Brokers Review

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Best Online Stock Brokers for Beginners of 2020

Ready to get started investing but not sure where to start? We’ve compiled a list of the top brokers we recommend for 2020.

Catering to both seasoned and new investors alike, there’s someone on this list for everyone. Whether it is customer service, affordability, or platform versatility, each of these brokers shines in its own way.

Be sure to compare the most important differentiators, such as trading costs and account minimums before you make your choice. As a beginner, you may also place more value on educational resources and customer support while you’re still learning the ropes.

Ally Invest

If you’re a seasoned investor, you may never have heard of Ally Invest, but its newness to the scene shouldn’t make you discredit it.

In 2020, Ally invest bought out TradeKing and has only recently emerged into the online brokerage game. That said, it’s quickly become very clear that everything that was great about TradeKing has only gotten better.

Ally offers automated portfolio management and forex trading. There is no account minimum, commissions on trades are $4.95.

Are you a frequent investor?

Ally Invest offers discounts to members who trade 30 or more times per quarter. At that point, the fee drops down to $3.95.

Whether you use a PC or a smartphone, Ally has a great online trading platform for its users. Trade fast, get current, 24-hour quotes and data, make your own unique dashboard, and get a diverse set of trading tools at your disposal.

Here are some of our favorite helpful features:

  • Profit-and-loss calculator
  • Maxit Tax Manager, which informs you of any changes to your taxes based off of trades
  • Probability calculator to tell you of the likelihood of your desired targets for each share

Worried about trading from work? Don’t be. Ally Invest’s web platform doesn’t require you to download anything. Simply log in and you are ready to trade. Considering everything they offer online, this is quite an achievement in and of itself.

TD Ameritrade

TD Ameritrade is considered by many investors to be one of the best resources for both beginning and advanced investors.

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It offers portfolio-building advice, has over a hundred commission-free exchange-traded funds (ETFs), and provides great trading platforms (mobile and PC) — all while not requiring an account minimum for its customers.

TD Ameritrade also has a program online for beginners called Web Platform which is extremely useful. Here newcomers can select their trading ‘skill level’ and their level of education, and TD Ameritrade will help the investor build a properly balanced portfolio, including:

If you like to do your own research before doing any kind of investing, TD Ameritrade also provides its investors with a lot of free resources. Customers can stream CNBC news for free, access market ‘heat’ maps and real-time trading quotes.

They can also communicate with a community of specialists that are available to chat in person or over the phone about investment options and ideas. Ameritrade is one of the few companies these days that offer this kind of service.

Part of its success comes from its ability to delegate. Every quarter TD Ameritrade relies on Morningstar, an independent investment research firm, to compile a list of mutual funds that offer no-transaction-fees.

This rather large list hits 45 investment categories and is given out exclusively to Ameritrade customers.

Merill Edge

Merill Edge is a great option for beginning investors. You can open an account with $0 minimum investment. They also offer excellent customer service, strong education and research, and low fees.

You can get unlimited free online stock, ETF, and options trades with their Preferred Rewards program, or pay just $2.95 per trade with no trade or balance minimums.

They offer flexible tools with customizable features and the best part is they are there to guide you step-by-step. They have dedicated advisors who will work with you one-on-one to help you build a comprehensive financial strategy.

Their advisors can give you recommendations based on your needs to help you grow and preserve your wealth. If you prefer to meet with them in person, they have over 2,000 Bank of America locations where an advisor will be more than happy to work with you.

Vanguard

Perhaps one of the best brokers for low-cost investing, Vanguard is frequently utilized by buy-and-hold and retirement investors with high account balances.

Its expense ratios on index funds and ETFs are quite below the national average, so it is the go-to broker for long-term investors.

Retirement-minded investors can find a lot of resources with Vanguard through its website. They list safe and healthy investment options that promise long-term growth, and it gives helpful hints on where you should prioritize your time and energy if you’re just getting started.

