Top 10 Stock Brokers for 2019 Compared
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These days online brokers are far more than just websites that give you the ability to enter buy and sell orders. Actually, many of the best brokerage firms now offer sophisticated online trading platforms. These trading platforms are even comparable to the systems used by professional traders. You don’t necessarily have to use a broker to buy and sell shares. However, it’s certainly a lot easier to do so with an online broker. Just try Googling “how to buy stocks online without a broker”, and then decide if you really want to do your trading without a broker.

Online Trading / Online Broker
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So, once you have decided to open a brokerage account, you’ll need to choose a broker. Before rushing out to open an account, it’s worth familiarizing yourself with the ways one broker may differ from another. This guide will help you understand some of the factors to consider when choosing an online broker.

What is an online broker?

Stock Broker Team
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Traditionally stock brokers were members of stock exchanges and executed trades on behalf of their clients. The structure of the market has changed a little over the years, but essentially the service a broker offers is still the same. The difference is that instead of taking an order over the phone and then physically going onto a trading floor and executing the trade, an online broker uses a secure website to capture your order and then routes that order to an exchange server where it is automatically executed. The other important function of a broker is providing their customers with live stock prices (real time quotes), including the price of the last trade, the highest and lowest prices of the day, and the prices of the best bids and offers. These are essential pieces of information for anyone engaging in online trading. An online stock broker will also provide lots of other trading tools to make life easier. All broker websites will give their clients up to date stock trading account values, the profit and loss for each position, and the amount of cash they have available to trade. Most brokers also offer tools such as charts and watchlists to help traders make decisions. Some also offer research, the ability for clients to trade with leverage (margin trading) and sell stock short (short selling). Stock brokers are increasingly giving clients the ability to do their online trading in other markets and around the world too.

How to find the best online broker based on your own needs

To find the best online broker for your personal needs, you’ll need to identify the features that are important to you. You can then list all the brokers that offer those features. There are lots of websites that allow you to compare online stock brokers. You can have a look at a few of them to make an informed decision. Some sites are paid to promote certain brokers, so try to stick to factual information, and then check that information on the brokers site. Most online brokers offer a lot of sophisticated looking trading tools. However, these tools may not be ideal for those just starting out with online trading. The best online stock broker for beginners is probably not the one with the most functionality. Too many tools and features may well confuse beginners and lead to prompt them to overtrade. As you compare online stock brokers, you should rather focus on the simplicity of the fee schedule and the amount of educational material available. If the fee structure is complicated, there’s a good chance you will end up paying hidden fees down the line. Any online stock trader will want to be able to look at charts, but these do not have to be complicated. Again, the more tools and indicators, the more chance there is that you’ll get confused.

Best Broker for Social Trading 2019

  1. Etoro

Rating:

4,9/5

Accepts Clients From:

 

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66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

eToro is a trading company that was founded in 2006. Their most important feature is their social trading aspect, which allows users to copy the trends and results of other traders in their platform. eToro is one of the best platforms and up-to-date with regulation with the FCA, CySEC, ASIC. eToro was made massively popular when they added cryptocurrencies CFD to the their portfolio. Nowadays, eToro has its own exchange, and counts with its own blockchain wallet technology, which means users can either trade on their CFD platform, or buy and hold the actual crypto asset in their wallet. eToro counts with over 10,000,000 registered users on its platform, and is currently expanding further to the US Stock Market.

Markets covered by eToro

Commodities Cryptocurrencies

Currencies ETFs

Stocks Indices

eToro’s most important Features:

  • Trade Commodities, Crypto and Crypto (CFD), Forex, Stocks and Cannabis Stocks
  • Trading with Leverage
  • Social Trading
  • Buy or Sell Cryptocurrencies
  • One of the most up-to-date companies with regulation
  • $25 Withdrawal Fees
  • Overnight Fees

eToro’s Payment Methods:

Creating an account on eToro

To create an account on eToro is very straight-forward. First thing you must do is go into the eToro website, and register an account with your personal information. Because eToro is regulated, you need not to worry about sharing your information, as it will only be used as your login credentials and trading purposes inside their platform. After you have confirmed your details, make sure you confirm your e-mail and you will be ready to start trading with eToro.

The Deposit

One of the strong points of eToro is that the new traders can actually create a demonstration account before proceeding into the live market. Once you’ve settled in and got yourself familiarised with the platform, the next step is adding funds to start trading Stocks. Once in the deposit page, you can choose one of the selected methods mentioned above. The minimum amount required in a deposit with eToro is of $250 USD. Once you’ve clicked on the deposit button, you can select your payment method, fill in the details of your preferred payment method and confirm the amount. If everything has occurred smoothly, you should see the funds added in your account.

