Cheap option trading brokerage

Best Option Brokers.

Who is the Best Option Broker?

Cheapest Options Broker.

Best Options Trading Platform.

Finding the "cheapest options broker" and finding the "best options broker" are two totally different searches. Every major online discount stock broker that I know now allows you to trade stock options, but don't think for a minute that all option brokers are the same. Based on my 20+ years of trading stocks and call and put options, here are a few of the things you should consider before you fill out your first online option broker application and write a check to fund it.

Option Broker Reputation.

Believe it or not, brokerage firms DO go out of business and they WILL take your money with them. Recently there have been several brokerages (especially forex brokers such as MF Global) that have suddenly closed and hundreds of millions of dollars in customer accounts are missing.

As with anything you hear, if it sounds too good to be true, it probably is. Before you open a stock and option brokerage account, make sure the broker has been in business for a few years and that you have talked to people that really have an account there. If you think you have found the cheapest options broker but you have never heard of them before and you don't know anyone that uses them, then stay away!

Option Commission.

Once you are comfortable that the brokerage firm that you are considering is a credible, then take a look at their commission structure. Finding the cheapest option broker is not that easy. Here are a few tricks that the brokers play when you are looking at their stock and options commission structures:

Brokers often have several different commission structures depending on the size of your account and the number of trades you will make per month or per quarter. So please make sure you are looking at the commission structure that matches your account size or trading frequency. Brokers commission changes based on the number of contacts you will be trading with each order so consider the size of your trade. Will you be trading 2 contracts, 20 contracts or 200 contracts with each trade? Make sure you are looking at their standard commissions and not just the "introductory" commission rates as there are lots of special broker offers out there and sometimes the offers are only good for the first 30 or 60 days. Finally, what other fees are there? Statement fees? Fees to get your money out? Check writing fees? Make sure you know the whole fee structure!

ETRADE's Option Commissions.

While these are the full commission rates ETrade quotes on their website, they are negotiable. The more money you have, the longer you have had the account, and the more trading history you have the more likely you can get a reduction. I called ETrade recently and asked them to match another brokerage firms commissions and they did within 24 hours. These brokerages know that it is very expensive to acquire a customer and it is much easier to maintain a customer.

Scottrade Option Commissions.

TradeKing Commissions.

Ease of Use of the Best Option Brokers Platform.

You might think that buying options on one platform is the same as buying options on another platform. Therefore, why should you pay someone $12 to make the trade when someone else will do it for $7? There are many other factors to consider when opening that option brokers account besides just the commission.

I am pretty web savvy and I have used many different platforms and trust me -- all options broker platforms are NOT the same. I have been burned so many times because I can't submit an order quickly, or I waste precious seconds trying to find the exact ticker symbol or the number of contracts I own. Option prices often move so quickly that seconds can mean a difference of a dime or more in price. And since each option contract covers 100 shares each dime costs you $10. And since you often trade 5 or 10 contracts at a time, a few seconds can easily cost you $50 or $100! So trying to save a few dollars in commission can be penny wise and pound foolish!

What I see happening with option brokers platforms now is that some are designed for the beginner option trader and some are designed for the experienced option trader. Since you are reading this article, you probably don't have an option brokerage account, so please keep reading and open the best option brokerage account for you.

One think I know for sure is that all brokers are not the same. Each brokerage firm has a different platform and so the ease of placing orders is different. And trust me, when you are just getting started it is very frustrating to see an option price that you want and when you place your trade you get filled at 10 or 20 cents away from where you thought you were getting filled. Or sometimes your order doesn't get filled at all. The speed of the order execution is very important since option prices often move quickly. Some brokers now offer a guaranteed order fill time or your trade is commission free. I like it when a firm backs up their promises like this--it usually means they believe in their product!

Current Marketing Promotion.

Finally, beyond price and ease of use, the other thing to consider before you open an option brokerage account is their current marketing promotion. How would you like to get your first 20 trades free? Would you like a $500 cash bonus just for opening an account and placing a few trades? Of course you would!

Here are the most popular option brokers and their most recent promotional offers:

Etrade--$2,000 minimum--Trade free for 60 days and get up to $500 CASH! Scottrade--$500 minimum--$7 trades -- No account fees TD Ameritrade--$2,000 minimum--Trade free for 60 days and get up to $600 CASH Get 100 Commission-Free Trades at OptionsHouse Think or Swim--$2,000 minimum--Trade free for 60 days and get up $600 CASH FirstTrade TradeKing.