They also have a sophisticated program that can estimate when you’ll be able to retire and can help calculate your monthly expenses (sudden or otherwise) once you do.

If you have some money to invest, you can save by choosing Vanguard. For accounts with at least $50,000, trades only cost $7 regardless of how big they are. When the brokerage account hits $500,000, trades only cost $2. When it surpasses a million dollars, many trades become free.

Want to make active trades? Keep looking.

If you’re an active trader and don’t have nearly that amount of money laying around, however, Vanguard isn’t the best stock broker. It doesn’t have any software to support its traders (meaning there aren’t any trading tools or platforms to utilize).

Also, investors who frequently trade (say, more than 25 times a year) are penalized with fees (assuming, of course, they don’t have $1 million invested with Vanguard).

Robinhood

Robinhood is aptly named, offering commission-free stock and ETF trades.

Not just some of the time — all of the time.

On top of this, they don’t have an account minimum. If you want to get started trading, there’s no reason to wait. However, unlike Motif, Robinhood doesn’t offer fractional shares, so you’ll need to have enough disposable income to buy at least one share of stock or ETF.

Robinhood has a great mobile app team. It’s so good there’s no reason for you to ever hop on a PC. It takes five minutes to set up and only an hour for them to activate your account. Seem long? By industry standards, it is pretty darn fast. (Keep in mind this is a trading account, not a twitter account you’re setting up.)

When you transfer $1,000 to Robinhood, it is available immediately for you to invest. If you upgrade to Robinhood Instant (a free upgrade), any proceeds you make from selling stocks or ETFs can be immediately used to buy stocks or ETFs elsewhere.

Don’t like the hassle of transferring money back to your bank account or vice versa? You can set up your account so that money is transferred to and from automatically whenever you want.

Once a week, once every two weeks, and so on. For as many perks that Robinhood offers, this one is just the icing on the cake for many users.

Due to popular demand, some of its features do having a waiting list, such as Robinhood Instant. Sign up on day one so you can take advantage of this upgrade as soon as possible.

Scottrade

Online platforms are great, but what about talking with actual human beings? Scottrade has about 500 offices across the country where you can actually go inside and speak with a knowledgeable investor.

Don’t have the time for that? Talk with someone over the phone or chat with them online. They have a staggering 1,000+ consultants that work every day of the week, that you can speak with almost any time of day.

It actually offers such good customer service that another company is working on buying it out: TD Ameritrade. It’s not finalized yet, but when it happens, it could be good news for members.

Can you imagine the resources of TD Ameritrade coupled with the customer service of Scottrade? That said, Scottrade still has a lot of aces up its sleeve until the buyout happens. Let’s talk about them.

Like many of the stock brokers mentioned already, Scottrade does not have an account minimum. Commissions are only $6.95 a trade.

When you deposit $10,000 or more into a Scottrade account, you get fifty commission-free trades. Do the math. That’s a bit of money saved right there. Also, in June of 2020, Scottrade lowered its contract fee on options from $1.25 to only $0.70.

Scottrade also offers low mutual fund commissions. It only costs investors $17 to sell and buy no-load funds. For funds that charge a sales load, it only costs investors $17 to sell, whereas it is nothing to buy. How many of these transaction-fee-free funds do they offer, you ask?

A whopping 2,600.

Charles Schwab

There are only a few brokers out there where we can honestly say are well suited for both beginning and advanced investors, but Charles Schwab is one of them. It has the tools to satisfy anyone, no matter their level of expertise.

Are ETFs your thing? Charles Schwab offers over 200 commission-free ETFs. Are you an absolute beginner? Schwab objectively selects what it believes to be the best ETF in every category, so you don’t have to go down rabbit holes of information and research.

On top of this, if you are just starting to build your portfolio, Schwab also offers recommendations based on your chosen risk tolerance. Take the safe road and know that your money is in good hands.

