Choosing the Best Online Stock Broker for Beginners

Tips for selecting the most appropriate online trading platform depending on the specific needs of each investor

online trading platform

There are many online stockbrokers, also referred to as broker dealers, available for beginning investors. Some of the most popular ones include TD Ameritrade, E*Trade, Charles Schwab, Merrill Edge, Fidelity Investments, Interactive Brokers, Ally Invest, Webull, and Robinhood, among many others.

Stockbrokers used to require minimum investment amounts to open a brokerage account, but most of them now allow the option to open accounts without minimums. Some stockbrokers like TD Ameritrade, Merrill Edge, and E*Trade sometimes even offer promotions that include cashback rewards for qualifying deposits made within a few weeks after opening a brokerage account.

Since October 2019, almost all stockbrokers have stopped charging commissions for online stock trades. After Charles Schwab slashed its commissions, the others followed suit. This was very good news for stock investors, who previously had to pay between $5 and $8 per trade, or more.

Some criteria to consider when selecting a stockbroker include:

  • the overall financial stability of the company;
  • its track record, user base, and target audience;
  • the way the information about stocks and their performance is presented to the user, so they can quickly visualize the information to help them with their trades without being overwhelmed by excessive data;
  • assessing their potential hidden fees, since nowadays most offer free trades but some still charge fees for certain transactions;
  • the types of orders available for trades, which in some cases could limit the execution of some investment strategies;
  • the ability to allow uninterrupted trading; the information they provide about stocks, such as analysts’ ratings and recommendations;
  • the accessibility of key statistics like earnings per share, P/E ratios, and dividend yields;
  • the ability to display charts with trends and indicator overlays; and
  • the option to select alerts to receive notifications when certain events or milestones are reached.

How relevant each of these factors is depends on their intended use by each investor. For people who prefer fundamental analysis, for instance, the ability to see detailed statistics would be important, in the same way that charts with the ability to add multiple indicator overlays may be important for those who rely on technical analysis.

For people looking for a platform that is easy to understand and who do not need sophisticated features, Robinhood’s smartphone app is very intuitive and one of the easiest for beginning investors to use.

Even if a stockbroker did not have the ideal combination of features, if some missing features are readily available from alternative sites, such as Yahoo Finance or Morningstar, for example, then these alternative platforms could be considered as part of the investor’s research strategy.

online stock broker for beginners

There are also stockbrokers with specific features for specialized users. For instance, users who intend to use algorithmic trading could use a stockbroker such as Interactive Brokers, which allows this type of trading in addition to providing regular stock brokerage services, or Alpaca Markets, which offers a commission-free trading platform for people to use their algorithms.

Other platforms, such as Acorns, allow users to link their brokerage accounts to their credit or debit cards, and each of their everyday purchases is rounded up to the next whole dollar, so those cents are invested in the portfolios they selected when they set up their accounts.

People considering investing via roboadvisors can explore the options offered by companies like Wealthfront, Betterment, Fidelity Go, and Axos Invest, among others. M1 Finance and Sofi Invest also offer automated investing without charging management fees.

For investors wondering if the stockbrokers they are considering are legitimate financial services providers, this can be checked by verifying their registration status at, which includes individuals and companies.

When evaluating an online trading platform, it is also important to verify that the company is a member of the Securities Investor Protection Corporation (SIPC), which protects customers of SIPC-member broker dealers if the firm were to fail financially. SIPC membership can be verified at The value of the stocks and other securities held with a stock brokerage company, however, is not covered by SIPC. For additional information about what may be covered, investors can visit SIPC’s website.


Brokerage Accounts for Beginners

After selecting a stockbroker company, the next step is to open an account with them. The process is similar to opening an online bank account. After filling out the paperwork and having their identity verified, people can transfer money to their accounts, explore the tools and resources available in the broker’s online platform or app, research what stocks to trade, and start placing buy orders.

There are different types of brokerage accounts for beginners. For most investors, the default would be an individual brokerage account. However, there are also other types, such as joint tenants with rights of survivorship, tenancy in common, and community property. There are also custodial accounts, like those opened for minors that are transferred to the beneficiaries once they reach adulthood.

Most investors will operate with a cash account, which means that they will only be able to trade with the money they deposited into their brokerage accounts. However, investors may be also asked if they want to open a margin account. Margin is not recommended for beginning investors, since borrowing money to invest involves significantly higher levels of risk to their investment capital, so not having the ability to use margin can avoid such risk.

online trading platform stocks

Investors planning to use options as part of their investment strategy could select level 2 access, which will offer them the ability to buy option calls and option puts. However, if new investors do not feel confident with options, they can decline this feature, particularly since that ability could be added at a later time, once they have improved their understanding of this instrument.

If the stockbroker offers interest on the account holders’ uninvested cash, investors may be asked to select how they prefer that interest to be handled from the available alternatives. Some investors may also want to activate the option to reinvest the dividends they receive.

Finding the best online stock broker for beginners may not be a straightforward process, since each broker has its own value proposition. Doing a comparative analysis on the advantages and disadvantages of each brokerage firm before deciding on the top candidates to entrust one’s hard-earned capital can prove beneficial in the search for such a crucial investment partner.

This and other related topics are explained in greater detail in the book “How to Invest in Stocks: A Beginner’s Guide to Making Money and Managing Risk in the Stock Market,” available in hardcover, paperback, and digital editions.

Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. Any action taken upon the information on this article is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.