Best Online Stock Broker For Beginners

Blain Reinkensmeyer

Published by Blain Reinkensmeyer

Monday, January 8th, 2018

There are three important assets a broker can offer any new investor. The first and most important is an easy-to-use website and platform. After all, what good is trading online if you can’t figure out how to perform research or place an order? Second, a robust offering of educational content is always beneficial. Third is having access to virtual trading for practice and honing the art of trading. “X” factors include research, mobile trading, and community functionality.

Best Brokers for Beginners

Here is a summary of the top five brokerages for beginner investors:

  1. TD Ameritrade - 5 Stars
  2. Scottrade - 4.5 Stars
  3. Fidelity - 4.5 Stars
  4. OptionsHouse - 4 Stars
  5. Capital One Investing - 4 Stars

Based on the above criteria, our No. 1 pick for beginners is TD Ameritrade. New investors have access to an easy-to-use platform and website through Trade Architect, more than 100 branch offices for live seminars, top-notch research, and much more.

Investools, a premium investing education provider brought to the broker through its acquisition of thinkorswim, is also a great asset. Driven by the Investools team, in 2014 the broker launched a brand-new education center that blew us away and continues to blow us away today in 2017.

Our one gripe with TD Ameritrade is that its virtual trading capabilities are offered only through the thinkorswim platform, which has not been built with new investors in mind. This caveat aside, TD Ameritrade is the best environment for new investors.

TD Ameritrade Trade Architect

Earning a recommendation based on its platform alone is OptionsHouse. OptionsHouse’s web-based platform requires no minimum deposit for access ($100 deposit for real-time quotes) and is a great atmosphere for any beginner.

Whether stock or options trading in a virtual or real environment, the platform defines ease of use. Personal notes can be added to stock charts as well as any new trades being made (trade tagging also allows for speedy post-trade analysis).

The one major caveat with OptionsHouse is its education center, which is primarily housed on the platform; beyond a handful of options articles, it’s very weak. Also, OptionsHouse’s research capabilities are nothing spectacular. Despite the drawbacks, however, OptionsHouse is still a winner for beginners.

OptionsHouse watch list

Other top brokers in this category include Scottrade, Fidelity, and Capital One Investing. Scottrade shines with its massive network of 505 local branch offices, its ever-increasing variety of on-site educational content, and the easy-to-use Scottrader Streaming Quotes platform. Alternatively, Fidelity offers clients access to industry-leading research, an easy-to-use website, and excellent on-site education. Capital One Investing is also well-known for its cleanly designed and easy-to-use website.

Scottrade Streaming Quotes

Navigating the challenges of being a new investor is no easy task. That is why having a good broker to instill confidence while new investors are learning the rules of the game will pay big dividends down the road.

TD AmeritradeScottradeFidelity OptionsHouseCapital One Investing
Has Education - Stocks Yes Yes Yes No Yes
Has Education - Options Yes Yes Yes Yes No
Virtual Trading Yes Yes Yes Yes No
Desktop Platform (Windows) Yes Yes Yes No No
Web Platform Yes Yes Yes Yes No
New Investors 5 Stars 4.5 Stars 4.5 Stars 4.5 Stars 4.5 Stars

Online Trading Basics

When trading stocks as an online stock trader, you are buying shares of a company that is publicly listed on a stock exchange. It is important to understand that trading stocks is different from ETFs (exchange traded funds), options (derivatives contracts), and CFDs (contracts for difference). Buying shares of stock means taking actual ownership in that company.

To place a stock trade, you fill out an order form with your online brokerage. The typical trade form includes the stock symbol, buy / sell, quantity, order type, and time in force.

The stock symbol is also known as the ticker, for example Apple's stock symbol is AAPL, Disney's is DIS, and Google's is GOOGL. To pull up a stock quote, you use the company's symbol, for example here is a stock quote for Apple (AAPL).

The most common order type is a market order, meaning to buy or sell at the national best bid offer (NBBO). The other most popular order type is a limit order.

Finally, the time in force is set to designate when the trade is active. The default option is "Good-until-cancelled", which traditionally means expiration within sixty days. Time in force is also used to designate trades for pre and post-market hours.