If you need to speak with a representative, you may do so no matter the time of day, whether via phone or online chat. That said, Schwab actually has a pretty large brick and mortar presence, where you can make an appointment to speak with a representative or attend invaluable workshops.

A downside to Schwab is that they do have an account minimum. While many brokers we’ve discussed require no account minimums, Schwab does require that its investors maintain at least $1,000 with them. If you don’t have that, you can have the minimum waived when you sign up for an automatic monthly deposit of $100.

Fidelity

With low $4.95 commissions per trade, Fidelity is one of the most affordable brokers online, considering what it offers to its customers.

Utilizing top-notch research from over 20 companies, Fidelity provides its investors with some of the best investment advice that money can buy. It could be a lot of information to wade through, but after a few quick questions, Fidelity can match you up providers that resonate with your personal investment style.

Though it’s not considered the best customer support in the industry, Fidelity still offers some pretty sharp service for its customers. Investors can meet with representatives in physical branch locations, as well as attend investor seminars throughout the year for free.

The seminars cover a wide array of topics, such as social security and technical analysis. Plus, if in person doesn’t appeal to you, you can still study and expand your knowledge via webinars.

Looking for a solid online broker? Fidelity is truly among the best.

It offers both PC and mobile support, and if you are an active trader, you can even get real-time feeds displayed on your desktop. Each trading platform is intuitive and easy to use and provides tools to help you get a leg up on your competition.

For those interested, Fidelity also offers a premium tool called Wealth Lab Pro, which offers customizable strategies and 20 years of historical data.

Is XM a Scam?

Founded in 2009 and with more than a million clients, XM is without any doubt one of the powerhouses in the online trading industry. With a resume like that, it is quite safe to assume that this company can be trusted, but we still wanted to see which security features have been implemented here. In other words, we want to see for ourselves is XM a scam or a legit and reliable company. After spending considerable time trading on their website, we have familiarized ourselves with their security system and will tell you absolutely everything you need to know about in the rest of this text. Read on and see for yourself how a serious company operates.

Is XM a Scam? | Website reliability

As you can read in our XM Review 2020, we tested out every available deposit and withdrawal method. Not a single problem ever occurred and no traces of XM scam were ever noticed. This is because the broker is extra careful when it comes to its clients’ funds which are kept in segregated accounts opened with investment-grade banks. You’ll be happy to know that your money (up to 20,000 euro) is also insured thanks to the Investor Compensation Fund, whereas Negative Balance Protection prevents you from losing more than you have in your account. Other parts of the website, like the trading platform and the customer support work flawlessly too, and the broker has a Verisign certificate to prove it. But there are other evidence that can help you decide is XM a scam. Stay with us to learn what they are.

Is XM a Scam? | Licenses

You’ll be happy to know that XM is a fully regulated brokerage company on multiple fronts. Given that their headquarters are located in Cyprus, it’s not a big surprise that they have a CySEC licence, and their license number is 120/10. However, the company is also registered with the FCA (reference number 538324), which adds a lot to the company’s credibility. Furthermore, we have to say that everything on this website is done in full accordance with MiFID, a strict directive issued by the European Union. Therefore, in legal terms this broker has absolutely everything a legit broker needs to have and more, so there really is no reason to waste time deliberating is XM a scam or not. Simply put, this is a very professional company that takes excellent care of its clients.

Is XM a Scam? | Conclusion

As you can see, XM is definitely not a scam but a serious company that puts its clients’ interests above all else. Financial security is absolutely impeccable and the broker has all the necessary licenses, which makes trading here one of the safest investments you can make. For more than eight years these people have been a part of the trading industry, which is quite an achievement. A scam broker simply cannot last that long, not even close. So if you want to be sure your trading partner will treat you well, just open an account on this website and you will always have a place you can visit when an investment opportunity arises.

