Best Online Stock Broker For Beginners: The Top 5 Brokerage Accounts
As a trader and investor, you should know all about the best online stock broker for beginners. This guide will help you to find the best brokerage accounts for beginners. If you are more interested in active trade, please consider reading the day trading broker guides for more day trading specific insights and day trading platforms.
The 5 Best Online Stock Brokers for Beginners
All major retail online brokers in the United States offer zero commission these days. You can trade stocks, mutual funds, exchange traded funds, or trade based on your investment strategy. The brokerage account can be a cash account or margin account. But what trading platform is the best? Which online brokerage account is the best for beginners?
Table of Contents
1. TD Ameritrade: Best for Investors and High Volume Traders
TD Ameritrade belongs to the best online stock broker for beginners. TD Ameritrade has been in business for over 40 years and is one of the market leaders in the industry. They acquired Scottrade in 2017 to strengthen their market position. Now, more than 11 million clients hold their accounts with TD Ameritrade.
TD Ameritrade supports 24/5 trading. With stock trading flat fees of $0.0 and options flat fees of $0.0 per trade plus $0.75 per contract, TD Ameritrade offers trading execution prices. They perfectly suit any investor and high volume short term trader. In addition, the educational resources are well organized and the trading platforms offered are stable and rich in functionalities.
TD Ameritrade’s free main trading platform thinkorswim is perfect for just about any private investor. You can use it as a free paper trading account to practice trading and investing, or to buy and sell in real.
Great functionalities and robust order-flow processes make it a good choice, especially for the more active investors and traders.
Fee Structure
- Stocks: $0.0
- Options: $0.0 base fee + $0.75 per contract
- Futures: $2.25 per contract (+exchange & regulatory fees)
- Broker-assisted trades: $44.99
Customer Service: Local Branches ✓ Telephone ✓ Chat ✓ email ✓ Special Features: Facebook Messenger bot ✓ Alexa Skill ✓
Trading Tools and Platforms
- Web platform
- thinkorswim
- Trade Architect
- Mobile
TD Ameritrade’s trading platform is one of the best available at this time, with no account minimum. The usage of their trading tool is entirely free for clients who opened an account. Another great feature is the free paper trading account integrated into their trading platform. This way, it is easy to test new trading strategies and testing platform functionalities without any risk.
Charles Schwab acquired TD Ameritrade in 2020, and the company results are included in the Charles Schwab financials.
Stock Symbol: SCHW | Market Cap: 138.11B | Earnings per Share (TTM – trailing 12 months): 2.36 (09/2021)
2. Interactive Brokers: Best API for Automated Trading
Interactive Brokers is an online brokerage firm and provides access to all market data 6 days a week, 24 hours a day. For more than 40 years, IB has been offering its clients low-cost trading worldwide, providing access to 120 financial markets in 26 countries. More than 385,000 clients hold an account with Interactive Brokers.
The pricing model is by far the most competitive, and the account minimum is only $2,000. The Trader Workstation is Interactive Brokers trading platform, and it is one of the best investing tools for stock research, trade automation, and active trading. In addition, the TWS API allows you to connect third-party tools with the platform.
Interactive Brokers is an excellent choice for any day trader who can maintain a minimum account balance of $25,000. Furthermore, Interactive Brokers has a great API. Traders can connect an amazingly high number of applications to the IB Traderworkstation (TWS).
Fully automated trading can be implemented in no time using tools like Trade Ideas. Sending trade ideas directly from your stock screener to the IB Traderworkstation works like a charm. Traders can adjust the settings depending on their personal preferences. Trades can be managed as either fully automatic, semi-automatic or completely manual.
The Traderworkstation is not a web interface. Instead, it is an application designed for highly active traders. Instead of typing in each order, the TWS can be handled with a few mouse clicks. Interactive Brokers is an NYSE-listed company.
Fee Structure
- Stocks and ETF trades: 0.5 cents per share ($1 minimum)
- Options: $0.70 per contract ($1 minimum)
- Futures: $0.85 per contract (+exchange & regulatory fees)
- Broker-assisted trades: not for the average investor and a minimum of 10,000 stocks or 100 options needed for trading desk support
Customer Service: Telephone ✓ Chat ✓ email ✓
Trading Tools and Platforms
- Desktop TWS – Traderworkstation
- IBKR Mobile App
- IB Web Trader
- IB APIs
Interactive Brokers is the best choice for any active day trader. If you are a day trader with a high trading frequency, you need low trade fees and a great API to connect external trading tools. That’s precisely what Interactive Brokers offers. Connect stock screeners like Trade Ideas to Interactive Brokers, and you’ll be firing on all cylinders.
