One of the best ways to build long-term wealth, plan for retirement, or save for a rainy day, is to invest in stocks. By buying shares of profitable companies, your money can grow while you sleep. Particularly today, when savings accounts pay very little interest, the stock market is one of the best ways to put your money to work.
But how does one invest in stocks? Before choosing individual companies to invest in, one must first select a stock trading platform to use. This guide will provide recommendations on the best stock trading platforms, as well as guidance on how to choose the right broker for you.
What is a stock trading platform?
A stock trading platform, or a stockbroker, is a company that serves as a middle man between investors and the stock market. These brokers facilitate trades, allowing small investors to gain access to the same financial markets as large scale institutional investors.
In past decades, stockbrokers catered to wealthy individuals, and most transactions were done over the phone. Today, technology has enabled brokers to process transactions online, through intuitive digital platforms. Plus, brokers are much more efficient, and much cheaper, than they were originally – which allows them to cater to everyone, not just wealthy investors.
Today, there are hundreds of stock trading platforms available. Some are ultra-low-cost, with no-frills features. Others are higher cost, but offer advanced trading features, or even guided investing.
Why use a stock trading platform?
Stock trading platforms are required to purchase equities (stocks) in almost all cases. If you wish to invest in stocks, or even ETFs and mutual funds, going through a broker is a must.
The only real exception is if you are purchasing stock in your employer’s company, directly through your employer. But other than this niche situation, it’s essentially required to use a stockbroker.
You can also buy stocks through a traditional broker, which may operate a brick-and-mortar office, and conduct trades over the phone – or even in person. This old-fashioned arrangement might appeal to some, but it almost always comes with higher costs.
To maximize convenience, and minimize costs, using an online stock broker is recommended. We cover the best stock brokers in the list below, but first, let’s cover what you need to know about choosing a trading platform.
How to choose a stockbroker
There are hundreds of stockbrokers and trading platforms to choose from. How do you select the best one? Here are the key things to keep in mind.
Fees and trading costs
The fees you pay for investments can significantly impact your returns over time. There are a few different costs to be aware of:
- Transaction fees, which are charged every time a security is purchased or sold
- Expense ratios, which are charged annually on many ETFs and mutual funds
- Account fees, such as annual fees or set-up fees
Each broker will have different pricing structures, so it’s important to compare options.
For transaction fees or trading commissions, some charge a flat commission on each trade, some charge a percentage of the trade value, and some have no transaction fees at all.
Over the last few years, many mainstream brokers have transitioned to a no-transaction-fee model. This is great news for investors, and it means that many platforms that still don’t offer no-fee options are behind the times.
Some mutual funds may also have front or back-end loads, which are substantial fees charged when you invest in a mutual fund or later sell that same fund. These should be avoided.
For expense ratios, the vast majority of index funds, exchange-traded funds (ETFs), and mutual funds will have some sort of expense ratio. Individual stocks do not have this expense.
An expense ratio can range from as low as 0.05% ($5 annually on a $10,000 investment) to 1.5% or more ($150 annually on a $10,000 investment).
However, these fees have more to do with the specific investments you choose, rather than the actual broker. That said, each broker offers different ETF/fund options – look for a stock trading platform with a variety of low-cost funds.
For account fees, these are relatively rare for large scale brokers. Some may charge a fee to transfer in existing assets, or to handle complicated account transitions. Set-up fees are rare unless opening a complex account like a self-directed 401k. In general, avoid brokers with account fees.
Investors can choose from standard (taxable) investment accounts, retirement accounts such as Roth IRAs, margin accounts, and more. Most online brokers now offer a variety of investment account styles – but the details of each will vary.
If you are simply looking for a standard, taxable brokerage account, nearly every broker offers this. However, the specifics of the account – such as available investments, margin requirements, etc. will vary.
If you are looking for a retirement account, you’ll need to be pickier in choosing your broker. Most brokers will offer standard accounts like Roth IRAs, but specialty accounts, such as SEP IRAs, individual 401ks, etc. can be harder to find.
What kind of investments does the platform offer? Of course, all stockbrokers will offer trading in stocks. For individual stocks, most brokers offer similar selections, at least for US-based companies. However, not all brokers allow you to trade on international stock markets, so keep this in mind.
The big difference often comes in a broker’s selection of ETFs and mutual funds – and the fees they charge to invest in these products.
The ability to conduct options trades is another big one to look out for. Options trading is a way to leverage your investment and is a popular choice for day traders and advanced investors.
Likewise, some stock trading platforms offer alternative assets, such as cryptocurrencies, Forex currencies, etc. If you’re looking for anything specific, take a detailed look at the offerings of any brokers you are considering.
Some brokers will have a minimum amount of money that must be deposited from your bank account in order to open an account. This could be as little as $100 or as much as $100,000+, depending on the broker. Most online trading platforms now offer no-minimum or low-minimum accounts, but it’s still important to pay attention when shopping around for brokers.
When selecting a stock trading platform, it’s best to think about the long-term, by assuming that you will use that same broker for many years to come. With this in mind, choosing a company with good customer support is important.
Most brokers offer phone support, and may also have email or online chat support. Some just offer routine support, to fix issues or answer questions. Others offer actual investment guidance, helping new investors select asset classes and build their portfolios.
Interface and apps
Each trading platform will have a different interface and trading tools. Some are very intuitive and designed for beginners. Others may be more tricky to navigate, but offer advanced charting and far more data for more experienced traders. Some brokers have downloadable desktop platforms with very advanced features, while others are only available in a browser.
