Exploring the Finest Digital Brokers and Trading Platforms in January 2024
Explore advanced functionalities offered by online brokers and trading platforms for seamless financial transactions and investment opportunities.
An all-encompassing, impartial evaluation of top-tier online brokerage options
After meticulous research, Fidelity Investments emerges as the ultimate online brokerage platform, excelling in affordability, industry-leading full-service features, robust tools, and beyond. Our assessment spanned 25 online brokers, scrutinizing them on 66 criteria, including fees, account services, user experience, and additional features.
- 2024's Premier Online Brokerage Accounts and Trading Platforms
- Top Choice Overall: Fidelity Investments
- Leading Broker for ETFs: Fidelity Investments
- Prime Broker for Low Costs: Fidelity Investments
- Top Pick for Beginners: TD Ameritrade
- Prime Pick for Mobile: TD Ameritrade
- Optimal Choice for Advanced Traders: Interactive Brokers
- Ideal Selection for International Trading: Interactive Brokers
- Top Spot for Options: tastytrade
Fidelity Investments: Unrivaled in Overall Excellence, ETFs, and Low Costs
Reasons for the Endorsement
Fidelity maintains its multi-year dominance as the supreme choice for overall excellence and low costs, now also securing the top position for ETFs, surpassing Charles Schwab. Fidelity delivers a comprehensive experience to both institutional and retail investors, offering sophisticated tools through an intuitive workflow, all at a cost-effective price.
Pros & Cons
Pros
- Dedication to eliminating common account fees
- Robust portfolio analysis and account features
- Exceptional order execution
- Empowering the Active Trader Pro platform
- Direct indexing
- Trading fractional shares in over 7000 U.S. stocks and ETFs
Cons
- Slightly higher broker-assisted trade fees
- Minimum balance for some index trading
- Access to all tools may require multiple platforms
- Overview
Fidelity reigns supreme overall, excelling as the best low-cost broker and top broker for ETFs. Its continuous product enhancements, robust customer support, unmatched value, and extensive research and educational resources contribute to its top position. Based in Boston, Massachusetts, Fidelity, founded in 1946, boasts $4.4 trillion in discretionary assets as of December 2022, ranking among the top brokerage firms.
Fidelity's Financial Evolution: Unveiling Digital Innovations, ETF Triumph, and Client-Centric Advancements in 2022
Keen to enhance its financial products, Fidelity introduced a Digital Assets Account (DAA) in 2022, facilitating access to Bitcoin for plan sponsors. The company also launched Fidelity Crypto Industry and Digital Payments ETF (FDIG) and Fidelity Metaverse ETF (FMET).
Institutional tools like Fidelity Bond Beacon saw expanded accessibility. Fidelity's commitment extends to individual investors, introducing Fidelity Managed FidFolios for digital direct indexing accounts with fractional shares, and enhancing the mobile experience with a redesigned app dashboard.
After fierce competition, Fidelity outshone Charles Schwab as the best broker for ETFs, leveraging fractional share trading. Fidelity's industry leadership in fee reduction, coupled with an extensive customer service network, positions it as the go-to choice for online brokers prioritizing cost-effectiveness without compromising value.
TD Ameritrade: Premier for Beginners and Mobile Users
Reasons for the Selection
TD Ameritrade retains its stature as the optimal choice for beginners and mobile users, owing to its user-friendly platform, extensive educational resources, and outstanding mobile options analytics, research tools, and trading features.
Pros & Cons
Pros
- Diverse product offerings
- Outstanding educational content
- Top-tier trading technology and options analytics across platforms
- Highly capable paper trading platform
- Robust customer support
Cons
- Relatively higher account fees
- No fractional share offerings
- Automatic cash sweep requires opt-in
- Cryptocurrency trading limited to OTC trusts, ETFs, mutual funds, and Bitcoin futures
- Overview
TD Ameritrade stands out as the repeat winner for best broker for beginners and mobile users, offering intuitive platforms, ongoing product enhancements, and a robust charting functionality and portfolio digest feature announced in 2022. Purchased by Charles Schwab in 2019, TD Ameritrade, founded in 1975 and headquartered in Omaha, Nebraska, provides a top-tier trading experience across mobile, desktop, and web platforms.