My Review of these option brokers:

ETRADE or TradeKing are good starter platforms. The commissions are reasonable and the order executions are excellent. TradeKing has Zecco's special option trading tools, so it's a great entry level platform for the beginning option trader. ETRADE has a downloadable app for your desktop computer which makes the HTML site look antiquated. Try ETRADE PowerTrader; I highly recommend it. Scottrade might have slightly lower commissions than ETRADE, but I find its platform outdated, slow, and just plain unattractive. If saving $2 on a trade is important to you, or if you want your platform available in Chinese, then you might be OK with Scottrade. The commission is lower than ETRADE's and other larger platforms, but that is about all that I see going for it. The TD Ameritrade brokerage platform is simple and easy to use and has excellent research tools. However, I just prefer ETRADE's navigation and reporting more. Maybe it's because I have used ETRADE's platform longer but something just seems off with the TDA platform. The commissions are similar, but ETRADE seems to be ahead of the curve by also offering access to 6 global equities markets in case you want to trade a Canadian, European, or Asian stock. The ThinkorSwim platform is by far the best platform if you want to do the complicated option spreads or other multi-legged trades. HOWEVER, if you are a beginner and are buying a few calls and puts, then ThinkorSwim is NOT for you as you will be totally confused by the order types and all of the information that is presented to you.

Here are the top 10 option concepts you should understand before making your first real trade:

Options Resources and Links.

Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority (OPRA):

Best Options Trading Brokers and Platforms.

NerdWallet offers financial tools and advice to help people understand their options and make the best possible decisions. The guidance we offer and info we provide are deeply researched, objective and independent.

We spent over 300 hours reviewing the top online brokers before selecting the best for our readers. And to help you find the one that’s best for you, we’ve highlighted their pros, cons and current offers.

Who is the best options broker today? The answer depends on whom you ask and what they value. For some investors, the best broker for trading options is the one with the cheapest commissions. Others prioritize trading tools, platform design, research, customer service or all of the above.

While most of the brokers on our best-of list below would be a good, all-encompassing choice for many investors, we’ve also highlighted the standout candidates in specific areas that matter most to options traders.

Unsure what you’re looking for? See how to choose an options broker for more on what can make or break an options trading experience.

Summary: Best online stock brokers for options trading.

Best for low-cost.

Best options trading platform.

Best for research and education.

Best overall for options trading.

Our top picks cover all the option trader needs — access to high-quality research, analytical tools, a user-friendly platform — at reasonable prices.

TD Ameritrade and Interactive Brokers earn high marks for options investors for their advanced trading platforms, deep bench of research and tools, plus their high-caliber options trading capabilities.

TD Ameritrade handily serves option traders no matter where they are on the learning curve. The broker’s thinkorswim platform offers a robust options trading experience for active investors seeking professional-grade tools to identify trading opportunities, analyze potential risks and rewards, test trade strategies and quickly place even the most complex options trades.

The broker’s web-based Trade Architect platform is for investors just getting into options or those who don’t require a high-octane platform. Its stripped-down, easy-to-use interface won’t overwhelm newbies. And although Trade Architect isn’t as fully stocked with tools and data as thinkorswim, it’s no slouch, either. Intermediate investors will find advanced features like a market/options heat map, screening and tradefinder tools, and streaming news. Get details in our TD Ameritrade review.

For cost-conscious, active options traders looking for low costs and a platform with a lot more meat on its bones, Interactive Brokers may be more your style. Interactive Brokers charges just 70 cents per contract with no base fee ($1 minimum order), plus discounts for larger volumes, if you can manage the $10,000 account minimum. Its Trader Workstation platform (with an options strategy lab) is considered one of the best and most sophisticated around. But watch other fees to ensure that the lower commissions pay off.

Both brokers allow prospective clients to test-drive the goods without putting any real money on the line. TD Ameritrade offers a paperMoney virtual trading account to test out the thinkorswim platform. At Interactive Brokers, once customers open a real account (which has a $10,000 minimum funding requirement), they can set up a paper trading account that offers them hands-on practice using IB’s Trader Workstation platform and tools.

Best brokers for low-cost options trading.

These brokers offer competitively priced options trading commissions and have eliminated or dramatically capped minimum trading fees.

In early 2017 most of the mainstream online brokers slashed commissions to levels once reserved for their deep-discount peers. That doesn’t mean that they’re the best deal in town for every investor.

For active options traders, eOption earns five stars from NerdWallet for its low options trade commissions. The company charges a fixed $3 base plus 15 cents per contract. Another plus: eOption is known for having some of the lowest margin rates available. Although eOption charges a $50 annual inactivity fee on accounts that have placed fewer than two trades in the past 12 months or have less than $10,000 in credit or debit balances, the minimum trade workaround isn’t onerous, even for infrequent traders.

Charles Schwab’s trade commission of $4.95 base rate plus 65 cents per contract puts it within spitting distance of deep-discount peers. Schwab recently fully took over the old OptionsXpress and incorporated that broker’s options experience into its own platform, with both web-based and mobile functionality.

Commissions aren’t the only costs associated with trading options. Platform, data and other fees can quickly cancel out what you save on commissions. See our full reviews of Charles Schwab and eOption for details on what they offer. For those simply looking for a cheap way to execute options trades, Charles Schwab and eOption get the job done.