Getting Started

Now that you have the funds added to your eToro account, you are ready to place your first trade. To do so, click on the ‘Watchlist‘ option in your dashboard, and you should be taken back to the previous screen, which has all the markets listed. If you can’t find a specific market or stock that you are looking for, you can always use the ‘Search‘ function at the top.

Due to eToro’s regulation, you will need to complete your profile, and submit a form of Identity for their KYC/AML procedure. It’s a standard procedure that usually takes 5 minutes to be completed. You can, however, place trades while you await the response.

After you’ve selected your stock of choice, click on the “B” button next to it’s indicator, and you will be taken to the next screen to place the trade. In the example above, we chose Amazon (AMZN) On the next screen, there are 2 factors you need to keep in mind. With eToro, you can trade both in CFD’s or the actual Stock

eToro CFD Trading

The Contract For Difference (CFD) is the representation of the asset, as opposed to the stock. If you choose to trade the CFD, you can trade with leverage, this has more risk as the potential gains are much higher, but so are the losses. With eToro, you can trade with 2x or 5x leverage.

eToro Stock Trading

When you chose a x1 leverage, in this order example you won’t be trading with a CFD, but you will be buying the stock itself via eToro. The biggest difference is the minimum amount required for the trade to be executed. You will need to sign a W-8BEN form to proceed.

A description of the terms above:

  • SET RATE: This is the rate you will choose to open a trade to in the CFD market for the stock of choice.
  • AMOUNT: The amount is the actual amount you want to invest from the deposit you made. With eToro’s CFD you can open trades with a minimum of $250
  • LEVERAGE: Leverage is the amount you will be borrowing from the broker to place the trade. In this case it’s 2:1 or 5:1
  • STOP LOSS: Stop Loss is the limit amount you want to set for the trade to close automatically. In case it goes under that, it will close the order
  • TAKE PROFIT: The place will close automatically if you set it to close upon reaching a certain profitable limit
  • SET ORDER: This button is to execute a trading order

Once you have executed your stock trading order, then you will be able to monitor your trades under your “Portfolio” section of the account.

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66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Other Recommended Brokers

24Option

Rating:

4,5/5

Accepts Clients From:

 

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24option.com is a multi-trading platform, that provides different trading options for their users. If you’re a soccer or football fan, you will probably have seen that 24Option sponsors the club Juventus. 24Option is actually improving in its educational concept, and they now have an educational hub, providing tools and a library of seminars, webinars, and daily news.

As a company of Richfield Capital Limited, 24 Option is regulated by CySEC under the license number 207/13. 24Option was actually one of the first brokers to introduce CFDs trading with cryptocurrencies in the market. Unlike eToro, 24Option only offers trading in the financial markets with CFD and Binary Options.

Markets covered by 24Option

Commodities (CFD) Cryptocurrencies (CFD)

Stocks (CFD) Indices (CFD)

Currencies

24Option’s most important Features:

  • Trade with CFD on Commodities, Crypto, Forex, Stocks and Cannabis Stocks
  • Trading with Leverage
  • CySEC regulated
  • Live Chat
  • Advanced Trading Platform
  • Education Hub
  • Inactivity Fees
  • Overnight Fees
  • Too many Different Account Types
  • High Spreads

24Option’s Payment Methods:

Markets.com

Rating:

4,5/5

Accepts Clients From:

 

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Founded in 2008, Markets.com is owned by Safecap Investments Limited and is a subsidiary company of Playtech which is one of the leading brokers in the Forex industry.

Their platform is regulated by CySEC, FSCA, and ASIC and is also considered as one of the most reliable brokers in the world.

Their platform counts with over 5 million registered users accounts, and is mostly known for offering more than 2000 instruments to choose to trade and its $100 USD minimum deposit.

Markets covered by Markets.com

Commodities (CFD)  Cryptocurrencies (CFD)

Currencies ETFs

Shares (CFD)  Indices

Market.com’s most important Features:

  • Trade more with CFD more than 2000 instruments on Commodities, Crypto, Forex, Stocks, Bonds, ETFs
  • Trading with Leverage
  • CySEC and FSCA regulated
  • Advanced Trading Platform
  • $100 minimum deposit
  • Multiple language support
  • ECN trading unavailable
  • Only LiveChat support

Market.com’s Payment Methods:

Special Brokers

Online broker for active traders

TD Ameritrade

TD Ameritrade

For over 40 years TD Ameritrade is offering powerful trading tools and professional guidance to traders and investors. This online broker has everything that active traders or long-term investors need. TD Ameritrade provides customers with web, mobile, and downloadable trading platforms, stock research, real-time quotes, access to various markets and much more.