While competitors like E*TRADE and Interactive Brokers present formidable mobile platforms, TD Ameritrade's comprehensive mobile package stands out. Boasting diverse asset classes, renowned customer service, premium research, powerful screening features, and transparent pricing, TD Ameritrade delivers an unparalleled mobile experience. The platform ensures consistency in functionality, accessibility, and flow across various platforms, catering to both novice and experienced investors.
Interactive Brokers: Premier Choice for Advanced Traders and International Trading
Reasons for the Endorsement
Interactive Brokers maintains its dominance as the top choice for advanced day traders and international traders, owing to its expansive range of global assets, advanced analytical tools, and calculators, leaving competitors trailing in these categories.
Pros & Cons
Pros
- Superior order execution
- Contingent orders for every conceivable situation
- Unparalleled range of investable foreign and domestic assets
- Low-margin interest rates
- Highly powerful and customizable Trader Workstation (TWS)
Cons
- IBKR's SmartRouting not available to IBKR Lite clients
- TWS can have a steep learning curve
- No in-platform backtesting
- Interactive Brokers' tiered fee-based pricing can be confusing
- Overview
Interactive Brokers: Pioneering Trading Excellence Since 1978 - A Global Leader in Innovative Financial Solutions
Interactive Brokers emerge as the unparalleled choice for sophisticated and international traders, blending an extensive array of global assets, cutting-edge trading technology, and rich research capabilities. With 2.43 million client accounts and $1.92 million in daily trade values, IBKR stands as a stable, well-capitalized, publicly traded broker.
Trailblazing Trading Solutions since 1978 – A Global Hub for Comprehensive Market Access and Innovative Tools
Founded in 1978 and headquartered in Greenwich, Connecticut, Interactive Brokers pioneers the use of computers in trading, now offering access to 150 markets and supporting trading in stocks, options, futures, currencies, bonds, funds, crypto, and more across 200 countries. Recent innovations include market rate interest on uninvested cash, the IBKR GlobalTrader mobile app, and fractional shares trading for European shares and ETFs.
For international traders, TWS provides access to financial markets and assets across desktop, web, and mobile versions, including IBKR Mobile and the IBKR GlobalTrader app. TWS stands out with its superb design, integrating technical analysis, social sentiment, fundamental research, and financial calculators seamlessly, offering unmatched capabilities to capitalize on price inefficiencies.
tastytrade: Optimal for Options Trading
Reasons for the Selection
tastytrade earns the title of the best options trading platform, excelling in tailoring tools and content for its options-focused clientele. Its capped commission structure for options positions it as the most cost-effective choice for high-volume, high-frequency option traders.
Pros & Cons
Pros
- Capped commission structure for options
- Highly regarded tools for analyzing and monitoring options trades
- Superb options-specific content and educational material
- Recent dashboard improvements enhance the trading experience
- Follow Feed feature enables users to track trades of tastytrade's TV celebrities
Cons
- Limited investment options
- Sparse investing and retirement resources
- Weak portfolio analytics
- Overview
tastytrade secures its position as the premier broker for options trading, presenting an industry-leading mix of options-focused tools and content. Launched by tastytrade as tastyworks in 2017 and headquartered in Chicago, Illinois, the platform, created by the minds behind TD Ameritrade's thinkorswim® application, offers competitive fees for options trading.
tastytrade's capped commission structure for large lot sizes and zero commissions for closing positions distinguish it as the most cost-effective choice for high-volume, high-frequency option traders. The platform seamlessly integrates options analytics, efficient workflow, and swift trade execution, standing out among competitors.
Acknowledging customer demand for social trading, tastytrade allows real-time tracking of individual traders and replication of strategies employed by others. While maintaining top-notch customer service and unparalleled options-related educational content, tastytrade stands out as the optimal choice for advanced options traders, surpassing competitors in mobile options trading.