Best options trading platforms.

These brokers offer some of the most powerful trading platforms available for a reasonable price.

Judging a broker’s trading platform by the number of features it offers is like buying a car based solely on what you read in the dealer brochure. While all investors have their must-have features, what’s more important is how the platform feels when it’s in their hands.

The trading platforms at Ally Invest and TradeStation offer a wide variety of analytical tools, provide stable and speedy trade execution, and allow investors to customize the tools and design to best suit their needs.

Unlike TradeStation, Ally Invest (formerly TradeKing) is technically a deep discount broker as reflected in its commissions (options traders pay a $4.95 base plus 65 cents per contract with only one base charge per spread), $0 account minimum and free access to research and data. Frequent traders (those who place 30 or more trades per quarter or who carry a balance of $100,000 or more) pay a discounted $3.95 base and 50 cents per contract.

But don’t be fooled by the lower prices: Customers get a lot of platform power for free.

Ally is suitable for newer options investors. The browser-based platform resembles the offerings of its pricier competitors and comes with free options trading tools for screening and advanced charting. Navigation is easy and streamlined. Customers can create a custom dashboard with movable modules with the data and features they want to use. The setup extends to what users see across all devices, including mobile and tablet.

TradeStation is best left to more experienced, tech-savvy investors who want to experience options trading using the same tools as pro traders. The broker provides all the tools needed to design, test-drive, monitor, automate and speedily execute the most complex trades via direct-market access (no pesky middleman to slow down the process). Its OptionsStation Pro platform is fully integrated into TradeStation’s regular trading platform. An added bonus is the broker’s active investor forums, where traders discuss ideas, ask questions and get help.

Access to all of TradeStation’s bells and whistles used to come at a steep $99.95 monthly platform fee for those who didn’t meet account balance or trading activity minimums. But in March 2017 TradeStation eliminated the service fee, lowered its trade commissions for stocks and options and tossed in free real-time market data and free access to its market-monitoring and portfolio-level back-testing tools. Educational tools and platform tutorials are plentiful, which is a plus: Because of the sophisticated nature of the platform, it may require some time to become familiar with all that it offers. See more in our TradeStation review.

Best research and options trading education.

Both offer extensive research and data for free, as well as live classes and webinars for beginning and advanced options traders.

If you’re new to options trading or want to expand your trading strategies, a broker that devotes its resources to research and customer education is a must. Because Schwab and Fidelity each have offices across the country in addition to their online options education libraries, they’re able to offer in-person guidance and free seminars on how to trade options, as well as one-on-one guidance on using the tools each platform offers.

Fidelity’s constantly refreshed library draws from more than 20 providers, including Recognia, Ned Davis, S&P Capital IQ and McLean Capital Management. The full suite is available to customers when they sign into the broker’s web-based platform. And you don’t have to stop digging when you’re away from your computer: Fidelity has a strong mobile app that lets customers access the company’s full suite of research through a mobile browser.

Charles Schwab’s options trading capabilities and lineup of trading data and research got a big boost as the company integrated its purchase of OptionsXpress. In October Schwab re-launched its online platform under the StreetSmart name, with both web-based and mobile functionality, though for now only former OptionsXpress clients have access to the new platform. In the first quarter of 2018, Schwab will begin rolling out the new platform to all clients. While the platform name is changing, Schwab still provides a fully realized suite of offerings for options traders, including trade assessment tools, customizable screeners, access to Schwab analyst options-market commentary, live online webinars and pre-recorded seminars.

Best brokers for beginner options investors.

These brokers provide ideal conditions (educational resources, user-friendly platforms, customer support and low minimums) for investors just learning the options trading ropes.

TD Ameritrade — one of our top overall brokers — ranked highest in this category, too. But since there are many types of beginners with many different preferences, instead of highlighting the category champions we’ve focused on brokers that are excellent candidates in three key areas:

Low minimum opening balance requirements.

Ally Invest, TD Ameritrade, Merrill Edge: If you’re not yet ready to devote a lot of your capital to options trading, you don’t want to tie up much in an account to meet the minimum. Many of the brokers on our list require no money to open an account. However, industry regulations require that traders maintain a $2,000 minimum to trade options.

Strong customer support.

Scottrade and TD Ameritrade: On-call help is particularly handy when starting out. One way to test a broker’s level of service is to contact the company with any questions you have about its option trading offerings before you even open an account. Scottrade is known for its standout customer service and huge physical presence of 500 branches. So is TD Ameritrade, with around-the-clock phone and support and 100 branches where clients can attend seminars and meet with investment associates. At the end of 2017, TD’s acquisition of Scottrade will be complete, increasing each broker’s ability to serve clients.

User-friendly platforms.

