8 Best Online Stock Brokers for 2022

Are you in the market for a new online stock broker? Or are you new to investing and want to start with the best online stock broker around?

The best online stock brokers offer opportunities to invest in the assets you want with the lowest fees possible. Some offer automated and assisted investing, while others are specialized for do-it-yourself (DIY) investors.

To help you pick the best online stock broker for your unique investment needs and goals, we took a look at the most popular brokerage firms around to help you zero in on the right investment company for 2022 and beyond.

Best Online Stock Brokers at a Glance

• TD Ameritrade – Best for Active Traders (Mobile)
• Interactive Brokers – Best for Active Traders (Desktop)
• E*TRADE – Best for Fee-Free Mutual Funds
• Charles Schwab – Best for General Investing
• Robinhood – Best for Low-Cost Options Trading
• Fidelity – Best for Retirement
• M1 Finance – Best for Automated Investing
• SoFi – Best for New Investors

TD Ameritrade – Best for Active Traders (Mobile)

What makes it great: TD Ameritrade is a top choice among active traders thanks to its Thinkorswim platform. While beginners and passive investors should find the main TD Ameritrade apps for desktop and mobile suitable, active traders will want to upgrade their experience with Thinkorswim, available to all users at no extra cost.

Thinkorswim mobile includes all desktop features, including customizable charts, live news, and live help with your trading strategy inside the app. It also has a free paper money (virtual trading) account to test your strategy risk-free.

Potential drawbacks: TD Ameritrade still doesn't support fractional shares. Also, it's no longer accepting new clients to its robo advisor service (Essential Portfolios) and has begun referring advisory clients to its parent company, Charles Schwab. So if you're looking for a broker that can handle both your active and passive investing needs, TD Ameritrade may not be the best fit.

Commissions and fees: TD Ameritrade offers most trades and accounts with no commissions or ongoing fees. Like competitors, mutual funds are not always free, and options require a per-contract fee ($0.65). Phone and broker-assisted trades require a fee, as do other less common needs.

Pros:

Cons:

Sign Up to TD Ameritrade | TD Ameritrade Review

Interactive Brokers – Best for Active Traders (Desktop)

What makes it great: Interactive Brokers is powerful enough for Wall Street investors managing institutional investment accounts. As an individual trader using the IBKR platform (the consumer version). IBKR Lite and IBKR Pro come with different pricing better suited for different types of investors, but mostly similar features.

The trading platform is top-notch and could make you feel like you’re in a fast-paced movie about the stock market. It supports a huge number of investment types with competitive pricing. It offers investor APIs, bots, and automations. This firm can meet the needs of any expert investor.

Potential drawbacks: IBKR may seem a bit overwhelming for beginners. With so many trading features and tools, the more complex platform is best for those with experience who intend to maintain their investment accounts actively.

Commissions and fees: IBKR Lite includes most features with no recurring fees or commissions for most orders. Fixed options trades cost $0.65 per contract with a $1 minimum. IBKR Pro has a more complicated pricing structure and is best for highly active traders.

Pros:

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Sign Up to Interactive Brokers | Interactive Brokers Review 

E*TRADE – Best for Fee-Free Mutual Funds

What makes it great: E*TRADE offers 4,400+ no-load, no-transaction fee (NTF) mutual funds. That's one of the largest lists of free funds that you'll anywhere today. E*TRADE's has a beginner-friendly platform as well as a robust trading platforms, called Power E*TRADE Pro. Both platforms are easy to use on mobile.

As a full-service brokerage, E*TRADE offers investments in stocks, ETFs, options, bonds, and futures. You can choose to open a regular, taxable brokerage account or an IRA, Individual 401(k), or Profit Sharing Plan. And E*TRADE also offers a robo advisor service, called E*TRADE Core Portfolios that's available to clients with balances of at least $500

Potential drawbacks: It's honestly hard to find things to complain about with E*TRADE. But if we're being picky, the lack of support for fractional share trading disappoint some traders, especially those with smaller account balances. Also, you'll need to look elsewhere if you're wanting to trade crypto in addition to stock market assets.

Commission and fees: Stock, ETFs, and options trade commission-free at E*TRADE. There's a per contract options fee that start at $0.65 but reduces to $0.50 if you make more than 30 trades per quarter. Futures cost $1.50 per contract and E*TRADE's Core Portfolios come with an advisory fee of 0.30%.

Pros:

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Sign Up to E*TRADE | E*TRADE Review

Charles Schwab – Best for General Investing

What makes it great: Charles Schwab is a tremendous all-around investment firm. It’s suitable for new and passive investors as well as highly active traders thanks to a combination of low pricing, a wide selection of investments, multiple trading platforms, and nearly any type of investment account you could want.

