Best online brokers of November 2023
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BLUEPRINT
Updated 3:16 p.m. UTC Nov. 1, 2023
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Picking the best online brokerage platform isn’t always intuitive. With so many competitors vying for your business, doing the necessary research before committing is important.
“The best online brokerage platforms offer a range of investment options, including stocks, bonds, ETFs, and mutual funds, have user-friendly interfaces and offer various tools and resources to help investors make informed decisions,” says Andrew Latham, certified financial planner and director of content at SuperMoney.
As with many things, fees also greatly separate the best brokers from the rest.
“High fees can quickly eat into your investment returns, so look for platforms that offer commission-free trades, no account minimums, and low service fees,” Latham says.
To determine the best online brokerage platforms overall, we assessed 19 brokerage firms based on their offerings from advisory services, education/research tools, insurance coverage, features, portfolio analytic capabilities, trading costs and margin rates to customer service and security.
Why trust our investing experts
Our team of experts evaluates a multitude of investing products and analyzes a host of data points to help you find the best product for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 19 brokerages reviewed.
- 74 data points analyzed.
- 3-step editorial review.
- 5-step fact-checking process.
Best Online Brokers of November 2023
E-Trade
Fidelity
Interactive Brokers
Charles Schwab
Merrill Edge
Ally Invest
Compare the best online brokers
Methodology
We have reviewed and researched some of the largest online brokerages available in the U.S. to rank the best ones available on the market today.
For our rankings, we sent a digital survey, consisting of 74 queries, to each company we reviewed. Our researchers verified the survey data and confirmed any missing data points by contacting each company directly and via online research.
Among all the brokerages considered, the seven that made our list excelled in areas across the 11 major categories (with weightings): range of offerings (13.2%), trading costs (12.5%), account minimum and fees (12.5%), features (11.8%), advisory services (10%), insurance (10%), customer service (10%), education/research (7.5%), security (5%), margin interest rate and cash interest (5%) and portfolio analysis (2.5%).
Within each major category, we considered several subcategories, combining them to give an overall score for that category, which we then weighted to calculate an overall ranking of the exchanges.
Data points were scored on a 0.00 – 1.00 scale. The top raw score was 0.82 and was curved to a 5-star rating as the highest possible score.
For scoring the range of offerings, we looked at whether the brokerage offered the following: stocks, bonds, mutual funds, exchange-traded funds, options, forex trading, futures, international stocks, fractional shares, cryptocurrency and over-the-counter stocks.
Trading costs, such as commissions, were scored on a comparative scale. The following variables were scored for trading costs:
- Stock commission.
- ETF commission.
- Options commission (discounts for options trading).
- Futures commissions (fee to open/close).
- Over-the-counter stock fees (minimum balance required).
- Broker-assisted commission.
For the account minimum and fee category, we assessed:
- New account bonuses.
- Free ACH deposits/withdrawals.
- Inactivity fee.
- Account closure fee.
- Transfer account fee.
- Domestic wire fee.
- International wire fee.
- Deposit with a bank card.
The insurance category reviewed whether the brokerage has Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) protections, additional asset protections as well as additional insurance.
Why other online brokers didn’t make the cut
The online brokerage platforms that failed to rank high enough usually lacked services and offerings as comprehensive as those that made the list. For instance, some did not offer bonds, mutual funds, options, futures, forex, international stock, crypto, or fractional shares trading.
Other brokerage platforms fell short of our rankings due to a relative lack of value-added features, such as advisory services (e.g., robo-advisors, cash management, or professional advisors) or educational and research resources.
Lastly, some brokerage platforms charge higher trading commissions and fees than others. Since many platforms now offer zero commissions on stock, ETF and options trading, firms that charge for those basic services ranked lower in our methodology. Firms that assessed higher fees for services like account closure, transfers, deposits, and inactivity received lower scores.
Final verdict
The best overall online brokerage platform of 2023 is E-Trade, topping the rankings as the No. 1 online brokerage, according to our methodology.
Despite not offering fractional share trading, E-Trade more than makes up for it with a wide range of offerings, broad advisory services, a focus on educational and research resources, and value-added features like a portfolio builder, paper trading simulator, and backtesting tools.
Most of all, E-Trade boasts no commissions for stocks, ETFs, or options, and assesses no fees for account minimums, ACH deposits and withdrawals, inactivity, domestic wire transfers, deposits with a bank card, or account closure.
Customers will like E-Trades’ excellent customer service, with around-the-clock support available via phone, email, or live chat.
Altogether, E-Trade’s combination of features makes it an excellent online brokerage platform for beginner and advanced retail investors.
How does an online broker work?
An online broker is a digital platform that allows individual investors to buy and sell various securities like stocks, bonds, mutual funds, ETFs, derivatives and more.