Ally, Charles Schwab and TD Ameritrade: There’s nothing better than test-driving a broker’s platform before you commit. Check to see if the broker you’re considering offers paper trading (virtual trading on a platform that mimics the real deal) or contact customer service to see if they will set you up with a demo account. As for brokers discussed in this review, Ally Invest’s browser-based platform is intuitive and easy to customize. And both Charles Schwab and TD Ameritrade have multiple platforms customers can use to start learning the ropes, then graduate to more sophisticated tools and trades if desired.

Best options trading brokers: summary.

Updated June 30, 2017.

Disclaimer: NerdWallet has entered into referral and advertising arrangements with certain broker-dealers under which we receive compensation (in the form of flat fees per qualifying action) when you click on links to our partner broker-dealers and/or submit an application or get approved for a brokerage account. At times, we may receive incentives (such as an increase in the flat fee) depending on how many users click on links to the broker-dealer and complete a qualifying action.

The Best Online Stock Brokers For Cheap Stock Trading (in 2017)

Finding the best online stock broker is becoming more and more difficult every day.

It seems like a new online broker is launched every month and cheap stock trading has become the way of the stock trading world.

But with all of the new players in the game, it's the oldest and most respected online stock brokers that continue to offer the best deals.

Just 10 years ago, trading online was nearly impossible. With a few start-ups in the works, E*Trade and Firstrade offered a raw and expensive way to avoid calling your local broker and making trades on your own.

As the years have progressed, trading stocks online has become easier for the consumer AND less expensive, which is a rare combination in business.

Nowadays, you can find dozens of online stock brokers, each claiming to be the best at what they do. But just how many of them can offer cheap trading, expert customer service, lightning fast execution and cutting edge technology? Let's take a look.

The Best Online Stock Brokers.

Use this table below to pinpoint the best online stock brokers:

Ally Invest fits right at the top of our list as it seems to do everything very well. Ally Invest has a low per-trade commission of $4.95, which does not change if you utilize a broker over the phone and options trading has the same $4.95 cost, plus a $0.65 fee per contract. If you follow SmartMoney, Barron's and other graders of online stock brokers, you'll find Ally Invest (formerly TradeKing) winning awards almost every time they are handed out. Ally Invest offers 24/7 customer support. Finally, Ally Invest is a leader in educating customers and you'll find hundreds of resources to help both amateur and professional investors. See our full review of Ally Invest.

To open up an Ally Invest account, visit their official website at ally/invest/

Scottrade currently offers fee-free IRA accounts and has fantastic customer service. In my 5 years of trading with Scottrade, I have never encountered a single delay, problem or inconvenience. Sure $7 per trade ($32 for broker assisted trades) is more expensive than the $4.95 or even $2.95 that other online stock brokers charge. While many other brokers offer similar services for cheap stock trading, I've found one that has been nothing short of fantastic. I'm not about to risk having problems for a dollar here or dollar there. In order to trade with Scottrade, you'll need a minimum balance of $2500. They will reimburse your transfer fees up to $150 and their iPhone or Android app can be used to access your account and make trades.

To open up a Scottrade account, visit their official website at Scottrade.

Fidelity isn't your normal online stock broker. They have a very powerful brand behind them, produce quality, low-cost funds, and over the past several years have received major credibility as a “discount broker”. Currently, Fidelity offers stock and ETF trades for a $4.95 commission. This is down from $7.95. To trade options, you’ll pay $4.95 + $0.65 per contract. You’re required to make a minimum deposit of $2,500 to fund your brokerage account. Fidelity offers live chat and 24/7 phone support – It’s free, very fast, and simple to use (I've tried it myself). Most mobile devices are compatible with Fidelity. With hundreds of webinars to educate investors, Fidelity is a great place to begin your investing career.

To open up a Fidelity account, visit their official website at Fidelity.

E*Trade is the only online stock broker I can think of that advertises on television, making them the most well known on this list. E*Trade is also one of the more expensive, as they charge $6.95 per trade and an additional $25 if you use a broker to execute the trade. E*Trade is currently offering free trades for the first 60 days of opening your account, but you will have to fund it with at least $10,000 (and of course other restrictions apply). E*Trade's technology and platform are like no other and for experienced investors, E*Trade by far is your best option. However, for the casual investor, it may be a better idea to go with one of the other brokers, to save money on fees.

To open up an E*Trade account, visit their official website at ETrade.

Capital One Investing (formerly Sharebuilder) is an excellent trading platform that allows users to make trades online at a price of $6.95. In addition, Capital One Investing now also offers managed portfolios. One of the premier benefits of having an account with Capital One Investing is that it can be connected with your Capital One 360 account, making transactions to and from the bank a snap. There is no minimum required to open an account and they are offering a variety of bonuses based on the amount of your initial deposit. While you need to deposit at least $200,000 to receive $600, you only need to start with $5,000 to earn $50.

