As a new beginner investor, finding an online broker is the key to successful investing. A good trading platform should be selected based on easy navigation, educational resources, investment choices, and top-tier customer service.
Here are several options to consider, along with a detailed how-to guide that will help you get started on your investing journey.
Best Online Trading Platforms For Beginners 2021
We based our research on many factors. Broker fees and commissions, account opening, customer support, investment options, education and research and much more was considered. Here is the list of the best brokerage accounts for beginners:
- eToro – Best For Beginners
- TD Ameritrade – Best Education for Beginners
- SoFi Investing – Great for Stocks and ETFs
- Firstrade – Great mobile trading app
- Interactive Brokers
- Charles Schwab
- Ally Invest
- Merrill Edge
eToro – Best Broker For Beginners
eToro is an overall winner for beginner investors. The firm is great when it comes to crowdsourcing ideas and copy trading. This brokerage offers web and mobile trading platforms that are easy to navigate. Traders have access to a broad range of trading strategies to copy. This includes forex, CFDs, and cryptocurrencies.
A Demo Account is available with $100,000 in virtual funds.
eToro is pricey when it comes to trading forex and CFDs though. Their research tools are a bit limited.
Free stock and ETF trading
Limited research material
Strong community of traders
Withdrawal and inactivity fees
User-friendly web and mobile platform
Paper trading offered
TD Ameritrade is another great choice for beginner investors. This brokerage stands out with its in-depth research and trading tools.
It provides a seamless mobile app platform for both beginners and experienced day traders. The app features educational resources to help new investors to get started.
The firm offers free paper trading for beginners, as well as excellent 24/7 customer service.
Free stock, options, and ETF trades
No fractional shares
Extensive educational resources for beginners
Well-designed and user-friendly mobile app
24/7 reliable customer service
Paper trading offered
Sofi Active Investing
SoFi Active Investing is aimed at beginner investors. It isn't the best option for those needing in-depth stock analysis.
SoFi offers an easy platform to buy and sell stocks, ETFs, and cryptocurrencies. Fractional shares are also available for beginners starting out on a budget.
That's about it though. For anything else, you'll have to find another broker.
$0 stock and ETF commissions
No mutual funds available
High-quality mobile app platform
No tools for in-depth stock analysis
Low account minimum and fees
Fractional shares and cryptocurrencies
Firstrade provides a user-friendly mobile platform with a great search function for beginners.
The platform features high-quality research with a range of tools, including trading ideas and detailed trading data. There is a great selection of educational tools including videos and webinars.
On the other hand, there is no two-step login feature and price alerts are unfortunately not included.
Free stock, ETFs, and options trades
No 24/7 customer support available
High-quality research and educational tools
No two-step login feature
All mutual funds are commission-free
Charles Schwab offers top-tier research and trading tools. With detailed trading strategies and data available, this broker is best for beginners looking to invest for retirement.
The firm provides reliable and helpful 24/7 customer support in case you need assistance.
On the downside, Charles Schwab only allows you to trade on US and Canadian markets. They also charge high fees for mutual fund trades.
Free stock and EFT trading offered
Available for only US and Canadian markets
Extensive research tools offered
High mutual fund fees
Excellent customer service
Webull's selling point is its mobile app platform. It offers better platform flexibility than most of its competing firms. Beginners will find the platform’s unique community-building features useful for learning.
Compared to competing brokers, Webull is lacking research and educational tools though. The app's trading tools are better suited for active traders than for beginners.
This broker is best for experienced active traders dealing in stocks and options through a mobile app.
Very functional mobile platform
No fractional shares or mutual funds
Suitable for active trading
Limited research and educational tools
Competitive margin rates
TD Ameritrade offers ThinkorSwim as a desktop trading platform. This trading platform easily rivals its competitors.
While it does have a learning curve, ThinkorSwim is a great choice for beginners looking to expand on their trading strategies. It features a powerful charting program with various customization features.
This platform also offers a paper trading account to TD Ameritrade account-holders.
On the downside, the tools for options trading a bit tricky for beginners to navigate.
Steep learning curve for software
Options, futures, and forex available
Option tools aren’t user-friendly
Range of educational tools
Ability to customize the platform
Paper trading offered
Ally Invest aims at both beginner and experienced traders in the US.
The firm offers a wide variety of commission-free mutual funds, options, and ETFs trades. Forex trading is also available with Ally Invest.
Ally Invest exceeds expectations for a discount broker with self-directed portfolio management and various free technical tools.
For futures trading and fractional shares, you'll need to look elsewhere. If you're wanting to trade smaller amounts then Ally Invest isn't the broker for you.