Stock Symbol: IBKR | Market Cap: 26.84B | Earnings per Share (TTM – trailing 12 months): 3.55 (09/2021)
3. Charles Schwab: Best for Retirement Savings and Long Term Investing
Charles Schwab is the heavyweight champion in this stockbroker comparison with more than 70 billion market capitalization. And most importantly, for any long term investor and retirement savings investor, Charles Schwab is the only online broker in this report who is offering automated robo-advice-investing with no commissions or advisory fees.
Like TD Ameritrade, Charles Schwab has local branches where clients can talk to Charles Schwab employees about their personal finances. Charles Schwab is one of the best investment companies and has been in business for more than 40 years.
Schwab offers its clients high-tech trading tools, like StreetSmart Edge, as well as a wide range of investment options in stocks, ETFs, mutual funds, options and much more. So whether you are a beginner or an experienced investor, Charles Schwab is a great overall online stockbroker, and you also can use it as a bank account, pen retirement accounts, or use the investment advice provided by Charles Schwab professional advisors.
Another incentive is the competitive pricing compared to other all-round-brokerage firms like TD Ameritrade and e*Trade. In addition, Charles Schwab’s trading platform StreetSmart Edge comes with an intuitive workflow.
Charting and complex trading strategies can be managed with StreetSmart Edge. The web interface is the perfect addition to your daily business tasks, and mobile apps are a must-have these days.
Fee Structure
- Stocks: $0.0
- Options: $0.0 + $0.65 per contract
- Futures: $2.25 per contract (+exchange & regulatory fees)
- Broker-assisted trades: $25
Customer Service: Local Branches ✓ Telephone ✓ Chat ✓ email ✓
Trading Tools and Platforms
- Web Trading
- Trading Software StreetSmart Edge
- Mobile Trading
Charles Schwab has excellent customer service, tons of local branches for a personal consultation with finance experts, and loads of free information for beginners on their website. Their current promotion, the $100 referral award for new clients, is interesting, but this should not be the crux of your decision.
The overall picture is good, the robo-advisor service is intriguing, and the trading platform looks promising for traders. The pricing structure for basic investments, like stocks, is solid. However, some funds are not commission-free, so inquire first before opening an account if you want to invest in funds.
Stock Symbol: SCHW | Market Cap: 138.11B | Earnings per Share (TTM – trailing 12 months): 2.36 (09/2021)
4. Ally Invest: Best Web Based Focused Broker
Ally’s core business is online banking. Checking accounts, savings accounts, home loans, mortgages, refinance, and many other products and services are part of Ally’s core business. Ally Invest offers customer support 24 hours a day by phone and email.
However, unlike Charles Schwab and TD Ameritrade, Ally Invest has no physical branches where you can consult with a professional to talk about your investments. Nevertheless, it should be pointed out that Ally made a considerable leap in the right direction for their investment clients.
Back in 2016, Ally Financials acquired TradeKing for $275 million. Since then, Ally Financial has offered great investment products, including a solid trading platform based on state-of-the-art technology under the name “Ally Invest.”
That is why Ally is good all around. Let’s now focus on the investment capabilities. With brokerage costs of $0.0 per trade, Ally Invest has conditions comparable to Charles Schwab and TD Ameritrade. In terms of the expenses per trade, Ally Invest settles between brokerages, like Interactive Brokers, and online brokerage companies, like TD Ameritrade and Charles Schwab.
As you will see below, this is an attractive price plan for active investors trading high numbers of shares regularly.
Fee Structure
- Stocks: $0.0
- Options: $0.0 + $0.5 per contract
- Futures: n.a.
- Broker-assisted trades: $20
Customer Service: Telephone ✓ Chat ✓ email ✓
Trading Tools and Platforms
Only a web application, but with streaming charts, a profit/loss and probability calculator, watchlists, market data and option chains (interesting for options traders)
Ally has a bit of everything but is not specialized in one financial investment style. Ally Invest doesn’t provide high-tech trading software tools like TD Ameritrade, Interactive Brokers and Charles Schwab, but they have competitive trade rates for active traders. Overall, Ally is more for people looking to manage all their financial belongings under one account at low costs.
Stock Symbol: ALLY | Market Cap: 18.59B | Earnings per Share (TTM – trailing 12 months): 7.60 (09/2021)
5. Merrill Edge: Best for Banking and Investing
Merrill Edge stands for excellent online trading and investing, and it is one of the best online brokers for beginning investors. Merrill is a Bank of America company and offers self-directed trading with unlimited $0 online stock, ETF, and options trade commissions. There is also no account balance minimum. With zero commission, most retail brokerages have similar offers today. At Merrill, you enjoy free stock trading too. For options trading, there is no commission but a $0.65 fee per contract.
