it needs to be in trustworthy hands.
Fidelity Investments is where I keep my personal brokerage account. As a regular trader, I not only need access to real-time analysis, and great research tools, but I want top-of-the-line security and seamless organization between by banking accounts and my brokerage account. Fidelity allows you to pay bills direct from your account, manage multiple accounts within one login, and there is no fee to transfer funds. Consider it a combination of a private banking account and a brokerage account.
The trading commission is lower than most at $7.95, and they have great free ETF trading access. Their options trading is the best in the business as well. They offer free training for any customer interested in trading options, which I would highly suggest for any serious trader. Their minimum initial investment is $2,500.
(5) You Rarely Trade, with a Portfolio Over $300,000
You could care less what happens to your portfolio, as long as the end of year statement is 7% higher than it was last year. You are heavy with mutual funds and ETFs, and if you ever buy individual shares it is for a blue chip stock.
Charles Schwab is the classic brokerage firm, the original. Ok, maybe not the original, but it certainly feels that way. Schwab might not have all the research and analysis tools, the faster real-time monitoring platform, or access to gimmicky sides of trading, but if you want top of the line customer support and peace-of-mind it doesn’t get better than Schwab. Their trade commission is $8.95, but if you’re executing one trade a year (and it’s probably a mutual fund) then I doubt $8.95 will break the bank.
(6) You’re a Student, You Love Playing Poker, and You Have No Idea What You’re Doing
Believe it or not, there are some really great options for traders who are investing for fun, to learn, or for excitement.
Robinhood is free. Seriously. $0 trading commission. The unused cash in user’s accounts gains interest on risk-free savings accounts based on the US Federal Fund’s rate. In my Fidelity account, I get to keep that cash. You can only make the most basic of trades, and there is no worthwhile research available to investors, but for the younger generation — it’s a great stepping stone to actively learning about investing.