Best Online Brokerages for Trading Stocks

Last Thursday, Robinhood users filed a class-action lawsuit against the company's decision to restrict transactions of individual investors, while allowing hedge funds to trade the same stocks freely. 75% of users say they plan to leave and another 13% say they have already switched platforms.

Related: How to Transfer from Robinhood without Paying Capital Gains

Looking for the best online brokerage to actively trade stocks? If you want to actively trade stocks, then you need a good platform to handle your trading. You should look for platforms with zero to low commissions, adequate tools, and plenty of research options and a good reputation for executing trades.

First, we want to educate you so you come fully armed with the knowledge to make an educated decision. Second, this is not advice and we're not in any financial agreement or contract. FTC requires that we let you know that this is not “financial advice” and do your own due diligence.

Qualifications for Day Trading

There is a day trading rule known as the PDT. Pattern day trader is a designation for those traders who execute 4+ trades over a 5 business day span. Get more info on pattern day trading on Investopedia.

In order to remove the restriction, you must have a minimum account balance of $25,000 and meet specific margin requirements. According to the SEC, a day trader is someone that makes at least four ‘day trades’ in a five-day period. But you can still make trades to build up to the $25,000 mark.

How Do Online Brokerages Make Money

By now, you're probably familiar with zero commission trading platforms. Platforms like Robinhood generate 40% of its revenue from selling orders to “market makers” like Citadel Securities.

In this example, Citadel pays 0.26% to process the orders through their platform. For every $1,000 of stocks bought, Robinhood makes $2.60. This is called “Payment for Order Flow” and can be very risky during volatile times, especially during the 2021 Short Squeeze of GameStop.

Online Brokerages make money and generate revenue through:

• They sell order-flow data.
• Earn interest on available cash.
• Loan clients cash to buy on margin.
• Lend out securities to short sellers to make money when price drops.
• Membership fees for extra tools.
• Investment Advisors.

Best Online Brokerage for Trading Stocks

Public

Public is a stock and ETF trading app founded in 2017 who offer commission-free trading with no minimum deposit to start investing. They recently added the ability to tip on your winning trades so they can make money. The idea is that if they have millions of people tipping, they won't have to rely on payment flows for orders.

They just posted that they are getting rid of the “payment flows for orders” due to last week when Robinhood started limiting trades and claiming that they didn't have enough funds to cover, which in turn manipulated the price of a few stocks which benefit the billionaires who were shorting the stocks.

Public Stops PFOF

Here's a direct quote from Public:

 We started off with zero commission, accepting it as the standard of the industry — and in turn, we participated in Payment for Order Flow (PFOF). This is a practice where brokerages are paid to route orders to market makers for trade execution, creating a potential conflict of interest between brokerage and customer.

To do the right thing for our customers, we have to lead the industry with first principles thinking, and proper values.

Public will stop participating in Payment for Order Flow and introduce tipping.

To align our incentives with those of our members, we will stop participating in the practice of PFOF and instead introduce a tipping feature on trades. By doing this, we can remove this conflict of interest from our business model.

Trades will remain commission-free and tipping is entirely optional. Members of the Public.com community can freely decide if they’d like to leave a tip to help pay for the cost of executing their trades. The reality is that there is no such thing as free trades.

We have notified our clearing firm that we want to be off the “PFOF rails,” and we started the process of getting that done on Saturday, Jan. 30. With the help of our clearing firm, Apex, we will route all orders directly to exchanges (e.g. Nasdaq and the NYSE).

Direct routing to the exchanges is more expensive, and therefore we’re turning what used to be a revenue stream (PFOF) into a cost center and we’re optimistic that the difference will be offset by the optional tipping feature. This process of transitioning to exchange execution may take a few weeks, and we’ll share updates on Twitter.

Click Here to Check Out Public

Webull

Webull just sent me an email saying they've seen an impressive increase in new users who are transferring away from Robinhood. They are reimbursing “transfer fees” of up to $100.

Webull provides free stock just for opening your account and allows you to trade stocks, ETF's, options and just opened their crypto trading at $0 per trade.

One of the advantages Webull has over Robinhood is their analysis tools and a slightly easier to use Desktop and Mobile app. PLUS, they are very generous with the free stock. This month, they are giving away up to 60 free stock just for opening an account. Click here for details on that promotion.