Commission-free trades on a range of stocks, options, and ETFs
Only US markets available for trading
Forex trading offered
No futures and fractional shares
Wide range of educational resources
Strong web-based platform
Automated portfolio management option
Experienced active traders won’t find Vanguard’s old-school style appealing, but this trading platform is a great option for beginners. Vanguard is best for retirement savers and buy-and-hold investors.
The broker’s simple, yet appealing platform allows beginner investors to easily learn and reach their investment goals.
With only 10 technical indicator tools available on its charting software, this is not ideal for active trading. Vanguard also doesn’t offer forex or futures trading.
Strong market research available
No forex or futures trading
Simple platform and mobile app
Small selection of charting tools
Large selection of inexpensive ETFs and mutual funds
Robinhood offers only the basics for beginners. Its strength is in its simplicity and low fees. This broker is best for beginners on a budget who are looking for low brokerage fees.
Robinhood’s bare-bone mobile platform is easy to navigate, which is perfect for new investors. Although there are no educational offerings, so resources will have to be found elsewhere.
The platform offers very little market research and trading tools, which is a downside for more experienced traders.
Very limited educational resources
Very user-friendly platform
Simple to use
Fractional shares offered
E*TRADE is one of the most well-known online discount brokers, but it isn’t the most beginner-friendly.
This brokerage is best for options trading, offering a fast order execution time. The mobile app allows you to easily trade on-the-go.
If you're after a more passive investment approach, then you should look elsewhere. Less frequent traders will face steeper per-contract commission fees.
Two comprehensive mobile apps
Higher per-contract options fees for less frequent traders
Paper trading offered
Only for US citizens
Wide range of research and analysis tools
Prebuilt Portfolio for a fast track to markets
Merrill Edge is another solid option for beginner investors, particularly customers of the Bank of America. It offers top-notch research and analysis tools.
It also provides excellent customer service and a cash-back rewards program. You can sit down face-to-face with an advisor in almost any Bank of America branch nationwide.
Merrill Edge’s margin rates and per-contract fee are on the pricey side. You can't trade options, futures, or cryptocurrencies.
Thorough stock research available
High margin rates and per-contract options fees
Various stock analysis tools offered
No futures trading, futures options, or cryptocurrency
Easy access to customer support
Cash-back rewards program
Acorns is a good stepping stone for beginner investors to build healthy financial habits. With its optional Round-Up feature, every credit card transaction you make is rounded up to the nearest dollar. Your spare change is then invested by Acorn.
While micro-savings is the main appeal, Acorn is great for retirement and custodial investment accounts.
A disadvantage is Acorns’ high management fees. It also charges per ETF transfer, which is surprising for online brokers nowadays.
Expensive management and trade fees
Good educational resources
Unique rewards program
As a leading full-service broker, Fidelity has several managed investment options for beginners to choose from. This includes personalized portfolios and advisory services.
The brokerage provides a premium trading platform as well as research. It boasts commission-free trades of stock, options, and ETFs. Plus, it offers no-fee index funds.
Fidelity doesn’t offer futures or forex trading, which is a downside. The firm also charges high broker-assisted fees.
Commission-free stock, options, and ETFs
High broker-assisted trade fees
Premium research offered
Lack of futures and forex trading
No-fee index funds
Strong customer service
Strong mobile app platform
TradeStation has a steep learning curve for beginners. This trading platform requires you to learn a new programming language.
It focuses on trade executions and market data. While TradeStation does provide a range of resources to help you, this isn’t recommended for first-time investors.
This brokerage is better suited to everyday traders looking to improve on trading skills.
Good charting and analysis tools
Steep learning curve to develop your own trading system
Ideal for active trading
Only available to US citizens
Wide range of educational resources
Interactive Brokers caters well to experienced active traders, but beginners will find the trading platform hard to navigate.
The brokerage offers very efficient order execution, thanks to its IB SmartRouting technology.
Its mobile trading platform is well supported across all devices. Beginners may find it tricky to use as it is aimed at experienced traders.
Fast order execution
Not easy for beginners to navigate
Wide range of securities available
Offers fractional shares
Customizable alerts on the trading platform
How Does The Stock Market Work
Companies issue stock to sell on a market. A stock market allows buyers and sellers to negotiate online stock prices. Investors then buy and sell these stocks among themselves.
The exchange keeps track of stock supply and demand. Share prices will change depending on the market demand.
What is an Online Broker?
An online broker buys and sells stocks and other securities on behalf of their clients. They handle transactions for both individual and institutional customers.
Different stock brokers provide a range of different investment products and commission fees. Nowadays, many brokers offer zero-commission trading and a wide range of research tools for beginners.
