How To Choose The Best Online Brokerage Firm For Stock Trading

Curious about how to choose the best online discount broker for stock trading? It’s a common and understandable question as there are many discount brokerage firms to consider, with different companies and trading websites offering a variety of services, platforms, fees, commission structures, and investment options. But how do you weigh the pros and cons of the top online discount?brokerages?

On one end, you have major players like Vanguard, Schwab or Fidelity, and on the other you have steep discount shops?like Ally Invest. Then you have a group of robo-advisors who will invest and manage your portfolio for you, at a fraction of the cost of a traditional financial advisor. If you’re wondering who is the best discount brokerage firm?or which trading platform to open an account and trade with, we will teach you how to compare the top firms in the industry.

The Best Discount Broker Isn?t Always The Cheapest

Fees can have a significant impact on the health of a portfolio. The SEC backs that opinion and has conducted research?showing the toll fees take. As a result, you?d think that the best discount broker is the one that?s the cheapest, but that?s simply not the case. In many instances, you get what you pay for when it comes to choosing an online broker.

For example, Loyal3?offers free trading, which sounds like a great value. However, a closer look reveals they only offer commission-free trades on roughly 65 stocks. If you?re just starting out or want to invest in a specific stock, Loyal3 may be a great option; otherwise, this limitation can be a hindrance if you want to diversify. While you should be mindful of the cost you?re paying per trade, don?t confuse price with quality or service level.

Think Long-Term

It can be difficult to think long-term if you?re just starting investing. You may only want to invest in stocks or simply want to?rollover your 401(k). However, we encourage you to think beyond this immediate, short-term need and consider a?long-term mindset with the following potential needs:

  • Will you want to invest in mutual funds?
  • Will you need guidance or financial planning at some point in the future?
  • Will you want access to other financial products?

How you answer those questions will help narrow down the kind of online broker you will want to choose. Take it from someone who has done it, it?s not worth the hassle moving brokerage accounts because you overlooked a need when making your initial decision.

What?s The Platform Like?

If you see yourself using the platform much, this is a major question to consider. I can’t tell you how many times I’ve spoken with an investor and the platform they’re using is causing them headaches. Take the time to find one that works for you and is user-friendly.

You might wonder how to determine this before opening an account. Many discount brokers offer paper trading accounts for free ? TD Ameritrade is?the first one that comes to mind. Think of it as a virtual trading account investing with fake money. In most instances, it?s the same base as their platform. Save yourself some time and try a few out before deciding on an online brokerage.

Research and Education

Depending on your investing experience, you may find that you need some help getting started – we all must start somewhere. Many discount brokers offer free education to help meet that need for investors.

Outside of your 401(k) plan, this is one of the best sources of free investment education. Depending on the online brokerage firm, you may find simple, self-paced courses or even?free in-person educational seminars. Take advantage of these as they?re an invaluable resource.

Keep in mind that not every discount broker offers these ? you will want to look at platforms like Scottrade or E*Trade?as opposed to brokerages like OptionsHouse or Loyal3.

Customer Service

You may not realize it, but customer service is a major part of choosing the best?online broker. You are handing over your hard-earned money, so it makes sense to choose a broker that will offer the assistance you need. The simplest way to get a feel for the service level to expect is to call into their call center on a few occasions. Ask several questions, not indicating you’re looking to switch to them, but to get a grasp of the kind of service they’ll offer.

The following are some factors?to consider when measuring the customer service offered by discount brokers:

  • Are they open 24 hours a day?
  • Do they offer an instant chat feature?
  • Do they have a local branch if you need to speak to someone in person?
  • Are you sitting on hold each time you call in with a question?

Determining the customer service offered by a discount broker is part art and part science. Simplify it by determining what?s most important to you ? this will help you narrow down potential candidates.

It’s noteworthy to add that we’ve done most of the research for you. All our discount broker reviews and ratings discuss customer service since we have opened accounts and/or worked with each firm we’ve reviewed.

Do You Need A Robo-Advisor?

Over the past several years, a new option has popped up in the discount brokerage industry?? the robo-advisor. Think of them as a virtual financial advisor. Meant to democratize investing and bring quality financial management?to the masses, robo-advisors offer services previously only available to those with considerable wealth.

Choosing a robo-advisor allows you access to a solid investment philosophy while also allowing someone else to do the heavy lifting of managing the investments. For someone new to investing, or with little to start with, robo-advisors provide great potential.

If this is a route you?re looking at, consider looking at two of the largest robo-advisors in the space ? Motif Investing, which allows you to start investing with as little as $250, or Wealthfront, which allows you to start investing with as little as $500.


Discount brokers want your business. They will even give you cash back or rewards, in addition to other incentives, if you open an account with them. This doesn?t necessarily add to the measure of the quality of a discount broker, but free money never hurt anyone.

There are many promotions to consider, from Motif Investing offering up to $150 cash back for opening a new account?or, similarly, up to $2,000 for a new account at Scottrade. If you?re looking for a new online brokerage, make sure to check?for current promotions.

Choosing the best discount brokerage for you takes time. With a little research and reading of our reviews, you can find one that will help you meet your investment goals.