Looking for an Online Stock Broker? Look No Further Than These 5 Power Tips

Estimated read time: 5 minutes

Batman had Robin. Jordan had Pippen. At the side of just about every successful investor is a trusted partner, too. For new investors, one of the first – and most important – decisions you must make is choosing a brokerage account. In addition to serving as a place to buy and sell investments, the right broker can act as a reliable sidekick toward reaching your financial goals.

These days, most investors have their investment needs met digitally through an online broker. What online broker makes sense for you depends on personal factors, such as your goals, investment objectives, and level of wealth. You can differentiate brokers by their fees, minimum requirements, research and educational tools, customer service, and more.

Online Stock Brokers: Are They Right For You?

Before you open a brokerage account, you should decide if you want to work with an online broker. The role of a stock broker is to facilitate trades on the behalf of investors such as yourself. A stock broker can be a registered individual or financial institution. Years ago, investors had to spend the time and money calling brokers directly on the phone to buy and sell investments. Many of these brokers worked in loud, raucous trading pits (think Trading Places) fulfilling orders.

Now, everything can be done digitally, much faster, and for much cheaper. With an online brokerage account, you can execute trades in seconds with just a few clicks. You don't have to hire a single individual to do your trading. Therefore, if you are accustomed to doing most things online and are comfortable being self-reliant with your investments, then an online broker is probably a good fit.

However, it's important you understand the responsibility that comes with opening an online brokerage account. For one, you will have to educate yourself on basic investment principles as well as each individual investment you buy or sell. Further, you may be responsible for monitoring the market and placing trades on your own.

5 Tips for Selecting an Online Advisor

  1. Review the account minimums

    First things first: you want to work with a broker that won't pressure you to keep a certain balance. Depending on how much you want to initially invest, you can quickly narrow down your search. Fortunately, there are many online brokers that have $0 account minimums. Just be aware that some brokers do have minimum initial investment requirements. Further, you may have to also meet minimum investment requirements in order to invest in many mutual funds.

  2. Search for promotions

    In order to generate new business, companies try to draw customers with limited time promotions. To your advantage, online brokers are no different. You can find brokers offering a limited amount of free trades or cash bonuses when you open an account with a certain starting balance. Before jumping at a good promotion though, make sure you understand what the costs and requirements are once the promotions end.

  3. Compare broker commissions

    Through an online brokerage account, you can buy or sell just about everything from stocks to cryptocurrency. One important way online brokers separate themselves is in how much they charge in commissions. Brokers mainly charge per-trade commissions on individual stocks. These typically costs anywhere from $4 to $7. Some brokers may also charge for other investments, such as bonds, mutual funds, ETFs, and options. It's easy, though, to find brokers that offer no commissions on the purchase or sale of mutual funds and ETFs. However, mutual funds charge their own management fees that are separate from any broker commissions you may pay.

  4. Shop based on your investment objective and needs

    Beginner investors likely won't need the bells and whistles of some technically advanced online broker platforms. Instead, you may want to find a broker that offers a robust selection of educational resources. Anything from videos to in-person tutorials. These are generally provided for free, but let's say you want to become a frequent trader. Maybe you want to pick stocks for fun, as if your account were an entertainment slush fund. Then you want to find a broker that gives you room to grow your skills. That would be a trading platform with a lot of analytics and data tools.

  5. Keep account fees in mind

    Another cost for working with an online broker are account fees. Among them are annual fees, inactivity fees, trading platform subscriptions, and fees for additional services or data. You can, however, find brokers who don't charge account fees, and you don't have to pay for services you don't want. It's common to be charged for moving funds out or closing your account. If you're moving those funds to an account with a new broker, it's also common for a that broker to cover some or all transfer fees you incur.

Best Online Brokers

The marketplace for online brokers is competitive, where both long-established financial institutions and recent startups are fighting for investors. Here is a selection of the best online brokers for investing newbies.

Charles Schwab

For first-time clients, Charles Schwab offers a $100 referral award. It also boasts a huge selection of commission-free ETFs. Add in no account minimums, and this is a very cost-effective broker for beginners. Trades are $4.95.


Robinhood is a young but technically advanced broker on the scene. Its trading app is free for beginners, and there is no account minimum. Further, it does not charge commissions. As a promotion, Robinhood gives accountholders a free share of stock for referrals.

TD Ameritrade

New investors can greatly benefit from TD Ameritrade's vast library of educational content. But wait, there's more: no account minimum, no inactivity fees, and a promotion worth 500 commission-free trades and up to $600 with a qualifying deposit. Trades are $6.95.

Ally Invest

Depending on your account size, Ally Invest may provide a $50 – $3,500 cash bonus and free trades. Otherwise, trades are $4.95. It does not require a minimum account balance and features free tools and research.


E-Trade gives investors access to a large choice of investments at a fair price. The account minimum is $500, but it's $0 for an IRA. Those who start with a deposit of $10,000 or more get 60 days of commission-free trades. Trades are regularly $6.95, though investors can receive a discount based on the volume of trades.

Merrill Edge

Merrill Edge is another broker that does not require an account minimum, and, depending on your account size, it offers a $100 – $600 cash bonus. Trades are $6.95.


For qualifying deposits, Fidelity offers a whopping 300-500 free trades. Otherwise, trades are $4.95. In addition to low commissions, Fidelity is known for its robust trading platform. There is also no account minimum.


Vanguard lets investors choose from thousands of commission-free mutual funds and ETFs. Trades range from as low as $2 to up to $20 based on your account size. There is, however, no account minimum.

In It For the Long Haul

Investors have a variety of online brokers to choose from, several with platforms designed with beginners in mind. You don't have to stick with the traditional brokers. It's worth reiterating that you shouldn't choose any online broker just to get started, but rather choose one that you want to work with for the long haul. The skill and guidance you can gain from the right broker will become all the more valuable over time.