One standout product for new and passive investors is Schwab Intelligent Portfolios. This no-fee robo-advising platform handles your investments for you based on your investment profile and goals. It’s also noteworthy for offering both basic and professional-level trading platforms. The upcoming merger with TD Ameritrade is also good for Schwab users, as it comes with the highly-rated Thinkorswim investment apps.

Potential drawbacks: There are a few places where you might find Schwab doesn’t meet your needs. For example, while fractional shares are supported, the list is limited, and you can’t schedule recurring buys, like a weekly recurring purchase of a favorite stock or ETF. It also comes with meager interest rates for cash, including its otherwise excellent “high yield” online checking and savings accounts.

Commissions and fees: Most trades are commission-free, and most accounts have no recurring account fees. Options require a $0.65 cent per contract fee but no base commission. Schwab offers a vast list of mutual funds with no trading fees, but others require a commission. Over-the-counter (pink sheets or unlisted stocks) require a trading fee, and you’ll pay $25 extra per trade for broker assistance. There are some additional fees for other, less common activities.

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Our Charles Schwab Review

Robinhood – Best for Low-Cost Options Trading

What makes it great: When Robinhood launched in 2013, it disrupted the industry with its commission-free stock trading. Today, that's basically the price of admission if you want to be competitive an online stock broker. However, options trading is one area where Robinhood still undercuts most of its competitors. Not only does it charge no commissions on options, but it doesn't charge any per contract fees either.

Robinhood is optimized for mobile and active traders, though it could also work for long-term investors looking to avoid fees standard at other online stock brokers. Customers can optionally upgrade to Robinhood Gold for $5 to access additional features, including margin borrowing and instant deposits up to $50,000.. And unlike several names on this list, Robinhood also supports crypto trading – although at present only seven coins are tradable on the platform.

Potential drawbacks: Robinhood doesn’t support mutual funds, which is a drawback for some investors. It also requires a $5 monthly charge for all market data and research access. The biggest drawback of Robinhood is a history of outages and regulatory missteps, though it seems those issues may now be resolved. Regardless, it’s good to be aware before signing up.

Commissions and fees: Robinhood doesn’t charge any commissions or fees on trades. The only fee customers can incur is an optional $5 monthly charge for Robinhood Gold,  It should also be mentioned that Robinhood relies on the somewhat controversial practice of receiving Payment For Order Flow (PFOF) to monetize its clients' trading activity in lieu of charging commissions.

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Sign Up to Robinhood | Our Robinhood Review

Fidelity – Best for Retirement

What makes it great: Fidelity is another of the biggest online stock brokers in the United States that makes it easy to manage all of your investments under one roof. However, Fidelity stands out from the rest for its retirement accounts and related features. If your main goal is long-term investing, Fidelity could be the best choice.

In addition to low fees accounts, Fidelity offers a set of no-fee ETFs, meaning you can make a broad investment that’s almost truly no-cost. It also supports multiple trading apps for various investment types and goals. The retirement analysis tools are also some of the best around and are free for all customers.

Potential drawbacks: Fidelity doesn’t give us much to complain about. But it should be noted that it doesn't support certain less common assets like futures or crypto. It also charges a relative high fee for assisted trades, but that’s not out of the norm among peers. Expert active traders may also find Fidelity’s platforms limiting compared to others.

Commissions and fees: Fidelity mainly offers accounts with no recurring fees. You won’t pay commissions on most trades outside of fixed income securities and a $0.65 cent per contract fee for options. Fidelity also features four index mutual funds with 0% expense ratios. Broker-assisted trades will set you back $32.95.

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Our Fidelity Review

M1 Finance – Best for Automated Investing

What makes it great: M1 offers a suite of tools that are perfect for automated investors, including experts who want to maintain a specific portfolio and beginners who want a primarily hands-off experience. It is also notably fee-free for most investing needs outside of some investment-specific management fees.

The highlight of M1 is its portfolio experience, which is managed using an interface called Pies. You can choose an expert-curated Pie or customize your own. The system works to keep your portfolio balanced to that target allocation, including stocks and ETFs. It supports several popular account types and offers banking and lending products in addition to its flagship investment product.

Potential drawbacks: Some features are limited to M1 Plus program members, costing $125 per year. M1 Plus unlocks a second daily trade window (by default all trades go in one batch in the morning), smart transfer rules, and more favorable rates for banking and loan products. M1 Plus is required for custodial accounts. It only supports a limited set of investment assets, with no mutual funds, cryptocurrencies, or options.