To open up a Capital One Investing account, visit their official website at CapitalOneInvesting.

ChoiceTrade isn't your everyday online stock broker and if you visit their website, you'll know that right away. Rated four-star broker by Barron's for the last six years, ChoiceTrade offers $5 online trades with NO penny stock surcharge (very hard to find). However, the mail drawback to using ChoiceTrade is their platform. If you're looking for good technology, you will have to pay for it. Their basic online streaming platform costs $14.95 per month and their premium platform is $135 per month. ChoiceTrade does feature an in-depth investor community where you can ask thousands of fellow users your questions. Also, you can sign up for a virtual account with a $100,000 balance to try out their services.

To open up a ChoiceTrade account, visit their official website at ChoiceTrade.

thinkorswim has been around since 1999, and is now owned by TD Ameritrade. thinkorswim is known as one of the best places to trade options because of their superior technology, as well as a hub for options educational information. In 2017, they were ranked #1 for long-term investing by Barron's and #1 overall broker by StockBrokers. You can trade stocks for a flat fee rate for $6.95 – with no account balance requirement or limit on how often you can make trades. Broker-assisted trades will cost you $44.99. TD Ameritrade is currently offering 60 days of commission-free trading when you fund an account with at least $3,000, and higher initial deposits will earn you an additional cash bonus. They offer 24/7 customer support and they don’t charge any fees for access to the trading platform or other data. TD Ameritrade offers “Paper Money” accounts, to try out different strategies with no real money involved.

To open up a thinkorswim account, visit their official website at thinkorswim.

SogoTrade is one of the quieter online stock brokers and unless you've already signed up an account with them, this may be the first time you've heard of them. SogoTrade is one of the leaders in cheap stock trading with a $3 rate for those who make at least 150 trades per quarter (otherwise the fee is $5). With their four unique trading platforms and an app (available for Apple or Android devices), SogoTrade continues to implement game-changing technology. All of their platforms provide customers up-to-the-second data to help them make the well-informed trades. There are no account maintenance fees and the initial required deposit is only $500. SogoTrade protects customer account funds up to $500,000.

To open up a SogoTrade account, visit their official website at SogoTrade.

Not into active, online trading? Try something a little less hands-on. See our list of the best Robo Advisors.

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Philip Taylor, aka "PT", is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!

Comments.

I would suggest LOYAL3 to add in this list.

I think sogo trade is not the cheap because if we do not do 150+ trade in a quarter then they charge $5 instead $3 as standard.

I believe Banc De Binary is not applicable for US resident. They site said that.

Thanks for the info!

I signed an account with sogotrade, after days of research I finally found a good broker for international clients! 🙂 The 1st thing I noticed is the REALLY fast live support response in chat (I asked about “any additional fees for non-US residents?” – they said no), so now I opened an account, and have to print and mail them the 3 PDF files they ask to fill and sign by hand (then scan and mail), overall I have a very good feeling about the broker 🙂 I hope they will not disappoint me.

Very impressive post!

Banc De Binary is yet another financial organization providing cheap trading services, would be happy if you also add them in this list. It is a good choice for both the casual and experienced investors.

I completely agree with your point that E trade is a good option for experienced investors but not for casual investors who would have to pay a lot of fees on some basic things.

Please try to make your post more interesting and fun to read.

Lopez well, it seems that it was only yesterday. bbinary is now a very powerful brand with loads of features and great commissions as well. “We expect to become a leader in online trading technology and financial services” – Well, I think Aaron was right about it (: A lot of great reviews sites also popped up as mushrooms after a good rain. Needless to mention bancdebinaries that’s doing a great job promoting the binary options broker itself – great tips, great guides and a very powerful binary trading system. keep your work up guys, you’re doing it great!

Thanks for sharing, it was very useful….

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The Best Cheap Online Stock Brokers.

Latest Update October 13, 2017.

The best cheap online stock broker offers a variety of investment options at a low cost. We compared fees, account minimums, and other costs of the cheapest brokerage accounts to find which best suits different investing priorities. While most online brokers have dialed down their costs, we found three that we like more than the competition.

For anyone just starting to wade into investing, Ally requires no minimum investment to start an account, and it offers some of the lowest trading fees. Its online-only platform transfers between devices with ease, making it easy and inexpensive for investors to set up an account.

The only brokerage of our three top picks that operates brick-and-mortar branches, this financial institution has kept offers plenty of useful tools and platforms while also offering traditional resources for in-person help.

This low-cost, high-account value trading platform offers surprisingly low fees if you meet its requirements for account balance and activity. But novice investors won't find the same benefits, or the same simplicity offered by our other picks.

The Best Cheap Online Stock Brokers.

Best for New Investors.

Best for Active Investors.