Webull Features

• Web platform charting with ability to add hotkeys and grid layouts.
• Ability to trade stocks, options, ETF's and crypto.
• Easy to use mobile app.
• Read our full review here.

Click Here to Create Your Account with Webull

TD Ameritrade's Stock Trading Platform is Called ThinkorSwim

TD Ameritrade’s platform, thinkorswim, is great for the active investor. It offers an exceptional array of research and tools meant for active investors just like you. If you're brand new to trading, then I recommend starting with THIS platform and using their paper trading simulator. That way – you practice, get good at it before you dive in with real money.

Features:

• Practice trading with ‘virtual money’ before diving in
• $0 commissions on online stock, ETF, and options trades
• 24/5 trading, which allows you to trade stocks 24 hours a day five days a week
• Get access to advanced trading tools
• Get access to more than 400 technical studies
• Large selection of investment options

E*TRADE

E*TRADE is one of the longest standing online brokers. Great for those just starting in day trading as well as experienced investors, E*TRADE offers a fast system that’s easy to use. If you start to daytrade, please contact your local E*Trade rep who can release any restrictions on your account.

Click Here to View the e*trade's cash bonuses when you open an open.

Features:

• $0 commissions on stocks, ETFs, and options
• A wide range of options including stocks, ETFs, options, futures, and mutual funds
• Exceptional charting tools that provide technical analysis
• Risk analysis tools that help you make fast decisions
• 24/7 customer service

eTrade is not generous with the free stock like Webull or even, Robinhood. You can refer friends and get a $50 Amazon gift card (up to ten per year). If you signup for eTrade, we get a $50 Amazon gift card which we will use to upgrade our equipment and grow the site.

Click Here to Checkout eTrade

Fidelity

If there’s one thing you need as a day trader, it’s effective order execution as time is of the essence and Fidelity offers it. Firstly, Fidelity provides consistency and reliability that you want in a trading platform. Secondly, Fidelity is one of the most stable companies out there today. As a result, you get excellent trade executions and terrific research screeners.

Features:

• Real-time insights
• Get real-time alerts allowing you to make fast decisions
• No account fees
• $0 commissions
• Low margin rates
• Research from more than 20 sources
• Zero expense ratio index funds

Charles Schwab's Edge Trading Platform

Let me show you why Charles Schwab’s StreetSmart Edge trading platform makes day trading a breeze. StreetSmart Edge is great for the beginning day trader as well as the expert, as the system easily grows with you. Because it provides a wide variety of tools and services designed to appeal to ALL levels of investing, including beginners.

And now, Schwab has acquired thinkorswim from above as of August 2020.

Features:

• Risk management features that help you make quick decisions that protect your portfolio
• Access on any device
• Get real-time news
• Utilize advanced stock charting
• Access to reputable research
• Trade multiple securities on one ticket
• $0 online commissions for stocks, ETFs, and options

TradeStation Stock Trading Platform

TradeStation leads the pack in technology with its innovative offerings both on the desktop and mobile devices. If you're looking for an all-in-one platform, TradeStation puts everything day traders need under one roof and charges $0 commission on trades.

Features:

• $0 commissions on stocks, ETFs, and options
• Cutting edge technology that provides the power day traders need
• Access to free webinars and courses
• Watch live demos from the ‘pros’
• Advanced trading tools
• Offers cryptocurrency trading

Questrade

If you live in Canada, this is one of the best platforms outside of the USA since $0 trade is not a thing in Canada. Most Canadians love the stand-alone system for both computer & smart phone.

And they charge different commission amounts depending on your trading style. Is Questrade a good idea?

Questrade is a great broker for active traders who want to reduce their commission costs. Long-term investors, with more than $5,000 CAD in their account, also benefit from low commissions as well as access to no-cost-to-buy ETFs and managed portfolios with low yearly fees.

Do your research, consult with your financial advisor and choose the stock trading platform that suits your needs. Most platforms today offer $0 commissions, but it’s not just about the cost. Think about the features offered and how they help you make the smart trading decisions you need to succeed.

Related Articles:

• Learn to Trade Options with Danny Devan
• Learn to Trade Stocks with Ricky Gutierrez
• What Stocks to Buy Now
• What Stocks Do Well Under President Biden
• The Top 5 Books Every New Investor Should Read

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