Best for Investor Education

Based on 20 different variables, here is a summary of the top five brokers for investment education:

  1. TD Ameritrade - Scored 100%
  2. Fidelity - Scored 93%
  3. E*TRADE - Scored 90%
  4. Charles Schwab - Scored 85%
  5. Merrill Edge - Scored 83%

Over the years, the educational offerings from online brokers have grown considerably. Brokers have realized that providing robust education on options trading basics and strategy, for example, yields more active and confident clients.

In our assessment and ranking of online brokers’ educational offerings, we have looked beyond just having investor videos or archived webinars. Instead, we have weighted the quality and quantity of each education type. We spent endless hours reading articles, watching videos and webinars, and even reading client magazines to find a true champion.

TD Ameritrade clients have access to over 200 videos, a points system tied to progress tracking, and even badges to encourage continued learning.

The top three finishers this year impressed us. In first place, once again, is TD Ameritrade, which blew us away thanks to its interactive education center driven by its premium education subsidiary Investools. TD Ameritrade clients have access to over 200 videos, a points system tied to progress tracking, and even badges to encourage continued learning. The Ticker Tape portal, together with the quarterly thinkmoney client magazine, are two other highlight offerings (Charles Schwab is the only other broker that mails out a client magazine throughout the year).

TD Ameritrade education learning center

Moving up to second place this year, Fidelity continued to make progress, expanding its Learning Center that was launched in 2013. Content is sorted by experience level, category, and content type. The depth of content is truly impressive, with articles, videos, and webinars, as well as infographics and courses. Courses create a roadmap of both articles and videos to follow, with each step being tracked for completion so you can easily pick up where you left off.

Fidelity education course

In third place is E*TRADE, which offers one of the diverse and best-organized education centers in the industry. ETRADE’s education center includes short videos as well as archived webinars and a slew of third-party articles. Content can be filtered by ratings, skill level, type, or category. The one primary drawback is navigation; once you navigate to an article or video, there is no easy way to navigate back to the education home without clicking the back button on your browser.

E*TRADE education center

The brokerage industry overall has realized that organization, variety, and depth are extremely important components. Each attribute is dependent on the other, and while quality education shouldn’t be the only reason to choose a broker, it certainly is a nice complement to the primary offering.

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All pricing data was obtained from a published web site as of 01/08/18 and is believed to be accurate, but is not guaranteed. The staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the bottom of this page. For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.

TD Ameritrade, Inc. and are separate, unaffiliated companies and are not responsible for each other’s services and products. Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading privileges subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options. Offer valid for one new Individual, Joint or IRA TD Ameritrade account opened by 9/30/2018 and funded within 60 calendar days of account opening with $3,000 or more. To receive $100 bonus, account must be funded with $25,000-$99,999. To receive $300 bonus, account must be funded with $100,000-$249,999. To receive $600 bonus, account must be funded with $250,000 or more. Offer is not valid on tax-exempt trusts, 401k accounts, Keogh plans, Profit Sharing Plan, or Money Purchase Plan. Offer is not transferable and not valid with internal transfers, accounts managed by TD Ameritrade Investment Management, LLC, TD Ameritrade Institutional accounts, and current TD Ameritrade accounts or with other offers. Qualified commission-free Internet equity, ETF or options orders will be limited to a maximum of 250 and must execute within 90 calendar days of account funding. No credit will be given for unexecuted trades. Contract, exercise, and assignment fees still apply. Limit one offer per client. Account value of the qualifying account must remain equal to, or greater than, the value after the net deposit was made (minus any losses due to trading or market volatility or margin debit balances) for 12 months, or TD Ameritrade may charge the account for the cost of the offer at its sole discretion. TD Ameritrade reserves the right to restrict or revoke this offer at any time. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. Please allow 3-5 business days for any cash deposits to post to account. Taxes related to TD Ameritrade offers are your responsibility. Retail values totaling $600 or more during the calendar year will be included in your consolidated Form 1099. Please consult a legal or tax advisor for the most recent changes to the U.S. tax code and for rollover eligibility rules. (Offer Code 264) TD Ameritrade Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2017 TD Ameritrade.