Online brokers and trading platforms are digital platforms that enable individuals to buy and sell financial securities such as stocks, bonds, options, and mutual funds through the internet. These platforms provide users with access to various financial markets, allowing them to execute trades from anywhere with an internet connection.
After extensive research, data analysis, and live broker platform demos, we have identified Fidelity Investments as the best overall online brokerage platform for investors. Fidelity stands out for its low fees, expansive product offering, comprehensive full-service features, and more. Our evaluation process involved assessing 26 online brokers based on 89 criteria, including available assets, account services, user experience, and additional features.
An online brokerage account is similar to a bank account but specifically designed for investing in financial markets. Here’s how it works:
- Deposit Funds: You deposit money into your brokerage account, typically by transferring funds from your bank account. This deposited cash becomes available for investment.
- Investment Options: With the funds in your brokerage account, you can invest in various assets offered by the brokerage. These assets include stocks, bonds, exchange-traded funds (ETFs), and even cryptocurrencies.
- Trading Platform: The brokerage provides a trading platform where you can execute your investment transactions. This platform allows you to buy and sell assets based on your investment strategy.
- Track Holdings and Cash Balance: Your brokerage account will display the assets you’ve purchased (your holdings) and your cash balance, also known as buying power. This allows you to keep track of your investments and available funds for trading.
- Sell Investments and Withdraw Profits: If your investments increase in value, you can sell them through the brokerage platform. The profits from these sales are deposited back into your brokerage account, adding to your cash balance. You can then reinvest these profits or withdraw them to your bank account.
- Earn Interest on Cash: Some brokerage accounts offer the option to earn interest on uninvested cash held in the account. This can provide a small return on cash balances while waiting for investment opportunities.
As for the amount of money needed to open a brokerage account, there is typically no minimum requirement. Many brokers offer accounts with no minimum deposit, allowing investors to start with any amount of money. Fractional shares and low-cost investment options further enable investing with small sums.
It’s important to note that investing in financial markets carries risks, and it’s possible to lose money in a brokerage account. However, with careful research, diversification, and a long-term investment approach, investors can work towards building wealth over time.
In summary, an online brokerage account provides individuals with a convenient platform to invest in a variety of financial assets, manage their investments, and potentially grow their wealth over time.
- Top Choice Overall: Fidelity
- Most Cost-Effective Option: Fidelity
- Ideal for Beginners: Charles Schwab
- Tailored for Advanced Traders: Interactive Brokers
- Leading Platform for ETFs: Fidelity
- Optimal for Options Trading: tastytrade
- Premier Choice for International Trading: Interactive Brokers
- Premier Mobile Investing & Trading Platform: E*TRADE
- Leading Platform for Cryptocurrency Trading: eToro
- Expertise in Risk Management: Interactive Brokers
- Outstanding for Cash Management: Fidelity
- Excellence in Generating Stock Trading Ideas: Interactive Brokers
- Superior for Algorithmic Trading: Interactive Brokers
- Standout in Alternative Investments: Public
Fidelity Investments stands out across multiple categories:
- Best Overall: Fidelity takes the top spot overall for its comprehensive brokerage features, advanced tools, and competitive fees.
- Best for ETFs: Fidelity offers a rich array of ETF-focused educational resources, research tools, and fractional ETF trading options.
- Best for Low Costs: Fidelity maintains its leadership in low fees, offering transparent and compelling fee structures.
- Best for Cash Management: Fidelity excels in cash management with seamless integration of banking features, industry-leading insurance, and passive earnings on uninvested cash.
Pros:
- No payment for order flow (PFOF) ensures excellent order execution.
- Strong portfolio analysis and account features.
- Superior trading platforms suitable for all types of investors.
- Top-tier educational content, screening tools, and research capabilities.
- FDIC insurance coverage up to $5 million.
Cons:
- Limited selection of digital coins available for trading.
- Some index trading may require a minimum balance.
- Accessing all tools may require using multiple platforms.
In summary, Fidelity offers a well-rounded product suite catering to a wide range of investors’ needs. With a history dating back to 1946 and $4.9 trillion in discretionary assets as of December 2023, Fidelity is among the top brokerage firms in terms of assets under management. The company’s commitment to continuous improvement is evident in its enhancements to financial products and services, including robust financial advisor support, bond liquidity analysis, and innovative banking features like the Fidelity Youth app. With a vast customer service network and a steadfast focus on keeping costs low while delivering powerful tools, Fidelity remains a top choice for investors seeking a comprehensive online brokerage experience.
