Cheapest Online Trading Platform
If you want to maximize your investments, choosing the online trading platform that will work best for you is essential. Several are known for their high-quality customer service, while others are popular for being inexpensive yet powerful trading platforms.
This article will highlight the most cost-effective platforms that are great for beginners. Here’s our list of the best affordable online trading platforms:
TD Ameritrade
TD Ameritrade was founded in 1975 and is now home to over 12 million brokerage accounts and $1 trillion under management. Whether you’re there for options trading, day trading, or is just a casual investor, you don’t have to worry that much since it offers the best features.
Some of its powerful tools include advanced earnings analysis, company profiling, charting social sentiment, plotting FRED data, replaying historical markets tick by tick, backtesting, and viewing corporate and economic calendars. It also enables its users to conduct real-time stock scans and perform advanced options analysis. These are only some of the features that can’t be found in other online trading platforms.
However, what makes TD Ameritrade the winner is its extremely low commissions and fees. Because of the pricing war, the company was forced to lower its $6.95 stock trades to $0. Its options trades only cost $0.65 per contract, as compared to its $1.25 in the past years. Take note, however, that they still implement a $6.95 charge for trading penny stocks.
Lastly, they do not have a minimum deposit, which beginner investors love.
This is a great way to get started in trading online. With such low fees, you can trade often without the fear of eating away at your initial capital.
Ally Invest
Ally Invest has one of the lowest fee structures in the market. It boasts its no inactivity charge policy and its $50 full outgoing transfer free. They are also able to attract more users because it offers a zero account minimum deposit. What’s unique about their pricing is that they give out the most enticing discounts for active investors, such as a $3.95 equity trade drop for their customers who either have a balance of $100,000 or a 30-plus trade per quarter.
Ally Invest also followed in the footsteps of other popular mobile platforms (like Robinhood), with its totally commission-free ETFs and stocks trades.
Another attractive point of this online trading platform is its easy entry point. They offer a large array of stocks and ETFs that are perfect to investors of all kinds. Aside from this, they also deliver high quality tools like profit-loss estimators, sophisticated calculators, and an informative research library that incorporates interactive media and visual slides into its market data.
This is a great platform for beginners because of the educational aspect that is provided and it’s affordable per trade pricing.
Fidelity Investments
Fidelity Investments is already considered a household name in the field of investing. The company was founded in 1946 and is still continuing its growth by reaching over $2 trillion in client assets and around 20 million active retail brokerage accounts.
What makes Fidelity Investments reign supreme in the financial market is its approach to commissions and fees. For one, they do not accept payment for order flow (PFOF), which is very rare in the industry. PFOF is a practice where a brokerage gets paid small amounts for directing its trades to various parties for trade execution. This allows small brokerages to keep their costs low.
They also automatically manage the free cash of your portfolio and place it into higher-yielding assets. Therefore, instead of earning a profit of .01% to 0.12% from the interest in free cash on other platforms, Fidelity gives out a whopping 1.58% as of October 10, 2019.
Aside from this, another shining star that keeps them on top is their research tools and market commentary. A lot of investors consider Fidelity’s ETF, mutual fund, and stock as the industry’s benchmark. They also provide five third-party and 12 third-party research reports for ETFs and stocks, respectively – the largest of any broker in the world. The only problem with this, however, is that they do not employ third-party research reports for mutual funds.
In terms of market commentary, Fidelity Investments uses Fidelity Viewpoints for its overall market research. The most favorite feature of investors in Viewpoint is the annual sector outlook report. It aims to present a detailed analysis of every sector and highlight key trends to watch per industry.
E*TRADE
Earlier this year, E*TRADE had a high commission fee, which started at $6.95 (discounted to as low as $4.95 if investors make more than 30 trades in a quarter). This is on the higher end of the spectrum if compared with other online trading platforms. However, come October 7, 2019, it lowered its commission rate to compete with the online disruptors like Robinhood. By this date, E*TRADE eliminated its retail commissions on those U.S.-listed ETF, options, and stock online.
Aside from this, they also do not require any minimum investment or account balance for brokerage accounts. This is compared to before, which imposes a $500 balance, an amount that most novice investors cannot afford.
According to experts, investors look for two things in an online stock trading platform – room to grow and a smooth learning curve. What’s good about E*TRADE is that it satisfies both criteria.
First, it offers the best library of educational articles, webinars, podcasts, and videos tailored to each type of investor. If you are a beginner, you will start with the fundamentals of investing. This way, you will be familiarized with how the system works in the field. Once you have mastered the basics, you can then read the reports, commentary, and market news from the company’s analysts.
Lastly, they also have excellent one-on-one assistance. They have online chat tools, 24-hour hotlines, and free branch appointments just in case you need guidance with how you run your investments.