Best Online Brokers

Find and compare the best online trading platforms for every kind of investor

With so many different types of online stock brokers available to investors, it can be tough to choose one that works best for you. That’s why we put these U.S.-based online brokers through a comprehensive review process that included hands-on research to determine the best in the industry.

When we started our 2020 online broker reviews six months ago, no one knew how the world would change. We recognize that we all are living through a particularly volatile time as we deal with this global crisis, and financial markets have also seen unprecedented change, impacting all investors. Our analysis of the online brokerage industry is, “Commission Cuts, Consolidation, and a Coronavirus Crash.”

Our mission has always been to help people make the most informed decisions about how, when and where to invest. Given recent market volatility, and the changes in the online brokerage industry, we are more committed than ever to providing our readers with unbiased and expert reviews of the top investing platforms for investors of all levels, for every kind of market.

Best Online Brokers and Trading Platforms for April 2020:

  • Fidelity Investments: Best Online Broker
  • TD Ameritrade: Best Broker for Beginners
  • tastyworks: Best Broker for Options
  • Interactive Brokers: Best Broker for Advanced Traders
  • TD Ameritrade: Best Broker for Mobile
  • Interactive Brokers: Best Broker for International Trading
  • tastyworks: Best Broker for Low Costs
  • Charles Schwab: Best Broker for ETFs

Best Overall: Fidelity Investments

  • Account Minimum: $0
  • Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade

Fidelity earned our top spot for the second year running by offering clients a well-rounded package of investing tools and excellent order executions. It has continued to quietly enhance key pieces of its mobile-responsive website while committing itself to lowering the cost of investing for its clients. Fidelity joined in the rush to cut equity and base options commissions to zero in October 2020 but remains devoted to offering top-quality research and education offerings to its clients. The firm also makes it easy for clients to earn interest by sweeping uninvested cash into a money market fund. Fidelity also shares the revenue it generates from its stock loan program, and allows clients to choose which stocks in their portfolios can be loaned out.

Fidelity provides excellent trade executions for investors. On average, over 96% of orders for Fidelity customers are executed at a price better than the national best bid or offer.

Fidelity offers a wealth of research and extensive pre-set and customizable asset screeners.

Your uninvested cash is automatically swept into a money market fund to help contribute to overall portfolio returns.

Some traders and sophisticated investors may have to use Fidelity’s web platform in addition to Active Trader Pro to access all the tools and research they require.

Non-U.S. citizens or residents cannot open an account.

Traders and investors must manually refresh the data when using the website.

Fidelity has a wide offering of securities, but no commodities or options on futures.

Best for Beginners: TD Ameritrade

  • Account Minimum: $0
  • Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2020. $0.65 per options contract.

Financial markets can be intimidating the first time you try to put your money to work, so it helps to have an online broker that understands that and puts in an effort to help. To determine the best broker for beginners, we focused on the features that help new investors learn as they are starting their investing journey. Brokers were selected based on top-notch educational resources, easy navigation, clear commission and pricing structures, and the overall quality of their portfolio construction tools. We also looked for low minimum account balances, as these can be a barrier for new investors with limited capital. Finally, we put an emphasis on the availability of demo accounts so new investors can practice using the platform and placing trades.

TD Ameritrade, one of the largest online brokers, has made significant efforts to market itself to beginner investors through social media. Work is still being done to further streamline its web and mobile experiences and make them more accessible to new users, but the resources new investors can already access are exceptional. Education is a key component of TD Ameritrade’s offerings. You’ll find expanded learning pathways, ranging from beginner to advanced, to help clients understand everything from basic investing concepts to extremely advanced derivatives strategies. You can open an account and poke around without making a deposit, and take advantage of all the learning opportunities until you’re comfortable. TD Ameritrade wants new investors to become more confident, and to trade additional asset classes as their skills grow.

The education offerings are designed to make novice investors more comfortable.

TD Ameritrade offers in-person education at more than 280 offices as well as multiple training pathways available on its website and mobile apps.