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Online broker for professional traders

Interactive Brokers

Interactive Brokers

Interactive Brokers is the ideal online broker for professional traders. IB gives you direct market access to stocks, options, futures, forex, bonds, everything from one account with an industry-leading commissions schedule for higher returns. With IB you can optimize your trading speed and efficiency with a powerful suite of trading platforms, advanced algos and trading tools.

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Options trading online broker

E*Trade

E*TRADE

With E*TRADE you’ll have access to powerful, yet easy-to-use tools to research ideas, test strategies, and trade various markets and instruments. With their award-winning OptionsHouse platform you can enjoy a powerful trading experience on any web browser or tablet. In addition, E*TRADE has some of the lowest fees in the market so you can invest in what you want, whenever you want.

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Other Types of Online Brokers

Best Brokers for Day Trading

Day trading is the buying and selling of any financial instrument on the same trading day and is characterized on the closing of all positions by the end of the trading day.  The day trading strategy suits speculators who aim to earn a profit on short term price fluctuations. Unlike day trading via exchanges that require a commission for any transaction, CFDs brokers do not charge any fee other than a buy/sell spread.

eToro is one of the leading day trading brokers in the industry providing over 150 financial instruments including shares, indices, forex, ETF’s commodities, and crypto. One of the advantages of eToro as a day trading platform is their social/copy trading feature that allows you to connect, interact and copy with other successful day traders.

Best Brokers for Forex Trading

Best Brokers for Forex Trading

Forex trading is the exchange of one currency for another based on factors that can signal the pair’s direction. Forex trading, also known as foreign exchange trading, occurs on a decentralized global market where all the currencies are being traded.

1. eToro

eToro offers day traders 47 currency pairs including all majors and minors pairs. Perhaps the biggest advantage of eToro is the platform’s technology that gathers all the necessary tools for a day trader.

The platform’s tabs for each currency pair include a feed that allows users to see other investors’ comments and suggestions, the pair’s stats, and a chart.

2. Forex.com – Best for US Residents

Over the years more and more individuals have become interested in becoming part of the forex market, while access to the market has been relatively accessible in Europe and Asia, in the US the story has been completely different. Due to a very strict and demanding regulator, not many firms have gotten access to offer their services to US residents.

Seen a broker offering forex trading in the US is more meaningful than in Europe, it is literally harder than achieving a licensed bank in most European countries. Forex.com is one of the few companies with an active forex license in the US. The reason for the success of this firm is all the backing they receive from their parent company, Gain Capital. Starting a new company is easy when you are one of the largest prime brokers in the country. 

Keep in mind that one of the key elements that will determine your success in the markets is who is your broker, your main goal is to always aim for a company that will take care of you and your business. Reliability is one of the biggest issues most individuals have with forex brokers, you need to be comfortable knowing that when the time comes you will be able to get in or out of trades lightning fast! 

If you are interested in learning about forex and you are a US Citizen or Resident, you should look at Forex.com as one of the best options you will find in the market. 

Please be aware that as a prime broker the company offers a package on which pricing and fees are pegged to the volume traded, this means that your trading activity will determine how much your spread and commissions are. This is a great benefit for anyone operating with a very active strategy as prices will drop considerably. 

Best Brokers for Penny Stocks

Most CFD brokers do not provide the opportunity to trade penny stocks as they usually offer the most popular and liquid stocks. A Penny stocks refers to a small share of a company that trader below $5.

eToro offers several penny stocks trading through contract for difference trading. On the eToro platform, choose the trade markets on the left menu and search for one of the listed penny stock eToro offers.

etoro stocks page

Now, you can enter the stock’s page and research the company through the feed, stats and chart tabs.

eToro stock page

In order to purchase the stock, click the Trade button and a new window will open up.

eToro buy stock

In this window, you can choose the order type (market order, limit order) and the number of shares you want to purchase. Remember that this is a leverage transaction, meaning you do not need the whole amount of the transaction.

Best Brokers for ETFs

An exchange-traded fund is financial security traded on exchanges similarly to shares trading. An ETF is a basket of securities that tracks stocks, bonds, commodities or any other financial asset with the intention to diversify and reduce the risk of the investment.