Commissions and fees: M1 doesn’t charge any trading commissions or recurring account fees unless you opt-in for M1 Plus at $125 per year. There are some fees for less-common activities and inactive accounts with a balance of $20 or less.

Pros:

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Sign Up to M1 Finance | M1 Finance Review

SoFi – Best for New Investors

What makes it great: SoFi is an excellent brokerage firm for newly active traders. Any digital native, from Gen X to Gen Z, would likely find it intuitive and easy to use even if they have never invested in the past. It makes investing in stocks and ETFs very easy and includes commission-free trades and no recurring account fees.

In addition to a beginner-friendly trading platform, it offers a robo-advisor with no added costs or fees. It also supports cryptocurrency trades and an excellent low-fee banking platform, among other useful financial products and services. The settings for automated, recurring investments are one of the best around, with options for daily, weekly, and different schedules for fractional purchases of any supported stock, ETF, or cryptocurrency.

Potential drawbacks: It supports most common trading and investing needs but doesn’t cover every type. For example, you can’t hold mutual funds at SoFi, and you won’t find every stock on the markets. The types of accounts you can open are also limited compared to some larger online stock brokers.

Commissions and fees: Many users will find the SoFi investing experience completely fee-free, with no commissions and no recurring account fees. There’s a cost for cryptocurrency trades, deducted from orders automatically.

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Sign up to SoFi Active Investing | Our SoFi Active Investing Review

Other Notable Online Stock Brokers

Here are a few more online stock brokers that just missed the cut for our “best of” list but may have specific features that appeal to you:

• Ally Invest: Ally Invest offers both self-directed and automated investing and its options trading platform is one of the most advanced and affordable (options trade for just $0.50 per contract) on the market today. Read our Ally Invest review >>>
• TradeStation: TradeStation is a top brokerage for expert, active traders who want a professional-style investment experience. Read our TradeStation review >>>
• Webull: Like Robinhood, Webull supports crypto in addition to stocks, ETFs, and options. But Webull's trading platform is more advanced and provides an impressive array of technical analysis tools. Read our Webull review >>>
• Firstrade: Firstrade offers a little something for everyone, with a wide range of supported investments and account types with very low fees. Read our Firstrade review >>>
• Public: Public.com allows users to trade fractional shares of stocks and ETFs and also supports crypto trading. The platform also has social features like the ability to make your trades “public” and learn from other traders in your feed. Read our Public.com review >>>
• Vanguard: Vanguard has long been one of the best online stock brokers for passive investors. This is thanks to its low-cost index funds and the rock-bottom advisory fees that it charges for Vanguard Digital Advisor and Vanguard Personal Advisor services. Read our Vanguard review >>>
• Merrill Edge: Merrill Edge could be a great choice for Bank of America (BOA) customers since those with eligible BOA checking accounts can enroll in Preferred Rewards to earn up to a 0.15% discount on Merrill Edge Guided Investing as well as other perks. Read our Merrill Edge review >>>
• JP Morgan Wealth Management: Investors can use J. P. Morgan Self-Directed Investing for commission-free trading for mutual funds, stocks, and ETFs. The company also has a robo-advisor if you prefer. Read our J.P. Morgan Self-Directed Investing review >>>

How Did We Choose These Stock Brokers?

In selecting these investment tools, we had the requirement that they must help:

• Increase your investment returns, OR
• Decrease your expenses, OR
• Improve your asset allocation

We've created the following as a shortcut for your investing needs, but this doesn't mean we didn't fully test out these services. With most of the brokerage accounts listed, we've done an in-depth review. So please also read the full review to find out why these services are on our recommendation list.

How to Choose the Right Online Stock Broker

Choosing the right stock broker for you depends on your particular trading style and goals. So we've compiled these factors to help you choose:

1. Cost Per Trade — Be sure to investigate all costs. Don't get tempted to the lowest commission per trade. Look at fund fees if you're investing in ETFs or mutual funds, as well as any hidden fees like for assisted trades.
2. Minimum Initial Investment Required — Choose an online stock broker with no required minimum or one that requires only a few hundred dollars to start investing.
3. Types of Retirement Accounts Available — Confirm what kind of accounts they offer before you sign up. Do they offer an IRA, a rollover IRA or just traditional taxable accounts?
4. Proper Asset Allocation Guidance — Find a broker that offers asset allocation with a minimum additional charge. For example, if you choose a robo advisor, check to see how their portfolios are invested to see if they are diverse enough for your needs.
5. Easy-to-use Website — Make sure the platform is easy to use and that all fees are clearly defined. You can read our article on the best investment apps for beginners for some of our favorite picks.
6. Direct Investment Advice — Be sure to choose a service that provides a full investment advisory service.
7. Access to Investment Research — Find a discount broker that offers research papers for free.

