Best Free Stock Trading Platforms
- November 8, 2018
- Posted by: Ashley Sutphin Watkins
- Category: Investing
At a Glance:
Free stock trading platforms can offer robust features and capabilities. We look at four options that offer “free” stock trading, but it’s clear that investors should review commissions and other fees that might be included.
Investing in stocks is one of the best ways to build wealth and steadily create a nest egg for retirement. However, stock trading and investing in the markets does carry risks. Generally, the more risk an investor takes on, the higher the returns in the long-run.
However, if you are spending too much on fees, you won’t get as much reward for the risk. Some investors, particularly new investors, don’t understand just how much fees and other costs can reduce their rate of return.
Luckily, as technology advances, a wider variety of free and low-cost stock trading brokers have become available. Most of them also offer extensive features and user-friendly options. The following are some of the best free stock trading platforms.
Free Online Stock Trading Platforms
Robinhood is one of the few stock trading platforms that’s entirely free. Many platforms have some free options, but Robinhood is a pioneer in terms of providing truly free investment opportunities. As a result, its popularity has soared. Robinhood allows new investors to learn as they go. They can create a portfolio while simultaneously gaining an understanding of investing.
Investors are privy to personalized news feeds, and a way to discover new stocks with the Collections feature. Robinhood is available both as an app and a web-based version.
- No account minimum
- No trading fees
- Tradable securities include stocks, ETFs, options, and cryptocurrency
- Real-time market data is available
The biggest benefit of Robinhood is the fact that it offers completely commission-free trading. However, while the company is working on offering more sophisticated features and capabilities, Robinhood is still fairly simple in what it provides.
It’s also easy to use, but only individual taxable accounts are supported through the platform. Mutual funds and bonds aren’t supported. There’s also no feature for automatic dividend reinvestment.
Charles Schwab, a well-known name in the trading world, offers desktop and mobile trading services. Charles Schwab offers both individual brokerage accounts and joint brokerage accounts, as well as retirement accounts. Real-time support and third-party insights are available.
Charles Schwab isn’t completely free like Robinhood, however. Instead, most trades made through its platform cost $4.95. But what Charles Schwab does offer is a large collection of trades for free if certain conditions are met. It offers the option to get 500 commission-free online equity and options trades for two years. To qualify, clients must make a qualifying net deposit of $100,000.
Charles Schwab offers the following with their stock trading platform:
- Advanced tools and research
- Access to more than 10,000 trading service client members
- 500 commission-free online equity and options trades, and free Schwab ETF online trades available
- No service fees with most accounts
Charles Schwab isn’t entirely free, but it does offer some free and low-cost options. Charles Schwab excels regarding the services and robust features that are offered, trading education access, and support is available from specialists. Charles Schwab can work well for someone who’s completely new to trading, and someone who’s highly experienced.
ETrade is another well-known name in online stock trading. While the platform isn’t entirely free, it does offer some free features and options for investors who meet certain criteria. ETrade currently offers 500 commission-free trades, as well as a $600 cash credit.
To be eligible for these free trades, accounts must be funded within 60 days of opening, and the minimum deposit for eligibility is $10,000. Of course, you can open an ETrade account with much less than $10,000, but you won’t be eligible for this free trading offer. ETrade also offers other free options, such as more than 250 commission-free ETFs.
Some of the features available for clients of ETrade include:
- For many accounts, the minimum opening deposit is only $500
- Frequent promotions, including commission-free trading
- Advantages for both active and passive traders
- Extensive research and data
ETrade does offer some free trading options, although again unlike Robinhood, it’s not entirely free. There are volume discounts available for some trades, and a variety of tradable securities are available. There are more than 150 commission-free ETFs, and more than 4,400 mutual funds available.
TD Ameritrade offers a variety of financial and trading options. Typically, stocks can be traded online with TD Ameritrade for $6.95 per trade, but there are free options available as well. For example, TD Ameritrade has a similar offer to ETrade right now, but the minimum opening deposit requirement is lower. New customers can trade commission-free for up to 60 days with a deposit of $3,000 or more. This includes online equities, ETFs, and options trades.
TD Ameritrade also offers more than 300 commission-free ETFs from top providers. There is a wide selection of no-transaction-fee mutual funds also.
TD Ameritrade offers the following to account holders:
- Many accounts require no account minimum
- Three platforms available to customers: TDAmeritrade.com, Trade Architect, and thinkorswim
- Thousands of mutual funds have no transaction fees
- Both TD Ameritrade’s investor education and customer service are ranked highly
Overall, TD Ameritrade is similar to ETrade in many ways. The standard commissions are similar, as are the promotions and the commission-free ETF and mutual fund options. However, one big difference between ETrade and TD Ameritrade is the fact that TD Ameritrade requires a significantly lower opening deposit for its commission-free promotions.
Of these four platforms, the only entirely free option is Robinhood. However, Robinhood lacks the advanced and sophisticated trading tools and features of the other platforms. The other platforms do offer options for free trading as well, especially regarding ETFs and mutual funds.
It is important to do a full assessment of the fees before choosing any stock trading platform because they can reduce profitability significantly. However, passive investors who may make fewer each year may be less worried about fees than active investors who trade more frequently.
If you want to choose the right trading platform, think about the style and approach you’ll use. If you’re mainly going to be passively investing in mutual funds and ETFs, then you may have more options in free trading.