Fee Structure
- Stocks: $0.0
- Options: $0.0 base fee + $0.65 per contract
- Futures: n.a.
- Broker-assited trades: $29.95
Customer Service: Local Branches via Bank of America ✓ Telephone ✓ Chat ✓ email ✓
Trading Tools and Platforms
- Web-based trading platform
- Merrill Edge MarketPro
- Mobile Investing
Merrill Edge is a reliable broker for beginners focusing on long-term investing. Day traders consider using a day-trader brokerage.
Broker Comparison Table
| Broker | Best for |
|---|---|
| TD Ameritrade | Investors and high volume traders |
| Interactive Brokers | Day trader and active investors |
| Charles Schwab | Retirement savings and long term investing |
| Ally Invest | Investment and online banking combination |
| Merrill Edge | Investment and swing-trading |
Best Online Stock Broker for Beginners Summary
This detailed online stock broker comparison clearly shows there is no one perfect solution for everything. The previously mentioned online brokers have their advantages and disadvantages. Therefore, the question, “What online broker is the best?” can only be answered depending on your emphasis and requirements.
Tech-savvy day trading geeks will probably go with Interactive Brokers. Their API is excellent, the rates are at the bottom, and trade executions are lightning-fast. In addition, as an active trader, you can save thousands of dollars each year based on the low fees Interactive Brokers provides.
It is easy to connect Trade Ideas and Interactive Brokers for automated trade executions. However, additional costs for the platform and the exchange data feeds can apply, depending on the trading activities. In addition, the SEC wants to protect people with a day trading rule, thereby making it necessary to have at least $25,000 in the trading account to day trade.
Investors looking for a way to have only one account for everything, from personal financial belongings to trading and speculative investing, might consider Ally Invest. Unfortunately, the trading platform from Ally Invest is not as good as the ones from Interactive Brokers, Charles Schwab and TD Ameritrade. Still, the technology is solid, and everything can be handled from one web interface.
Traditional investors wanting to communicate face to face with a real person might consider TD Ameritrade and Charles Schwab. Both have many local branches, as well as great trading tools and investment opportunities.
TD Ameritrade and Charles Schwab also have the highest market capitalization of the 5 online brokerage companies we have covered. The prices per trade are a bit higher, but they provide well-engineered trading platforms without additional costs.
I hope this Best Online Stock Brokers Guide provides you the transparency you are looking for. However, please make sure to do more research on the website of your preferred company before making a decision.
Best Online Stock Broker for Beginners: Key Aspects
Total Costs and Asset Protection
What is your goal when you plan to open a brokerage account with the best online stock broker? I assume you have the same goal as everyone else. You want to trade and invest in increasing your net worth. At first, trading and investing means spending money. Even if you buy and sell your stocks at the same price, you make losses.
You have to pay your online broker for his services. If you are the buyer, he connects you with the seller and vice versa. For this service, the online broker charges you a service fee. As you will see in this article, the difference can be huge, and the total costs vary by more than 100%.
A word of caution, never open a brokerage account with a broker who is in a bad financial situation. Make sure your money is protected in case your broker goes bankrupt. Again, segregated accounts give you better protection than non-segregated accounts.
Also, make sure a trustworthy authority regulates the online broker you choose. The more money you transfer to your brokerage account, the better the protection should be.
Customer Service
We all know the game. Everything is perfect when someone is trying to sell us something. We can reach the “new clients” support center in seconds, and all our questions are answered in no time. But, to make it on the list of the best online stock broker for beginners, it needs more.
While good sales support is comforting, the most important factor remains customer service. Once you have become the client of an online brokerage company, you need excellent support.
Not reaching anyone within the brokerage company can cost you thousands of dollars if there is a problem with your order executions. That’s why it is essential to focus on the available support channels when choosing your broker.
Online Broker Trading Platform
The brokerage costs could be on the lower end, and the client support could be the best in the world, but if you choose an online broker trading platform that doesn’t suit your needs, you have just made the wrong selection.
If you are a day trader using an online stock broker trading platform where you have to enter all of your trades by hand, spending five minutes to fill out each form, you will never make money. Never!
And if you plan to invest long term, choosing an online stock broker with a great API, automated trading support and other cool features for a monthly fee, then you are also throwing money out the window. Your trading platform should enable you to trade the financial instruments you want to trade:
- stocks,
- options,
- exchange-traded funds,
- forex,
- cryptocurrencies.
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