How To Pick a Broker?
The key to successful investing is choosing a stock broker that meets your investment goals and learning style.
Here are some of the most important aspects to consider before you choose a broker.
Fees & Commissions
Stock brokers charge a range of different fees you should be aware of in advance. It's important to know what commission rates your broker charges per trade.
Annual fees are better than per-transaction fees. This avoids a broker earning commissions through unnecessary transactions.
Regulated brokers will be registered with at least one financial regulating body in their country. The firms need to follow the rules set by these bodies.
It’s important that you are aware of the privacy policies of your online brokerage account. Your brokerage should have security measures in place to protect your account.
Because of growing cyber threats, most online brokers make your account security a priority. Features such as two-factor authentication should be a necessity.
Trading Tools and Research
User-friendly platform tools make successful trading a lot easier for beginners. A good stock broker should offer access to a wide range of trade tools for you to make the most of every trade.
A good online broker will provide a variety of market research. If you're a beginner, you'll need advice on how to analyze data and diversify your portfolios.
Account Types and Minimums
Common account types are retirement accounts, margin accounts, and cash accounts.
You should be aware of which accounts your broker offers. Different brokerages might have investment minimums for different types of accounts.
Most online brokers have no minimum deposit requirements for opening a brokerage account, while others require several thousand dollars.
Offering of Investments
There is a range of investment products out there for you to put your money into. Stocks, bonds, and options are the most common. You need to choose a brokerage that offers the investment products you're interested in.
A good stock broker should offer a strong selection of commission-free ETFs, mutual funds, and options.
Order execution is when your broker completes buy or sell orders on your behalf. All your orders are sent to your broker to be executed. It's important to have a broker with efficient order execution, especially for active traders.
If you plan to trade on foreign markets then it's important to have a brokerage that offers international trading.
For investors living outside the US, you need a brokerage that offers service in your country.
Types Of Accounts
Retail vs Professional Accounts
Retail traders are individuals with no experience in day trading. They usually rely on knowledge picked up from educational resources on broker sites. Most retail traders use their own cash and generally trade stocks, options, or forex.
Professional trading accounts are only made available for traders with proven trading expertise. These accounts require a significant amount of available capital for investments.
Cash Trading Account
A cash trading account is for simply buying and selling securities using cash-on-hand. This doesn’t include borrowed capital or margin. Cash trading accounts are the default account options offered by online brokers. These accounts are simple to open and maintain.
Demo Trading Account
A demo account is funded with fake virtual money that allows a potential customer to experiment with a broker’s trading platform. This is also referred to as paper trading.
Paper trading is a great tool for beginners to test out an investment strategy before setting up a proper trading account with real money.
Managed Trading Accounts
A managed account is owned by a single investor, who is either an institutional investor or an individual investor. This account is managed by a professional money manager who is hired by the investor.
Cash Account Vs Margin Account
Margin trading is only for very experienced traders. Margin trading accounts are more complex to open and maintain compared to cash accounts.
This trading method involves trading assets using funds from a third party. This lets traders access larger sums of capital. Different brokerages charge various different margin rates on transactions.
Discount Brokerage vs. Full-Service Brokerage
A full-service brokerage offers you the full package. This includes investment planning, financial advice, and portfolio analysis. It comes at a steeper price but it’s worth it if you're new to investing.
Discount brokers only facilitate buy and sell orders through online platforms. While they offer lower commission rates, this doesn’t include any financial advising.
Trading vs. Investing (active traders vs investing for long term)
Active trading is trading that only lasts for seconds or minutes. This involves taking advantage of brief price fluctuations of an asset.
Long-term investing is a more passive strategy. It involves buying and holding assets for months or years.
Different brokers may offer incentives for different investment styles. You need to check that the commission rates match your trading style.
1. Open an account
2.Once you have chosen a reliable broker, follow their site instructions to set up an account. This usually requires you to upload relevant documents and fill out a form.
3. Make a deposit
4. Choose a payment method and fill in the form for deposit funds. Check your account balance after you have made the payment.
5. Start trading
6. Download the trading platform, log in with your account details, and make your first buy order.
Most brokerages nowadays don't have a minimum deposit amount to open an account and make your first investment. Thanks to zero-fee brokers and fractional shares, it’s possible to start investing with only $100.
But to get started properly, you should aim to properly diversify your portfolio. This means buying multiple stocks in different positions.
Trading is generally just a way for people to generate extra income. Only a select few investors will generate enough profit for trading to become a full-time career.
With its free trades and no minimum account deposit, Robinhood is ideal for beginners in many ways. It has a trading platform that is easy to learn how to use. Beginners will have to find educational resources elsewhere though.