Best Online Stock Trading Brokers for 2020

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.

In this article

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    The 6 best online brokers for stock trading of 2020

    BrokerageStock Trading Fees (per trade)Options Trade Fees (per trade)Minimum DepositMargin Rates (Up to $4,999)Fractional Shares Allowed
    Robinhood$0$0$0First $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$09.325%No
    E*TRADE$0$0.10$5008.95%No
    TD Ameritrade$0$0$08.95%No
    Ally Invest$0$0.50$09.5%Yes
    SoFi Invest$0N/A$100 one-time or $20 monthlyN/AYes

    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 dollar-cost averaging impact stocks explained

    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.

    Methodology

    SimpleScore

    The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

    For every review, our editorial team:

    • Identifies five measurable aspects to compare across each brand
    • Determines the rating criteria for each aspect score
    • Averages the five aspect scores to produce a single SimpleScore

    Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best stock trading platforms and brokerages of 2020.

     

    Why do some brands have different SimpleScores on different pages?

    To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

    However, it’s also possible for brands to have multiple SimpleScores, as we measure each category individually with a separate set of criteria. For example, when we apply our methodology to Chase’s stock trading product, it scores a 3.6 out of 5. On the other hand, when we compare Chase checking accounts, it scores a 4.4 out of 5.

    Questions about our methodology?

    Email Hayley Armstrong at hayley@thesimpledollar.com.

    Mobile app rating

    We took an average of each stock brokerage’s iOS App Store and Google Play ratings and scored brands based on the result.

    Additional products

    Investing is not just about stocks. We rated brands based on their product variety including ETFs, bonds, mutual funds, IRAs and options. The more products means higher the score.

    Resources

    We rated brands based on how many educational and investing resources are available. This includes Morningstar reports, market trends, how-to guides and more.

    Customer support

    When you run into trouble with your stock investment account, how can you get in touch for support? We award brands with more channels of support with higher scores in this aspect.

    Customer satisfaction

    We leveraged J.D. Power’s 2020 U.S. Self-Directed Investor Satisfaction Study to rate each brand’s customer satisfaction. As always, a higher customer satisfaction rating means a higher SimpleScore.

    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.