Whether you’re new to the stock market or a seasoned investor, choosing a brokerage with low overhead is a smart financial decision: Spending less money on fees means your investments have more room to grow. And while cheap trading platforms may not offer the same level of counsel or market research as a traditional firm, you can still find plenty of tools to make trading decisions smarter and faster.

If you’re a relative newcomer to the stock market, you should look for an account with low costs, plenty of educational resources, and, importantly, a low account minimum. Your best bets are Ally Invest and Charles Schwab. These two brokerages share a lot of price points, and most of the differences between the two are trade-offs. Example: Ally provides access to nearly twice as many mutual funds (around 10,000 vs. 5,000) and charges a much lower mutual fund commission (around $9 vs. Schwab’s $75). Meanwhile, no brokerage can compare with Charles Schwab for exchange-traded funds (ETFs): Over 200 trade commission-free. Conversely, Ally doesn’t offer any zero-commission ETFs.

With those differences in mind, we prefer Ally Invest for new investors due to its $0 minimum to start a brokerage account and because it offers virtual trading. With virtual trading, you can test out strategies before putting your own cash into the mix. Charles Schwab doesn’t offer any equivalent, and has a $1,000 account minimum. Ally also gives you the option to try your hand with individual trades or open a managed portfolio with a little more expert guidance, although managed portfolios require a $2,500 minimum.

Charles Schwab has retained more of a classic brokerage feel through its in-person presence (you can schedule a free consultation with a financial advisor) as well as its more traditional account minimums. And while Ally restricts its trading technology to online platforms, Charles Schwab gives clients an advanced desktop option: StreetSmart Edge. StreetSmart’s claim to fame: Making its platform more intuitive and convenient, based on user feedback about clunkier trading tech.

For more active trading, a higher account balance is par for the course. With Interactive Brokers, you’ll need $10,000 to start an account, but once you do, its other financial demands are incredibly small. Take advantage of the super low price per trade ($1) as well as extremely low margin rates (their highest interest bracket still charges less than 3%). It also offers the choice of fixed or tiered pricing, giving investors the opportunity to choose what makes more financial sense for them — tiered structures will typically benefit high-volume traders.

How We Found The Best Cheap Online Stock Brokers.

Your financial goals and your personal investing style will be the two biggest factors in choosing the right brokerage for you. We set out to find the strengths and weaknesses of the cheapest brokerages we could find, but you’ll still have to decide which offers the right combination of savings and services for your needs.

We considered seven brokerages in total: Ally Invest, E*trade, Fidelity, Interactive Brokers, Charles Schwab, Merrill Edge, and T. D. Ameritrade, all major brokerages that have made a name for themselves offering exceptionally low rates. This wasn't a comprehensive list — we focused on major names and newer players that were doing more to disrupt the space. To find the best among them, we investigated their platforms and compared the fine print to see how they stack up in fees, learning resources, and trading technology.

We primarily based our selection on the fees and strictures associated with each company’s brokerage account. Some of the most important: account minimum, account minimum fee, broker-assisted trade commission, monthly activity fee, price per trade, and price per share. Though the numerical difference between two brokerages’ fees can appear small — an extra $2 per trade or a 2% bump in margin rates — those dollars and percentages are still eating away at your investment. We looked for brokers that kept those fees and commissions as low as possible.

Special offers for opening a brokerage account can include a set number of free trades or even cash bonuses for investing above a certain amount. Read the fine print to be sure that these early benefits outweigh later costs, and whether those new client perks align with your investing practices. In other words, don’t be enticed into choosing a broker offering deals on investment products you don’t understand or aren’t ready to use. Since special offers are by definition short-term, we focused on set account pricing. In the long run, those are the savings that will impact your financial goals.

What We Looked For.

For the novice investor who wants to start small and spend small, we sought out accounts that have a low minimum balance (the amount you’re required to keep in your account at all times), no minimum activity rules, and as many $0 fees as possible. We also wanted low-cost options for both self-directed trading and investing in a managed portfolio, allowing you to make your first foray into the market as hands-on or hands-off as you like.

But we didn't want to neglect experienced investors, either. For investors who've had time to let investments grow, a low minimum balance probably isn’t a top concern. But putting more money in shouldn’t make your fees swell proportionately. We looked for brokerages that kept fees low for larger accounts — or, better yet, offered more discounts for frequent activity. We were also keen to see a full set of asset options, including advanced investment vehicles like forex and futures.

For any type of investor, a superior investment platform provides an array of research and learning resources, flexible trading options, and a usable interface compatible with most devices.

What We Found.

We found a lot of similarities among the different brokerages: Roughly half had the same $4.95 per-trade fee, with most of the rest charging $6.95. All our top picks charge $4.95 per trade, except for Interactive Brokers' $1 fee. Three of our seven finalists had no account minimum, and Charles Schwab will waive its $1,000 minimum with a monthly direct deposit of $100.

