Best Online Stock Trading Brokers for 2020

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Intuitive interfaces, a plethora of features, and easy access have made online brokers incredibly popular options for stock trading. Many brokers have fees well below that of personal brokers as well as bonus tools and unique features aimed at assisting those new to the investing world.

This list of the best online brokers can help you find the perfect trading platform for your investment needs in 2020.

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The 6 best online brokers for stock trading of 2020

Brokerage Stock Trading Fees (per trade) Options Trade Fees (per trade) Minimum Deposit Margin Rates (Up to $4,999) Fractional Shares Allowed
Robinhood $0 $0 $0 First $1,000 of margin is included with a $5 monthly fee. If you borrow more, you’ll pay 5% yearly interest on any margin used above $1,000. Please note: Federal regulations require you to have $2,000 in your Robinhood brokerage account and a suitable investment profile in order to use margin. Yes
Charles Schwab $0 $0.65 $0 9.325% No
E*TRADE $0 $0.10 $500 8.95% No
TD Ameritrade $0 $0 $0 8.95% No
Ally Invest $0 $0.50 $0 9.5% Yes
SoFi Invest $0 N/A $100 one-time or $20 monthly N/A Yes

What is an online broker?

Online brokers are simply brokerage firms that operate online instead of face-to-face. With an online broker, you can still trade stocks, ETFs, options and more. The most notable differences involve cost, convenience and the overall interactive experience.

Brokerage firms that operate primarily online give users the flexibility to trade and invest wherever they are. With snappy user interfaces and mobile integration, stock trading can be accessed by nearly everyone, even those without a large amount of capital to invest. This is because online brokers generally have significantly lower fees than personal brokers, as most of the investment work is handled by programs and algorithms.

The trade-off with online platforms such as these is that you will often have to make the trading decisions yourself — with account management directed by a person costing a premium.

Though the abundance of tools and educational resources that many of these brokers provide can help people of all skill levels get started in the world of trading.

How should I choose the right online broker?

With so many options to choose from, there are a few key factors to consider when picking the best online broker for you. With any stock trading or investment platform you should always take into consideration:

  • Your personal goals and trading needs
  • Fees & commissions
  • Account & trading limitations
  • Unique features

Your personal goals and trading needs will determine what you ultimately want out of the platform. Are you looking to invest in the short-term or long term? How often do you want to trade? How much are you willing to invest? Do you want to only trade stocks, or do you want access to other trading tools down the road? Answering these questions is a good way to gauge which broker you should approach.

Beyond the personal questions, you should always compare the cost of trading. While a cheaper option often sounds like the smartest investing choice, it doesn’t guarantee you’ll get a higher return. Often cheaper services will have more account and trading limitations.

Account and trading limitations are the rules and commissions each broker sets forth for you to use their platform. These are things like account minimums, trade frequencies, investment options available to you, whether you can purchase fractional shares and much more.

Lastly, take into consideration what’s unique about each platform and how you can use that to your advantage. For example, if you’re new to stock trading or investing in general, a platform with easy to use tools or even with excellent support and service such as Charles Schwab might be the most beneficial.

Should I self-direct my stock investments or hire a manager?

Managers are expensive; this makes the allure of self-directing stock investments a frugal one. Making all the trades yourself will certainly save you money, but only if you make a gain with your investments.

Managers only take a percentage if they make you money — giving them incentives to do well. If you’re not confident in your abilities to trade, or you lack the dedication to ensure your portfolio is performing optimally, then a manager can help.

If you’re more worried about making the most out of your investment efforts, then self-directing your stock investments is the path you should take.

How do I execute stock trades online?

Each platform has its own way of executing stock trades. For most, it’s as simple as finding the stock you want to buy or sell, and then hitting a button.

Keep in mind that trades aren’t instantaneous. The SEC makes this clear in its publication on trade executions. While trades can happen quickly, the moment you hit the trade button and the moment a trade happens do occur at different times. This is because you’re not doing the trading yourself when you use an online broker, you are merely telling your broker what to do.

What this means is that the price you try to make a trade at and the price you get might be slightly different.

Beyond this price discrepancy, just because you can access your online broker at any time does not mean you can execute a trade at any time. The stock market operates on weekdays between 9:30 a.m. to 4 p.m. EST. But after-hour trading can take place — which depends on your broker.

How much money should I invest in stocks?

There’s no golden rule to tell you how much you should be investing in stocks. There are portfolio percentage recommendations based on your investment goals, but as for a specific dollar amount, there’s no exact recommendation.

There is this idea that big money can make big gains. While this holds some truth, don’t let that philosophy convince you that you need a substantial amount to make investing worthwhile. That’s because what’s more important than the amount of money you invest, is the length of time you invest. A small amount over a long period can add up considerably.

Understanding this, and a few other stock trading basics can help you make the most out of your online broker.

How often should I check my stock investments?

How often you check on your stocks depends on what kind of investment goals you have and your personality. If you are looking to invest in the long term, then checking on your stocks every day is overkill. A few times a month would most likely suffice.

With that said, when self-directing your investments it’s tempting to feel the need to check in as frequently as possible. However, if you have a long-term strategy in place but you get stressed out easily by finances and are prone to making panicked decisions, then it’s probably even more important that you don’t check on your stock too frequently.

Investing takes time and making substantial gains takes time.

Ultimately there’s no real harm in checking your stocks as frequently as you want, but there can be damage done to your long-term goals by making an impulsive and ill-informed investing decision.

How dollar cost averaging impact stocks explained

The bottom line

With so many options for trading online, there’s an online broker for every kind of investor. Whether you’re a veteran stock trader or someone completely new to the world of investing, the best online brokers can bring you convenience, low fees, and a plethora of additional features. Once you determine your investing goals, style, and key needs, finding the best online broker for you becomes much easier – making it possible for you to begin investing whenever you want.

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Evan Manwell
Evan Manwell
Contributing Writer

Evan Manwell is a personal finance writer based out of Portland Oregon. He has worked closely with both banks and credit unions to write about personal loans, credit cards, student loans, cryptocurrencies and advances in fintech.