The TD Ameritrade Network offers nine hours of live programming in addition to on-demand content, viewable on mobile devices.

The well-designed mobile apps are intended to give customers a simple one-page experience.

Some investors may have to use multiple platforms to utilize preferred tools.

TD Ameritrade offers one of the widest selections of account types, so new investors may be unsure of which account type to choose when opening an account. More support is needed to ensure customers are starting out with the correct account type.

Investors are paid a tiny rate of interest on uninvested cash (0.01-0.05%) unless they take action to move cash into money market funds.

Best for Options: tastyworks

  • AccountMinimum: $0
  • Fees: $0.00 stock trades, $1.00 to open options trades $0.00 to close

Options trading has become extremely popular with retail investors since the turn of the 21st century. Our best options brokers have a wealth of tools that help you measure and manage risk as you determine which trades to place. They also include valuable education that helps you grow in sophistication as an options trader.

The commission structure for options trades tends to be more complicated than its equivalent for stock trades. Until the commission cuts that swept the industry in the fall of 2020, most brokers charged a fee for each leg of an options spread, plus a commission per contract being traded. The per-leg fees, which made 2- and 4-legged spreads expensive, have been eliminated for the most part. We are seeing some brokers place caps on commissions charged for certain trading scenarios.

Investors with fairly large portfolios can take advantage of portfolio margining at certain brokers, a practice that assesses the total risk inherent in a portfolio that contains stocks and derivatives, and can reduce the size of your margin loan.

Tastyworks officers say that more than 90% of the trades placed by their customers are derivatives, so there are a lot of tools for options and futures traders. Everything is designed to help the trader evaluate volatility and the probability of profit. It’s all about making decisions and taking action. Executions are fast and the costs are low, capping commissions for opening orders for options on equities and futures at $10 per leg. As you build a position from a chart or from a volatility screener, a trade ticket is populated for you. There’s a video viewer embedded so you can keep an eye on the tastytrade network. Though a newcomer to options trading might be initially uncomfortable, those who understand the basic concepts will appreciate the content and features.

All of the tools you’ll need for analyzing and trading derivatives are built into the tastyworks platform.

The charting capabilities are uniquely tuned for the options trader. If you have multiple positions on a particular underlying, you can analyze the risk profiles of the combined position.

There are hours of original video from tastytrade every weekday, offering up-to-the-minute trading ideas, plus a huge library of pre-recorded videos and shows.

Newcomers to trading and investing may be overwhelmed by the platform at first. There’s a learning curve to climb.

There is no fixed income trading (outside of ETFs that contain bonds) for those who want to allocate some of their assets to a more conservative asset class.

Besides profit and loss, any additional portfolio analysis requires setting up a login on a separate site, The Quiet Foundation, which is also part of the tastytrade empire.

Best for Advanced Traders: Interactive Brokers

  • Account Minimum: $0
  • Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite

Advanced traders need fast, high quality executions, reliable data, sophisticated order types, and access to the asset classes they want to trade. We also looked for portfolio margining and top-notch portfolio analysis.

Interactive Brokers (IBKR) earns this award due to its wealth of tools for sophisticated investors and its wide pool of assets and markets. The firm makes a point of connecting to as many electronic exchanges as possible. You can trade equities, options, and futures around the world and around the clock. Interactive Brokers’ order execution engine stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate. The order routing algorithms seek out a speedy execution and can access hidden institutional order flows (dark pools) to execute large block orders. The wide array of order types include a variety of algorithms as well as conditional orders such as one-cancels-another and one-triggers-another. You can also set up conditional orders based on price, volume, daily P&L, margin cushion, number of shortable shares available, rebate available from the trading venue, and other factors.

IBKR’s order execution engine has what could be the smartest order router in the business.

Interactive Brokers connects clients to 125 markets in 31 countries and enables clients to trade stocks, options, futures, forex, bonds and funds from a single integrated account.