Ameritrade and Merrill Edge lost out to Ally for having higher per-trade fees, despite having no account minimums. Both Charles Schwab and Fidelity charge $4.95 per trade and have physical locations and learning centers for investors. But we gave Schwab the edge for its lower account minimum ($0-$1,000 vs. $2,500) and the reviews of its desktop platform.

E*Trade lost points for a high account minimum ($5,000) and high per-trade fees ($6.95), offering the worst of both worlds. For investors who have that much to deposit into an account, we much preferred Interactive Brokers' $1 per trade fee. Even with Interactive Brokers' $0.005 per share fee, a trader would have to buy or sell more than 1,000 shares at a time to exceed E*Trade's fees.

Here's how our top picks stacked up in some of these key areas:

*Waived with monthly direct deposit of $100.

Our Picks for the Best Cheap Online Stock Brokers.

Best for New Investors.

Ally Invest A clean and accessible online brokerage that provides investing newbies with a simple platform and no investment minimums.

Because Ally Invest doesn’t maintain brick-and-mortar branches or run advertising campaigns, it is relatively unknown outside of the trading world. Despite its insider status, Ally does better than most online brokerages at making investing accessible to newcomers. The real welcome mat in front of Ally’s door: some of the cheapest rates in the industry.

With a $0 minimum for independent brokerage accounts, just about anyone can get started investing with Ally. But just because it makes investing approachable for beginners doesn’t mean it isn’t an expansive company; there are plenty of tools and opportunities to expand your investment horizons. Ally offers all the same major investment vehicles as other brokerages — stocks, options, ETFs, bonds, mutual funds, forex, futures — as well as a host of accounts that fall under a managed portfolio.

These portfolios are comprised exclusively of ETFs — investment bundles that trade on the open market like stocks. They offer similar diversification to mutual funds, but typically carry lower expenses. A small percentage of your total investment is typically held in cash, but the exact amount will vary according to your described risk tolerance.

In addition to small fees for holding the ETFs themselves, Ally charges a 0.3% advisory fee. That's a pretty middle-of-the-road percentage in comparison with other full-service brokerages but slightly higher than companies that offer only managed portfolios. We discuss these robo-advisor companies at the end of the review.

In the first half of 2017, TradeKing made the move to Ally Financial, officially becoming Ally Invest. The transformation of TradeKing accounts wasn’t totally seamless, but today they’re functioning normally. What’s more, the merger created a stronger trading platform that improved the functionality of the two original systems, beefing up the tools and technology.

Ally boasts an aesthetically pleasing and easily navigable site, but buries all the hard data that we were craving. From the easy-to-reach pages, scout out fine print hyperlinks promising “More Details” to find consolidated information about fees, investment vehicles, and account types. This sparsity of upfront information carries over into their light touch on education and research. While having more in-house resources would improve the overall client experience, plenty of information can be found elsewhere on the internet. A couple good resources? Investopedia and The Simple Dollar.

Best Resources.

Charles Schwab This old guard brokerage has kept on the breaking wave of trading technology, while providing plenty of support and advising resources.

Just about every basic fee charged by Charles Schwab goes toe-to-toe with Ally. The price between the two does jump in certain instances — broker-assisted trades go up by $5 and mutual fund commissions go up nearly $70 — and while Ally lets investors start a brokerage account with any amount, Charles Schwab requires $1,000 to start. However, the breadth of tools and resources available with Charles Schwab does a lot to justify the extra expense.

Schwab puts extensive information on their accounts and products front and center. Plus, easily access both product info and wider investment education through the learning center. And while Ally Invest makes it difficult to track down brass tacks in the name of a friendly user-interface, Schwab hits you with its full store of counsel and breaking news. Not only does the firm provide access to independent research, it also publishes relevant in-house research.

Research and ratings both live inside Charles Schwab’s desktop trading platform, StreetSmart Edge, the upgrade of Schwab’s flagship platform StreetSmart. If you need personalized settings and advanced features, StreetSmart Edge provides both in spades. You’ll just have to learn how to use it. For streamlined trading and market insights on the go, there’s also a web-based platform, Trade Source. Investors that are new to the game may find the web-based option more accessible.

Like Ally, Charles Schwab offers a managed portfolio option, Intelligent Portfolio, available for a large number of managed account types. Unlike Ally, not to mention every other managed account we looked at, it charges no advising fees. Instead, Schwab makes money by holding some of the underlying assets of the accounts. The only fees associated with the account come from the investments, and while that percentage increases to a substantial amount (from 0.07% to 0.21% as risk builds), it is still lower than most. The $5,000 account minimum for Intelligent Portfolio accounts is, however, higher than Ally’s.

Still, if the security of investing with a solid name in finances appeals to you, Charles Schwab offers a lot for your money. And Charles Schwab is finding even more ways to make you feel secure investing your money with them. Automated financial advisors are the wave of the future, but many people don’t feel comfortable putting their life’s savings in the digital hands of a computer. Charles Schwab has developed a half-and-half solution: A hybrid service, Intelligent Advisory puts both financial professionals and financial algorithms to work. A nice little solution, so long as you have $25,000 to plunk down.