  1. Etoro

For those who are searching for a CFD broker that provides ETF’s, eToro is a perfect choice. The broker offers 83 ETF’s across different types of assets and regions.

eToro etf's

Trading ETF’s with eToro provides a trader to leverage the capital and by that creating a diversified portfolio with a relatively low amount of investment.

2. TD Ameritrade – US Friendly

TD Ameritrade offers a professional way to trade ETF’s. With more than 300 commission-free ETF’s, advanced tools, ETF’s education resources and two different trading platform (web and desktop), TD Ameritrade is a good choice for those who wish to trade ETF’s. Moreover, TD Ameritrade has a very clear ETF’s directory sorted by category, fund family and a market cap that helps traders to find the best ETF to buy.

TD Ameritrade ETF

Best Brokers for Options Trading

Best Brokers for Options Trading

An option contract is an agreement between a buyer and a seller to exchange an underlying asset like a security, index, ETF, currencies, indices, and commodities at a predetermined price and on a specific predetermined time. Options trading can be used for many purposes such as hedging, long term & short term investment, and speculation.

1. Ally Invest – US Friendly

Ally Invest is known for its low commission costs in comparison to other brokers in the industry. While most brokers charge $5-$7 for base fee and $0.75 per contract fee, Ally Invest charge only $3.95 and $0.50.

The broker also offers great tools for options trading that include a profit/loss graph, probability calculator, options chain and research and market data. Ally’s options trading platform is web-based and provides all the necessary tools, in particular for day and swing trading.

2. RobinHood – US Friendly

Robinhood is free-trading app that shook up the financial industry in 2018 and recently rolled out options trading with no commissions. Really, commission free.

Take note that Robinhood provides a mobile trading app and does not support a desktop trading platform so the Robinhood commission-free service is mostly suitable for beginners who wish to learn how to trade options or experienced traders that take swing/long term positions.

Decide what type of investor or trader you are

Trading Software
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If you are still learning how to trade stocks online, you shouldn’t rush into choosing a broker. Everyone eventually develops their own trading style. Each strategy and trading style will have different needs when it comes to choosing a broker. You need to determine if you’re an investor (long term investing) or active trader (short term trading). Those concentrating on online investment will need less in the way of sophisticated trading tools and more in the way of fundamental research. Investors can also keep their costs to a minimum if they are not using a lot of the tools offered by a broker. If you are more of an investor, you may want to consider exchange-traded funds and mutual funds instead of active trading. Make sure the broker you choose gives you access to those instruments.

Active Traders
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More active traders often look for liquid markets like forex trading or other markets that are suitable for short term trading. In that case they may want to find a broker that offers currencies and maybe even CFDs on commodities and indices too. Many brokers offer CFDs on stocks, which are great for short term trading as well. However, if you are focusing on longer term stock investing, it’s best to stick to traditional stock trading accounts. More advanced traders often look to options trading to have more flexibility and futures trading to allow them to hedge their positions. If you think you will reach that level, it’s worth considering online brokers that offer trading with options and futures. If you read a few books and articles about online trading or stock trading for beginners, you will probably begin to identify with certain approaches. Until then, it’s worth using demo accounts from a handful of brokers to determine which is the best online stock broker for your own trading style.

Understand each online broker’s requirements

Business Calculation
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Every broker offers a slightly different range of instruments, charges different fees and requires customers to deposit and maintain a specific amount of capital in their online trading account. The best online broker for beginners will cater for those that have a relatively small amount of capital to invest and do not intend to trade very actively, at least in the beginning. This gives beginners time to learn trading while they avoid taking too much risk. You should avoid brokers that entice you to deposit more than you can really afford to put at risk, and that offer bonuses if you execute a certain number of trades every month. Your trading should be dictated by a well thought out strategy and a trading plan, not by incentives to trade more. A dedicated stock broker will usually only offer stocks and perhaps options on stocks. However, as technology has brought the cost of operating an online brokerage service down, many brokers now offer a wider range of instruments. If you are only planning to buy stocks online, it’s usually best to stick to a broker that focuses on stocks. Trading stocks and ETFs is a better way to get started, as forex and commodity markets tend to move faster and require more expertise. You should always choose the markets to trade based on your trading skills.

What software and tools should your broker offer?

Trading Software
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Most online brokers offer a wide range of professional trading tools. However, don’t let that lead you to believe the best stock trading platform is the one with the most tools. At least at the beginning, you’ll only need fairly basic charting functionality. If you do find you need more, there are plenty of free charting tools available on the web. You will also need to be able to view up to date profit and loss values for each position in your trading account. If you are on the go a lot, have a look at each broker’s mobile trading app. These trading apps do allow you to trade when you are away from your desktop. It’s also important that they allow you to view your portfolio and watchlists of live prices on your phone. That way you can keep track of the markets while you’re away.

