Best Online Brokers of 2018

Let’s get this out of the way. There is no one best online discount broker for everybody. What will be the best choice for you will depend on many factors. And what works for you may not be the ideal option for somebody else.

We’ve used a number of brokers, including Scottrade, Ally Invest, OptionsHouse, Motif, Vanguard, and several robo advisors. We’ve compiled this list of the best online brokers based on personal experience.

Best Discount Brokers

Let’s start with our top picks by category. Then we’ll look at each option in more detail.

Betterment – Betterment is not your typical discount broker.  They’re a robo advisor that advertises a simple free structure to your investments.  The fee to invest with Betterment is 0.25% annually.  If you want to take advantage of their CFP’s, they have a Premium plan that requires a minimum of $100,000 invested and a fee of 0.40%

However, there are no trading fees or other fees associated with your account.  Experts choose the investments and Betterment is confident in average annual returns much greater than the fees they charge.  As a bonus, Betterment is offering new account holders some time without fees. The length of time depends on the dollar amounts invested

• one month free for $15,000 deposited
• six months free for $100,000 deposited
• one full year free for $250,000+ deposited

Ally Invest – Ally recognized that TradeKing was one of the greatest online discount brokers and decided to gobble them up.  Not only can you trade with Ally, but you can also open up an online savings, check and CD accounts with the big bank.  Stock trades cost a very low $4.95 per trade and contracts will run you $0.65.  Ally Invest also offers a robo-advisor service for those who aren’t looking to invest themselves.

Unfortunately, Ally Invest does not currently offer any sign-up incentives.  They also do not offer a fee free ETF’s. So while this is a terrific option for low cost trades and robo investing, it lacks a few of the finer details you can find elsewhere on this list.

E*Trade – One of the few online discount brokers that offer volume based pricing, E*Trade was the very first online broker I used back in 2005.  If you’re a high volume trader, trading 30 or more times per quarter, a stock trade is $4.95.  Low volume traders will pay the rate of $6.95 per trade. Options contracts also offer volume pricing, with contracts costing $0.75 a piece at the low volume threshold and $0.50 a piece at the high volume threshold (again, 30 trades per quarter).

There is a $500 minimum to open your E*Trade online discount brokerage account and for a limited time, new accounts can trade commission free for 60 days on a deposit of $10,000 or more.  For those wondering why OptionsHouse didn’t make our list; that platform was sold to E*Trade last year.  The conversion is now complete, so anyone who owned an OptionsHouse account is now a proud member of E*Trade.

Fidelity Investments – If you can make at least 36 trades per rolling 12 month period, Fidelity Investments offers my favorite trading platform -Active Trader Pro.  It has the most advanced trading features for both mobile and desktop users.  You’ll also have access to dedicated trading specialists.  The minimum to open a Fidelity Investments account is $2,500 which is a bit high compared to the $500 minimum most others require.  Their costs are simple: $4.95 per stock trade and $0.65 per option contract.

Fidelity Investments kicks off new account holders with the promise of free trades.

• Deposit $50,000 and earn 300 free trades for the first TWO years
• Deposit $100,000 and earn 500 free trades for the first TWO years

Fidelity also offers a wide variety of other accounts, including deposits, credit cards and bill pay.

TradeStation – Straight forward, discount pricing is what you can expect with TradeStation.  All stock trades are $5 and all options contracts cost $0.50.  There are no software fees, no additional trading fees to speak of.  TradeStation includes a top notch trading platform, mobile app and Radar Scanner.  With Radar Scanner, you’ll have the ability to look through a thousand ticker symbols at once, real-time to find patterns and trading opportunities.

One feature that stands out is that for customers who open an account with $500,000 or more, TradeStation will pay a 0.40% APY on the balance of your account.  Most every other discount brokers offers little to no APY on your deposited funds (I could find none greater than 0.01%).  This interest-sharing program is set to expire on December 31st, 2017.

Beyond this feature, there is currently no up-front incentive to open a TradeStation account.

TD Ameritrade – TD Ameritrade offers it’s clientele stock trades for $6.95 a piece.  Options trades will cost $0.75 and if you’re in need of a broker, assisted trades run the rate of $44.99.  Perhaps the greatest feature of owning a TD Ameritrade account is use of their Trade Architect technology.  You’ll have access to streaming news, trading specialists and level two quotes using this platform.

TD Ameritrade offers a great up front bonus for new account holders.  Depending on the amount of your initial deposit, you’ll be rewarded with:

• Free trades for 60 days on a deposit of $3,000
• $100 + free trades for 60 days on a deposit of $25,000
• $200 + free trades for 60 days on a deposit of $100,000
• $300 + free trades for 60 days on a deposit of $250,000

Capital One Investing – What used to be known as ShareBuilder is now Capital One Investing.  After their purchase of ING, Cap One has launched itself into the online discount broker space with a terrific sign-up bonus. Depending on how much you’re willing to open your account with, you stand to earn between a $50 and $600 cash bonus.  The breakdown of the bonuses (with promo code GET600M17) earned are as follows:

• $5,000 deposit earns a $50 bonus
• $15,000 deposit earns a $100 bonus
• $50,000 deposit earns a $200 bonus
• $100,000 deposit earns a $300 bonus
• $200,000 deposit earns a $600 bonus

If however you cannot meet any of those initial deposit amounts, fear not.  Capital One is also offering a free $50 for new account holders after they make their first trade.  When signing up, use promo code M50FT17.

There is no minimum to open a Capital One Investing account and the cost per trade is a play $6.95.  Options contracts will run you $0.75 per contract plus the base commission and if you dare, they’ll offer you a margin rate of 7.75%.  Capital One Investing trading account has no account fees or annual fees.

How to Pick A Discount Broker

Here are the seven key factors to consider:

1. Cost: The cost of trades is crucial for active traders. Here you want to find the lowest cost broker for the types of trades you make. For those who trade infrequently, like me, the cost is less important.
2. Trading Frequency: This relates to cost, but it also relates to ease of use. Frequent traders spend a lot of time on their broker’s website. It should be easy to use.
3. Tools: For technical traders, tools are critical. This is where it’s important to understand the type of investor you are. So you can be sure to get the tools that are most useful to you.
4. Simplicity: This is the most important feature in my view. You want an online broker that’s easy to use.
5. Types of Investments: Here it’s important to understand the types of investments you’ll be making. Do you want to invest in mutual funds and ETFs? Or will you be doing a lot of options trading? The answer to questions like these will often dictate which broker is best for you.
6. Control: Simplicity and control are often mutually exclusive. A robo advisor gives you limited control, but wonderful simplicity. Interactive Brokers, in contrast, gives you wonderful control but far more complexity. There is no “right” answer here. It again depends on the type of trader you are.
7. Account Type: Most brokers offer all of the basic account types, including various retirement accounts. If you are a small business, be sure to make sure they offer the account type you need. Examples include SEP IRAs and Solo 401ks.

Since I am not an active trader, I don’t actively seek out new discount brokerages. If you have experiences you’d like to share, please leave comments below.