Algorithmic order types include VWAP (volume-weighted average price) and TWAP (time-weighted average price) as well as order types designed to minimize the trader’s impact on the price of a particular stock.

You can only have streaming data on one device at a time. This could be an issue for traders with a multi-device workflow.

The most advanced capabilities are restricted to IBKR Pro clients and trades on that plan are not commission free.

Best for Mobile: TD Ameritrade

  • Account Minimum: $0
  • Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2020. $0.65 per options contract.

Over the last few years, online brokers have increasingly adopted the mantra “mobile-first.” As more investors and traders use tablets or smartphones as their primary platform, online brokers have made efforts to improve their mobile apps.

Streaming data has made its way to mobile apps along with complex options analysis and trading, advanced charting, and educational offerings. With the availability of computers in our pockets, the way people interact with their trading and investment accounts have forced brokers to offer mobile apps along with their traditional desktop platforms.

TD Ameritrade focused its 2020 development efforts on its most active clients, who are mobile-first – and in many cases, mobile-only. TD Ameritrade’s thinkorswim mobile platform has extensive features for active traders and investors alike. The workflow for options, stocks, and futures is intuitive and powerful. You’ll find lots of bells and whistles that make the mobile app a complete solution for most trading purposes, including streaming real-time data and the ability to trade from charts. The regular mobile platform is almost identical in features to the website, so it’s an easy transition. TD Ameritrade clients can trade all asset classes offered by the firm on the mobile apps.

TD Ameritrade optimized its traditional website for mobile browsers with a dashboard where clients can quickly access account details, balances, balance history, positions, news, and more.

The well-designed mobile apps are intended to give customers a simple one-page experience where they can quickly check in on the markets and their account.

The TD Ameritrade Network offers nine hours of live programming in addition to on-demand content, viewable on mobile devices.

Streaming real-time data on thinkorswim’s mobile app is unlimited.

Customers may have to use multiple platforms to utilize preferred tools. Options-specific tools abound on thinkorswim and its associated mobile app, but fundamental research for equities and fixed income tools are mostly available only on the website.

Over-the-counter (penny stock) trades are subject to a commission of $6.95 per trade.

Clients are paid a tiny rate of interest on uninvested cash (0.01-0.05%) unless they take action to move cash into money market funds.

Best for International Trading: Interactive Brokers

  • Account Minimum: $0
  • Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite

For the international trading category, category weightings for the range of offerings were adjusted upwards to measure which broker offered the largest selection of assets across international markets. After that, overall platform functionality and variety of orders types were also measured as these are important to successful trading when undertaking position management in markets that span the globe. These adjustments revealed a clear winner for international trading in the 2020 review.

Interactive Brokers is the best broker for international trading by a significant margin. Interactive Brokers allows investors to access 125 exchanges in 31 countries across the globe. This reach is combined with a massive inventory of assets and 60 different order types to plan your entry and exit from a position. Investors can also fund their account in their domestic currency and IBKR will handle the conversion at market rates when you want to buy assets denominated in a non-domestic currency. And, if all that were not enough, the quality of trading tools available through Traders Workstation (TWS) make it easy to execute multi-layered trades across international borders. Interactive Brokers has won this category two years running, and there is no sign of that changing in the near future.

No broker can match Interactive Brokers in terms of asset inventory or international markets.

If an exchange enables a particular order type, IBKR offers it you. For example, very specific limit-on-close orders on the Tokyo Stock Exchange and pegged-to-primary orders on the London Stock Exchange.

You can trade non-U.S. dollar assets on margin without having to have the local currency in your account.

Most non-U.S. exchanges charge additional data fees that increase your trading costs.

All non-U.S. transactions incur trading commissions, some of which are not completely transparent.

Small or inactive accounts may be subject to maintenance fees or data charges, and interest is not paid on cash unless you have a substantial balance.

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