Charles Schwab offers a deluxe set of services, but depending on the account you choose, you don’t have to invest a correspondingly huge amount. Opting for an independent brokerage account gives you access to the resources of a traditional, full-service brokerage without putting down a traditional amount.

Best for Active Investors.

Interactive Brokers A top choice for experienced traders, this brokerage boasts a complete lineup of investment products, plus pro-grade trading tech.

Choosing a company with a variety of investment products is important if you plan on trading more than just stocks. All three of our favorite companies offer stocks, bonds, mutual funds, ETFs, and options trading. But if you’re particularly interested in more advanced investing, like options, Interactive Brokers is the way to go. The company also has incredibly low interest rates for margin trading: With an upper limit of 2.66%, IB’s rates are about a third of what’s charged by every other brokerage we looked at. For pure trading and competitive prices, no other brokerage comes close.

Interactive Broker’s account structure rewards the active investor. In fact, the two elements that make IB a bit unwieldy for new investors make it a perfect tool for the experienced: Once you meet the hefty minimum account balance — $10,000 — the rest of IB’s demands on your wallet are light. And the relatively high $10 monthly activity fee is charged only if your trades don’t rack up at least $10 in commissions. With the tiny $1 per-trade fee, that means you’ll need to make ten trades every month or pay the difference, e. g. six trades will leave you with a $4 activity fee.

If you are savvy investor who also happens to be under 25, you can open an Interactive Broker account with a reduced minimum balance — the required deposit is just $3,000 — and the monthly fee bumps down to $3. For an IRA, the minimum deposit is $5,000.

However, we didn’t love everything we saw about Interactive Brokers. Back in 2012-2013, the company was fined for several violations relating to the management of futures market funds. The result was a pair of fines totaling $925,000. Because the fines occurred several years ago, and because futures trading is a fairly niche investment area compared to stocks and funds, we don’t think this is enough to overrule Interactive Brokers’ overall cheap costs. However, if you’re planning on doing a substantial amount of futures trading, be aware of this mark on their record.

Interactive Broker’s incredibly rich platform offers trading technology advanced enough for professional day traders. Choose from the web-based trading platform WebTrader and the more advanced, downloadable platform, Trader Workstation. Both are included for Interactive Brokers clients at no additional cost. Serious traders will gravitate to the Trader Workstation’s more in-depth features.

Trader Workstation also comes with a steep learning curve. Navigation is far from intuitive as tools are located in discrete sections. However, it is also customizable, allowing you to group together the resources you make frequent use of and hide the ones you don’t. The interface, like the rest of an IB account, only benefits experienced traders. However, IB has recognized the learning gap. To supplement the educational tools on Traders' University, IB has introduced a layout library (choose from pre-made setups and templates for different trading strategies) as well as an AI assistant. IBot can answer plain-English questions but, like any other voice-activated helper from Siri to Alexa, it has its limits.

Did You Know?

The landscape of online investing is changing.

Financial institutions have gone through a lot of millennial growing pains. The culminating act: Several companies cannibalizing several others in the past year. For everyday investors, these acquisitions have little impact. For instance, T. D. Ameritrade gobbled up Scottrade, but Scottrade accounts are slated to transform painlessly into Ameritrade accounts in Q1 of 2018, to the extent that Scottrade is still enrolling new clients. The more major change is the movement away from traditional brokerages and toward increasingly automated investing options. Enter robo-advisors.

There’s an app for that.

The inexpensive trading platforms established by the likes of Scottrade and E*trade make it easy to invest by reducing or eliminating fees that make traditional brokerage firms elite. They also appeal to a younger generation of investors.

They are not, however, the newest rich kid on the block. A slew of robo-advisor investment apps have materialized within the last five years, with marketing and functionality geared toward a generation that has a job (yay!) and some money (yay!) but doesn’t know how to “adult.” A notable example, Wealthsimple, has a slogan that says it all: “Investing on autopilot.”

Hands-off investing as offered by Wealthsimple (or other robo-advisors like Wealthfront and Betterment) appeal to a demographic used to automated services. Simply plug in your time frame and risk tolerance and an algorithm takes it from there. A nice side effect of AI investing - even lower fees. Wealthsimple and Betterment both allow you to open an account with $0 down; Wealthfront asks for $500. Wealthsimple charges an annual 0.5% advising fee; Wealthfront and Betterment charge just 0.25%.

The Best Cheap Online Stock Brokers, Summed Up.

Table of Contents.

We find the best of everything. How? We start with the world. We narrow down our list with expert insight and cut anything that doesn't meet our standards. We hand-test the finalists. Then, we name our top picks.