Charles Schwab earns the title of “Best for Beginners” for its user-friendly platform and comprehensive educational resources, making it an ideal choice for new traders and investors. Here’s a breakdown of its features:
Pros:
- Industry-leading educational content: Schwab offers a vast library of learning materials, coaching programs, and live training events, aiding beginners in understanding the market and making informed decisions.
- Multiple user-friendly platforms: Schwab provides intuitive platforms that are easy to navigate and understand, suitable for beginners.
- Superb ETF research and scanners: The platform offers robust tools for researching and analyzing ETFs.
- Over 400 branches in 45 states: Schwab’s extensive branch network provides in-person support for customers across the United States.
- Access to the highly regarded thinkorswim® platform: Schwab users can leverage the powerful capabilities of thinkorswim® for advanced trading strategies.
Cons:
- Relatively high margin rates: Schwab’s margin rates may be higher compared to some other brokers.
- Low interest earned on uninvested cash: Customers may earn lower interest on uninvested cash balances.
- Lacks fractional ETF trading: Schwab does not offer fractional ETF trading, which may limit investment options for some users.
- No direct investments in cryptocurrencies: The platform does not support direct investments in cryptocurrencies.
In summary, Charles Schwab provides a user-friendly experience coupled with extensive educational resources, making it an excellent choice for beginners. With its acquisition of TD Ameritrade and ongoing integration efforts, Schwab continues to enhance its product offerings and solidify its position as a top-tier brokerage platform. While certain features like fractional ETF trading and direct investments in cryptocurrencies may be lacking, Schwab’s overall package caters well to the needs of novice investors.
Interactive Brokers stands out as the top choice for advanced traders, international trading, algorithmic trading, risk management, and generating stock trading ideas. Here’s why it excels in these areas:
Best for Advanced Traders:
- Interactive Brokers offers a wide array of advanced analytical tools, trading technology, and asset options, making it ideal for experienced traders.
- Ongoing enhancements to platforms like Trader Workstation (TWS) and IBKR desktop provide traders with the tools to capitalize on market inefficiencies effectively.
Best for International Trading:
- Interactive Brokers provides unparalleled global research capabilities, international trading support, and currency-based funding options, making it the top choice for international traders.
- With access to 150 markets in 34 countries and support in 200 countries, Interactive Brokers offers the broadest global coverage in the industry.
Best for Algorithmic Trading:
- Interactive Brokers offers a robust lineup of algorithmic trading features, including pre-built algos, API languages, and algorithmic paper trading accounts, catering to the needs of advanced traders interested in automated strategies.
Best for Risk Management:
- With powerful portfolio analysis tools, rebalancing features, and access to licensed brokers, Interactive Brokers provides traders with effective risk management capabilities to safeguard their investments.
Best for Generating Stock Trading Ideas:
- Interactive Brokers offers a vast universe of equities, leading research vendors, and proprietary search tools, providing traders with endless opportunities for investing and trading ideas across various time horizons.
Pros & Cons:
- Pros: Increasing availability of beginner-friendly platforms, superior order execution, industry-best selection of contingent orders, unparalleled range of investable assets, and powerful professional-level functionality.
- Cons: IBKR’s SmartRouting not available to IBKR Lite clients, learning curve associated with TWS, no in-platform backtesting, and tiered pricing structure can be confusing.
Overview:
- Founded in 1978, Interactive Brokers has evolved into one of the most complete online brokerage platforms, offering access to global markets, advanced trading features, and innovative tools.
- With ongoing enhancements to make platforms more accessible to beginners and a commitment to providing top-notch services to advanced traders, Interactive Brokers continues to solidify its position as a leading brokerage platform in the industry.
tastytrade: Best Broker for Options
Why We Chose It:
- For three consecutive years, tastytrade has been selected as the best options trading platform due to its innovative options pricing structure and tools tailored to the needs of options traders.
- The capped commission structure for options makes it particularly appealing for high-volume traders, offering the lowest costs in the industry for such traders.
Pros & Cons:
- Pros:
- Capped commission structure for options, ensuring cost-effectiveness for high-volume traders.
- Highly regarded tools and educational material focused on options trading.
- Fully customizable trading experience to meet individual preferences.
- Follow Feed feature allows users to track trades of tastytrade’s TV celebrities, offering valuable insights.
- Cons:
- No on-platform paper trading support.
- Limited investing and retirement resources compared to some competitors.
- Some key investment choices like mutual funds are not available.
Overview:
- Options trading is renowned for its complexity, but with the right guidance and tools, traders can harness its potential effectively. tastytrade, created by the developers of TD Ameritrade’s thinkorswim platform, maintains its position as the best broker for options by offering an intuitive platform coupled with comprehensive tools and content.