Unlike traditional brokerages, which typically involve advisors, online brokerages are self-service platforms where the individual is responsible for making their own investment decisions.
In addition to trade execution, online brokerages often offer portfolio management tools, research reports and educational resources to help you make informed decisions.
Although they’re designed for self-service, most platforms also provide some level of customer support through chat, email or phone. They may charge fees for trading, account maintenance, or other services, although some platforms now offer commission-free trades.
Online brokerages are regulated by financial authorities, providing a layer of investor protection. However, the responsibility for investment decisions lies solely with the individual, making it essential to be well-informed and cautious when picking the right one.
How to buy and trade stocks online
To buy and trade stocks online, you first need to open an account with an online brokerage, which typically requires identification and financial documents for verification. Once logged in, you can then browse or search for the stock you wish to buy using its ticker symbol or company name.
You’ll typically have the option to place different types of orders, such as market orders, which buy the stock at the current market price, or limit orders, which only execute the trade at a specific price or better. After selecting your desired stock and order type, you confirm the purchase, and the platform handles the rest, including executing the trade and updating your portfolio holdings.
When trading, it’s crucial to be aware of possible fees, although some platforms offer commission-free trading options. Keep in mind that not all brokerages will offer the same access to all asset classes, so be aware of possible trade restrictions.
While online brokerages are regulated by financial authorities, the onus for making wise investment decisions falls solely on you. So, it’s essential to do your due diligence and consider consulting financial advisors or conduct thorough research before making any trades.
A short history of online brokers
For retail investors, trading stocks back in the day meant phoning your broker or financial advisor and getting a quote. Once confirmed, the broker will enter the order on the back end, which would be then executed by the firm’s trade desk via a stock exchange. Often, this was accompanied by a hefty commission fee.
All that changed when the world’s first online brokerage platform, E-Trade, launched in 1992. Within three years, E-Trade was deriving more than 80% of annual revenues from trading commissions. In response, competitors such as Charles Schwab and Fidelity quickly followed suit with their own services to capture this rapidly growing market.
Now buying stocks is as simple as signing up for an online brokerage account on one of many platforms, providing some basic biographical and tax information, funding your account, and searching for your desired stock with its ticker symbol. In addition, most brokerages offer access to other asset classes, including mutual funds, exchange-traded funds, bonds, options, futures and cryptocurrencies.
In theory, you can buy shares without a broker-dealer through transfer agents like Computershare via the Direct Registration System. But this approach tends to be less intuitive, responsive, and cost-effective than purchasing shares via a broker.
For ease of trading, an online brokerage platform remains the best option for the average retail investor looking to buy and sell stocks with minimal fuss.
If an online brokerage platform fails, the stocks you hold still belong to you. In this case, the SIPC will step in and guarantee your investment up to a certain threshold.
Currently, the SIPC insurance limit is up to $500,000 per account, which includes a $250,000 limit on cash deposits. But you’ll need to keep in mind that the SIPC cannot reimburse you for losses due to poor investment decisions or bad advice. SIPC protection only kicks in if a broker becomes insolvent.
When choosing the best online broker for your needs, it’s essential to weigh various factors tailored to your objectives, financial circumstances, and degree of knowledge and familiarity with the markets.
Factors to assess include the fees charged, the types of assets you can trade, the user interface, the availability of educational resources and the accessibility of customer support.
There are also some universal factors to consider. For example, a good broker should offer a transparent fee structure, a wide range of trading options and a user-friendly interface. If you’re new to investing, you might also appreciate a platform that offers robust educational materials.
Finally, ensure that the broker is regulated by a reputable financial authority to provide a layer of protection for your investments and has not suffered a history of regulatory failures or cybersecurity incidents.
You can buy stocks online without a broker using the Direct Registration System (DRS). In this approach, you become a registered shareholder of the company, holding your shares directly rather than through a brokerage account. The shares are managed by a transfer agent on behalf of the company and held in your name.
While DRS allows you to bypass brokerage fees, it does have some limitations. For instance, not all companies offer this service, and the process can be more complex than using a broker. You also won’t have access to various research tools, educational materials or real-time trading brokers offer. Furthermore, orders may be processed on a less frequent basis, such as daily or weekly, rather than in real-time.
Several online brokers offer trades with no commissions. These platforms typically generate revenue through other means like payment for order flow, margin lending or offering premium services. While the absence of trading fees can be attractive, it’s important to understand any other associated costs or limitations.
Before choosing a broker, always read the fine print and consider the overall value proposition, including available tools, educational resources, and customer service, before selecting a broker. Finally, these brokers may limit commission-free trades to certain asset classes, such as stocks or ETFs only.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