Mobile Trading Online
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The ability to easily add and remove stocks from a watchlist is a handy feature to have. Most professional traders follow quite a few shares, and it really helps to be able to add and delete stocks quickly. Being able to set trading alerts when stocks on your watchlist reach specific levels is another useful feature to look for. Ideally you will want the trading platform to send you an email or text message when a trading alert is triggered. Some brokers will let you trade through online stock trading software programs that can be plugged into the broker’s API. These systems can be very useful if you know what you are doing, but are best avoided until you learn the basics.

Trading fees and commissions

Trading Fees
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Once you’ve identified the features you would like to see in the best online brokerage for you, and identified some of the brokers that offer those features, you can start looking at trading costs. These days brokers can be roughly split into full service brokers and discount brokers. Full service brokers are similar to old fashioned brokers, and clients usually phone a dedicated broker for advice and to place orders. Discount brokers are far cheaper for online trading, because everything is automated. In most cases trading through a discount broker will cost 15-25 percent of the cost of trading via a full-service broker. These days there is little point using a full-service broker unless you have a really big account. The other thing that has changed is that in most cases commissions are charged as a flat fee, rather than as a percentage of the total trade value. However, fees have also fallen to the point that as long as the value of a trade is over $500 the fee will be quite low as a percentage of the whole.

Is a cheap online broker better?

Trader / Modern Technology
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The online broking industry is very competitive. The trading fees charged by most discount brokers now fall between $4 and $10 per trade. It’s a good idea to make a short list of brokers before you even look at the fees. Then choose the cheapest broker that can offer everything else you need. It’s certainly worth paying two or three dollars more if you are being offered features you really need. However, otherwise there is no reason to pay more. So, while you shouldn’t automatically choose the cheapest online broker, there is no reason to pay more without a good reason. Recently several stock trading apps that offer free trades have been launched. Before choosing one of these free brokerage accounts, ask yourself how they make their money. All brokers are in business to make profits, so if you are not paying a fee for online trading, they are making money in some other way. It’s not necessarily a bad thing. However, make sure you understand their business model and are happy with it before using one of these apps. For active trading clients, some brokers offer discounts if a certain number of trades are made each month. You should first work out how many trades you’ll do, before accepting such a deal. Don’t let a deal like this determine how many trades you will do. There are lots of online stock trading websites and resources that can give you access to the tools you need if your online broker doesn’t offer them. So, the best online trading platform for you, could well be the cheapest option, if you find the trading tools you need elsewhere.

Online broker regulation and security

SEC Regulation
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When looking at an online broker comparison, the last thing to check is if the broker you are choosing is legitimate and properly regulated. Brokerage firms must be regulated by the primary regulator in the country in which they operate. While all proper brokers are regulated, some companies will masquerade as brokers when they are not. That means they will not be regulated and your stock brokerage account won’t be protected by the obligations of properly regulated brokers. Regulated brokers are not allowed to use client funds for their own purposes. In the case of a regulated broker becoming insolvent, client funds up to a certain amount will be protected by deposit protections funds. However, if you are trading with an unregulated company, this usually will not be the case.

A few other factors to consider when choosing a broker

Stock Brokers on Phone
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Depending on your own specific needs there are some other factors to consider before opening an online trading account. By looking at verified online broker reviews you’ll be able to gauge the level of customer service you can expect to receive. This is of particular importance to active traders who will need to have any issues or problems addressed very quickly at any hour of the day. Something else to consider is whether you want to keep your investing and trading activities with the same firm that handles your retirement account or 401(k). While there is nothing to stop you opening another account with another broker, for the sake of simplicity you may want to keep everything with one broker.

Conclusion: How to choose an online broker

Online stock brokers offer a wide array of features and fee structures. It’s worth keeping things simple and choosing a broker with a good reputation, only the features you really need and a reasonable fee structure, rather than being drawn in by a platform with all the bells and whistles – especially when you are starting out. What are your thoughts on choosing an online brokerage firm? What’s your favorite online broker? Please let us know in the comments below.

About the Author:

Richard Bowman

Richard Bowman is a writer, analyst and investor based in Cape Town, South Africa. He has over 18 years’ experience in asset management, stockbroking, financial media and systematic trading. Richard combines fundamental, quantitative and technical analysis with a dash of common sense.

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