- Founded in 2017 and based in Chicago, tastytrade provides competitive fees for options trading, including commission caps for large lot sizes and no trade commissions when closing positions. These low costs are complemented by ongoing platform enhancements, ensuring a powerful delivery of options analytics, trade execution, and digital content.
E*TRADE: Best for Mobile Investing & Trading
Why We Chose It:
- E*TRADE has been a pioneer in both mobile and online trading, offering a mobile experience that combines intuitive navigation, robust portfolio management tools, deep research, educational content, and complex trading tools suitable for investors and traders of all levels.
- With ongoing enhancements to its mobile capabilities, E*TRADE has solidified its position as the best mobile trading and investing platform in 2024.
Pros & Cons:
- Pros:
- Excellent range of tools and resources catering to investors and traders.
- Pre-built and automated portfolio options for simplified investing.
- Extensive educational content library for investors of all levels.
- Top-notch mobile apps designed for traders and investors.
- Cons:
- Lacks support for international exchange trading.
- No direct access to cryptocurrency investing.
- Fractional shares only available through robo-advisor portfolios or dividend reinvestment plans (DRIP).
Overview:
- Founded in 1982, ETRADE has continually embraced innovation to provide one of the best customer experiences in the industry. Following its acquisition by Morgan Stanley in 2020, ETRADE has further advanced its capabilities by integrating Morgan Stanley’s research materials and financial advisors into its platform.
- With a customer base of 8.2 million households, ETRADE offers an extensive list of investment choices and trading tools through its website, desktop, and mobile platforms. The integration with Morgan Stanley has expanded ETRADE’s educational catalog, making it easier for new investors to enter the market confidently while providing experienced investors with enhanced analysis capabilities. Though direct cryptocurrency investing is not available, traders have access to a wide range of analysis tools, charting functionality, and trading technology across various asset classes.
eToro: Best for Cryptocurrency Trading
Why We Chose It:
- eToro offers access to the largest selection of crypto coins among online brokers, providing a user-friendly experience.
- With one login, users can access stock, ETF, futures trading, and 21 physical crypto coins through eToro’s intuitive and socially focused web-based and mobile platforms.
Pros & Cons:
- Pros:
- Established platform available in over 100 countries, with support for a relatively large selection of tradable crypto assets.
- Innovative and easy-to-use social trading experience, allowing users to learn from and copy other seasoned traders.
- Cons:
- Limited availability in only 47 states.
- Very limited account types and a general lack of advanced trading tools, features, and research.
- No margin trading available in the U.S., and options trading is only offered to U.S. and U.K. residents via a separate app.
Overview:
- Originally focused on forex trading in 2007, eToro expanded its offerings to include social trading experiences in 2010 with OpenBook.
- Currently available in 47 U.S. states and over 140 countries worldwide, eToro serves more than 25 million users.
- Despite recent upgrades to its charting capabilities and the addition of Tradingview’s Pro charts, eToro still lacks many tools and features necessary for sophisticated investors. However, it provides real-time pricing information for various assets, including cryptocurrencies, stocks, and ETFs.
- eToro’s crypto wallet is separate from its brokerage platform, allowing users to buy and store crypto with eToro. While options trading is available to U.S. customers through a separate app, it is being piloted in the U.K. and will soon be integrated into the main app.
Public.com: Best for Alternative Investments
Why We Chose It:
- Public offers an easy-to-use platform with social networking features, fractional investment capabilities, and a creative selection of alternative investment options.
- Alongside traditional assets like stocks, options, ETFs, and cryptocurrencies, Public allows investors to purchase Treasury bills and alternative investments such as rare sneakers, trading cards, royalties, and more.
Pros & Cons:
- Pros:
- Available fractional share investing and a social media element that connects investors.
- Easy-to-use mobile app and no payment for order flow on stocks and ETFs.
- High interest earned on uninvested cash.
- Cons:
- Very limited account types and illiquid, expensive alternative investments.
- Basic educational material and limited features, with options limited to one-leg strategies.
- Requires manual opt-out for tipping on each transaction, and currently only offers access to individual brokerage accounts.
Overview:
- Established in 2019 by Jannick Malling and Leif Abraham, Public aims to lower the barrier to entry for investing by offering a clean and simple user experience, fractional investing, and a social networking element.
- The New York-headquartered company is a regulated broker-dealer with SIPC protection, providing a mobile and web browser-based trading platform.
- Despite its strengths, Public’s alternative investments may be highly illiquid and speculative, with high transaction costs. Additionally, the platform charges fees for services like inactivity and instant withdrawals.
- Public’s unique approach includes a transparent fee structure and a focus on individual brokerage accounts, but it may not be suitable for investors seeking more comprehensive account options or advanced trading features.