Final Verdict
In the vast landscape of online brokers, profitability hinges on trading activity, yet the best platforms rise above mere transactional success. They provide robust customer support, extensive research and analytical tools, expansive education content, diverse asset offerings, and transparent fee structures. After a meticulous evaluation, Fidelity emerges as the epitome of excellence, excelling in ETF investing and cost-effectiveness.
TD Ameritrade's platform, enriched with resources, caters to both beginners and experienced investors, delivering a best-in-class mobile experience. For those venturing into the most advanced trading realms, Interactive Brokers offers an unparalleled global platform.
Comparing the Elite Online Brokers
Why You Can Trust Our Assessment
At Investopedia, we compiled essential data from 24 online brokers, identifying key factors crucial to investors. This data formed the foundation for unbiased, comprehensive reviews, ensuring our readers make informed decisions aligning with their investment needs.
Choosing a Brokerage Account: A Guide
Selecting an online broker demands consideration of immediate needs as an investor or trader. For beginners, a broker offering robust educational material is crucial. Some brokers even allow paper trading before funding an account, facilitating platform familiarization without real capital risk.
Frequently Asked Questions
What Is an Online Brokerage Account and How Does it Work?
An online brokerage account mirrors a financial account, akin to a bank account. You deposit funds with an investment firm, usually via a transfer from your existing bank account. Once funded, you leverage the brokerage's trading platform to invest in a range of assets, including stocks, bonds, ETFs, and cryptocurrency.
Your online brokerage account displays your holdings and cash balance. Gains from asset sales are deposited in the account, enabling further trades or fund transfers. While risks exist, the Securities Investor Protection Corporation offers protection to brokerage cash accounts.
How Much Money Do You Need to Start Investing?
Today, there's no strict minimum to start investing, with many brokers waiving minimums on taxable and retirement accounts. Fractional shares and diverse asset classes enable account opening and funding with any amount. Consistency, especially with smaller sums, is key to wealth building.
Can You Invest With a Small Amount of Money?
Several brokers accommodate small deposits, making investing accessible. While some brokers may impose minimums, fractional shares and diverse asset options allow investing with limited funds. Consistency in contributing even modest amounts fosters steady wealth growth.
Do Brokers Offer Mobile Platforms?
Many brokers provide robust mobile apps, offering features akin to desktop platforms. TD Ameritrade, E*TRADE, and Interactive Brokers present exemplary mobile options catering to traders' needs. A broker's mobile capabilities often influence users' overall experience.
Can You Lose Money in a Brokerage Account?
Yes, investing involves risks, and losses can occur. Prudent decision-making, guided by extensive research and risk tolerance assessment, mitigates potential losses. Securities Investor Protection Corporation insurance protects brokerage cash accounts up to $250,000.
Can I Buy Stocks Without a Broker?
While unconventional, buying stocks without a broker is possible through direct stock purchase plans offered by some companies. These plans, once a way to bypass brokerage fees, have become less common with the rise of online brokers offering zero fees.
What Is the Difference Between Investing and Trading?
Investing entails long-term asset holding to gradually build wealth and achieve financial goals. Trading involves short-term strategies, such as daily or monthly trades, maximizing returns on a short-term basis. Investing is generally considered less risky than trading.
Choosing an online broker involves evaluating individual needs, preferences, and goals. For comprehensive guidance on selecting a broker, refer to our guide on choosing a stock broker. Once a decision is made, consult our guide on opening a brokerage account for seamless account setup.
Companies We Reviewed
Our research spanned 24 online brokers and trading platforms, culminating in the identification of four top-tier companies. Detailed reviews for each company, providing deeper insights, are accessible below:
How We Picked the Best Online Brokers and Trading Platforms
Investopedia's commitment to unbiased, comprehensive reviews led us to revamp our review process. Customer surveys, combined with subject matter expertise, formed the basis of a quantitative ratings model. We weighed key factors like trading technology, offerings, mobile app usability, research amenities, educational content, customer support, costs, account features, and overall trading experience.
A team of researchers gathered 2425 data points, weighting 66 criteria across 25 reviewed companies. Live demonstrations and hands-on testing further enriched the assessment process, ensuring the compilation of an accurate and reliable list of the best online brokers and trading platforms.