For instance, apps like Robinhood are very user-friendly but lack sophisticated analysis tools. On the other hand, established brokerage firms like Interactive Brokers offer extensive tools for experienced traders, but their interface is more complex.
If mobile trading is of interest to you, pay attention to whether or not the broker has a mobile trading app – and which features that app offers. If robo-trading is a feature you want, look for a broker with these advanced algorithmic tools.
The best stock trading platforms
Investors and active traders have many choices when it comes to where to actually conduct trades. The recommendations below consist of the best stock platforms to use, based on a combination of low fees, wide investment variety, good customer service, and user-friendly tools.
A wide selection of investment options, with commission-free trading
Fidelity is one of the largest stockbrokers in the US. It offers many different account styles and investment options, as well as commission-free trades for many assets. Fidelity users can easily trade stocks, bonds, options, ETFs, mutual funds, and more through Fidelity’s platform.
For advanced traders, Fidelity offers a suite of research features and analysis tools. Casual investors and professionals alike will appreciate Fidelity’s wide range of commission-free trading options. There are even a few ETFs and mutual funds with expense ratios of zero, which means they are truly free to invest in.
- Choice of a standard brokerage account, margin account, and various retirement accounts
- Zero commissions for stock trading
- Wide variety of investment options
- Wide variety of low-cost and no-cost index funds
- Advice from financial advisors, if desired
- Higher than average margin rates
- The website can be difficult to navigate
See the full review of Fidelity here.
A full-service broker that also offers access to Forex currency trading
TD Ameritrade is one of the best online brokers. It offers stocks, ETFs, mutual funds, and more, with no commissions on many trades. They offer a variety of account types, including taxable brokerage accounts and retirement accounts.
Plus, the service can be used to monitor real-time Forex data, and actively trade in the Forex market. TD Ameritrade’s Think or Swim Forex trading platform is among its most popular features.
- Forex currency trading
- A wide selection of low-cost investments
- 24/7 support
- Does not support crypto trading (although TD Ameritrade is actively working towards supporting this feature)
See the full review of TD Ameritrade here.
A low-cost broker that also offers a very useful bank account
Charles Schwab is a budget-friendly broker with a wide variety of investment options. Users can trade stocks, ETFs, mutual funds, bonds, and more on the platform. Users can build watch lists to keep an eye on interesting securities, and Schwab also offers investment advice to some clients.
If you prefer to manage all your personal finance needs in one place, Schwab has a variety of financial products, including a bank account. Their bank account is useful for travelers, as it refunds all ATM fees worldwide.
- Wide variety of investment options
- Low costs
- Powerful bank account with a debit card that refunds ATM fees
- Schwab Intelligent Portfolios offers a robo-investor-like experience
- Minimal access to foreign investments
See the full review of Charles Schwab here.
A powerful trading platform for experienced traders
Interactive Brokers is an online brokerage that mostly markets itself towards sophisticated investors and active traders. It focuses on trading of complex instruments, like options, cryptocurrencies, futures, and Forex currencies.
With that said, Interactive Brokers also has a beginner-friendly account, with no commissions on stock trades. They also offer educational resources and research tools, such as webinars and tutorials.
- Very low rates for margin trading
- Trade Forex, cryptocurrencies, futures, and more
- Advanced trading tools
- The interface can be difficult to navigate
- Charges inactivity fees on some accounts
An advanced trading platform for experienced investors
TradeStation is an online broker with an emphasis on serving experienced investors and traders. They offer extensive analysis and research tools, and a wide variety of investment options.
Traders can buy and sell stocks, ETFs, futures, and even cryptocurrencies on the TradeStation platform. TradeStation also offers access to Initial Public Offerings or IPOs.
- Advanced trading tools
- Supports crypto trading and futures
- Good variety of account types, including retirement accounts
- High fees
- Geared more towards active traders than long-term investors
See the full review of TradeStation here.
A solid platform for trading international assets
ZacksTrade is a trading platform that differentiates itself by offering a wider variety of international asset classes. For those looking for global exposure, it could be a good option.
ZacksTrade offers a lot of research tools, as well. Some are free, while others are part of a premium subscription package.
- Good selection of global investments on more than 90 stock exchanges
- Top-notch research tools and subscriptions
- Charges a commission on most trades
See the full review of ZacksTrade here.
A platform geared towards options trading
TastyWorks is a newer broker that specializes in options trading. Most TastyWorks users utilize the platform to trade options and derivatives, although the broker of course also offers normal stock trading.
While TastyWorks focuses on active traders, they also offer tools for everyday investors, including retirement accounts.
- Good tools for options trading
- Advanced trading platform
- Fast execution speed
- No fixed income trading
- The platform can feel complex for beginners
A slick app-based broker with commission-free trading
Robinhood is one of the pioneers of the world of discount brokers. They were among the first to offer stock trading with no commissions or fees. They now even offer no-commission trades for options. They also support fractional shares, allowing for small investments in any company.
There is a variety of educational material for beginners available, and Robinhood’s app is very user-friendly and intuitive. Robinhood sometimes runs a promotion where you can get a free stock when signing up.
- No commissions on stocks or options trades
- Fractional shares
- Very user-friendly mobile app
- Support for Bitcoin and Ethereum trading
- Limited account types
- Minimal customer support
See the full review of Robinhood here.