Charles Schwab
What’s good about Charles Schwab is that it offers a full suite of investment products and services. You can access the best offerings – from retirement guidance to stock and options trading. This list includes every investment account type that you can imagine, such as Rollover IRA, Roth IRA, Inherited IRA, Traditional IRA, Individual IRA, Joint IRA, Custodial IRA, charitable accounts, 529 plans, and estate and trust accounts.
Charles Schwab has a low price when it comes to trading. There are no fees for ETF and stock trades, while they charge $0.65 per contract under the options trade. Another good thing about them is that they do not charge for penny stocks trading or trades under $1. If you use the automated phone system of the company, however, a $5 fee will be added to your order. There is also a fee for broker-assisted trades amounting to $25.
Charles Schwab only charges for the original purchase of a mutual fund. You do not have to pay anything for selling them. For those individuals who are looking for No Transaction Fee (NTF) funds, this online trading platform provides its clients access to its OneSource Funds. OneSource Funds are No Load (NL) and NTF funds based on various factors.
The best feature that Charles Schwab offers is its high-quality research compared to other brokers. Their in-house research is useful and value-adding, thanks to its small team of 25 staff experts.
They are the only online trading platform that offers proprietary equity ratings aside from its traditional third-party ratings. They also live stream market commentaries and events for the benefit of its clients.
TradeStation
TradeStation may not be the cheapest online trading platform out there, but they offer various fair commission structures. Listed below are the said offerings:
- TS Go: This offers unlimited $0 stock and ETF trades aside from the $0.50 per contract charge for options trades. The only downside with TS Go is that there is a minimum deposit of $500.
- TS Select: In most of TradeStation’s pricing structure, each user needs a $2,000 minimum deposit to access its three platforms. With TS Select, however, all stock and ETF trades do not charge while options trades are for $0.60 per contract.
- Penny Stocks: Penny Stocks under TS Go and TS Select are priced at $0 for the first 10,000 shares, and collects $0.0001 per share on the succeeding ones.
- TradeStation Salutes: One of the best features of TradeStation is its TradeStation Salutes. This program is only exclusive to veterans, active military personnel, and first responders. This initiative provides 100 percent free ETFs, stocks, and options trades.
Among the list of online trading platforms, TradeStation probably has the best mobile trading offering. It is practical, clean, easy to understand, and provides the best functionalities needed by active traders to succeed. At the same time, it has the perfect charting that is more advanced compared to its competitors.
Believe it or not, the most demanding traders will be satisfied with the charting on Trade Station. It contains a full chart type, after-hours visibility, date range flexibility, 43 optional indicators, and active and filled order visibility. It also features drawing tools that are perfect for drawing trend lines.
Robinhood
Robinhood is a Silicon Valley startup that disrupted the online trading industry. According to the two Stanford alumni creators, their goal is to make investing more accessible and more affordable to the millennial market.
The best feature of Robinhood is its trading interface for both its website and mobile app. It has the most user-friendly interface that is fit for first-time traders since the design is interactive, minimalist, and easy to navigate. What makes it stand out among its competitors, however, is its commission fee guidelines.
Compared to other online stock trading platforms, Robinhood decided not to charge a commission fee on the times you buy or sell ETFs, stocks, and options. This is also the best option for a high-volume trader because it requires you to pay only $5 to $7 per trade. So, this is pretty affordable for those investors who do not have much cash to spare.
The only catch with this is that Robinhood increases its revenue from its “payment for order flow” policy wherein they round up their regulatory fees to the nearest penny. Therefore, they get a chance to pocket the difference.
One drawback of Robinhood, however, is the fact that you are only limited to trading ETFs, stocks, and options on the platform. They do not offer bonds, futures, and mutual funds. You are not even allowed to short-sell. The creators’ mindset with this is that their online trading platform is for beginners and first-time investors, so these clients tend to stick to the basics.
Interactive Brokers
Interactive Brokers aim to modify their services to address the needs of their clients. Therefore, they came up with two separate pricing plans: IBKR Lite for casual investors and IBKR Pro for professionals.
- IBKR Lite: There are no data fees or inactivity fees with IBKR Lite. Every US stock and ETF trade falls under a $0 commission fee, while options trade range between $0.1 to $0.75 fee. The only downside with using IBKR Lite is that they service lower quality order executions, no access to the Trader Workstation (TWS), and has a higher margin rate compared to IBKR Pro.
- IBKR Pro: The standard fixed pricing when it comes to US stock trades is priced at $0.005 per share with a maximum of 0.5% and a minimum of $1.00 trade value. Its options trade, on the other hand, is the same as that of IBKR Lite. The only drawback with this option, however, is that it charges inactivity up to $20 per month. Hence, you should always spend at least $30 in commissions per month or maintain a $100,000 balance to avoid these additional fees.
The Verdict
Among the online trading platforms listed above, the best one we reviewed is Ally Invest. Even though it has one of the cheapest pricing offers, it still supports its clients with high-quality customer service and great online tools to help them with their decision-making. The company also rewards its loyal clients with some of the most enticing discounts in the business. This makes them feel more appreciated and inspired to trade using the platform.