Get the full, in-depth, criteria list here.

Is Stock Trading Safe?

Generally speaking, it's safe to trade stocks online. But that doesn't mean you'll never be affected by threats. Online stock brokers are doing all they can to minimize those threats.

But as a responsible online trader, you also have to do your part to implement your security measures. Review your broker's security measures, implement your own, and use common sense when trading, and you should come out unscathed.

What Are the Risks of Online Stock Trading?

Unfortunately, there are several risks involved when you trade stocks online, just as is the case anytime you engage in any internet-related activity. Some of the more common ones include:

1. Identity theft. What's not always fully appreciated is the degree to which identity theft is an inside job. It makes perfect sense. People inside an organization have access to your information. When you trade stocks online, the potential is real for an insider to compromise one of your most valuable asset accounts.
2. Computer viruses and malware. Often the main purpose of viruses and malware is to install spyware on your computer. Thieves can use this to gain access to your passcodes and other information. One way they do this is by installing spyware that enables them to engage in keylogging. This allows thieves to track your keystrokes, giving them access to valuable information.
3. Data breaches. There were a record 1,862 data breaches in 2021. That represents an increase of 68% over 2020. To make matters worse, major financial institutions are a treasure trove of valuable information which makes them a gold mine for cyber hackers.
4. Phishing schemes. Thieves have become adept at duplicating official-looking documentation from different financial institutions. In fact, they can copy a webpage or email with exact precision. You can receive a convincing-looking email from what looks like your online broker. But it's really just a copy, directing you to log into your account by clicking a link. But the link doesn't go to your online broker. It goes to a duplicate webpage that's designed to collect your passcodes. Your real account then becomes immediately vulnerable.

How Brokers Protect You in the Trading Process

Virtually all online stock brokers maintain strong security procedures to protect you while you're accessing your account. As well, companies and security experts regularly monitor the online environment for new threats. Most threats, old and new, will be stopped by your broker's security measures.

Common broker security measures include:

• Secure sockets layer (SSL) encryption. This typically includes the use of a 128-bit key to encrypt and decrypt data files. In fact, 128-bit encryption is generally considered unbreakable. It would require a massive computation that could take thousands of years to break.
• Secure servers. Encrypted data is stored behind secure and monitored firewalls, in fully secured facilities.
• Two-step authentication. This feature is an additional login step, over and above your passcodes. It would be best if you took advantage of this step — see below.
• Automatic logout. Your account is set up to automatically log out of your secure session following a period of inactivity. For example, after 10 minutes of inactivity, the platform may ask you if you wish to continue. If you don't respond, it automatically logs you out of your account.
• System monitoring. The financial institution regularly monitors its entire system for potential security breaches and other threats such as malware, fraudulent apps, and phishing schemes.

What You Can Do to Protect Yourself

Even with the best broker-implemented security measures in place, your account can never be completely safe without your cooperation. It would be best if you took the necessary precautions to protect yourself:

• Install good anti-virus and anti-spyware programs on your computer. This will be your best protection against viruses, malware, spyware, and other online threats. It's also important to make sure your security programs are regularly updated.
• Use strong passcodes. Most people create passcodes that are user-friendly. There's a strong preference for passcodes that are easily remembered. Even worse, many users employ the same passcodes across several financial websites. Rather than using easy-to-remember passcodes, create the type that makes no sense at all.
• None of the words or numbers in an effective passcode should be easily connected to you personally. That means don't use family names, street addresses, or common numbers, such as your phone number or your date of birth. Use a mix of both uppercase and lowercase letters, numbers, and symbols. It will be less convenient for you, which is exactly why it will be much harder for hackers.
• Participate in two-factor authentication. This adds another layer beyond your passcodes. Many financial institutions make two-factor authentication available to you. It would be best if you always took advantage of it. It requires you to enter a verification code after entering your passcodes. Your trading app will send you the code by either email or text, and you then type that code to gain access to your online account.
• Guard your account information. Be aware of who's around when you're logging into your account. Never leave your computer unattended when you're logged in. Log out of your account immediately after you're finished. And never leave account documentation where anyone else might find it.

Further Reading: Best Stock Trading Apps and Platforms for Day Trading for 2022

The Bottom Line

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