As more and more brokers come to offer trading in individual stocks, our experts have selected the best 100 and then assessed them all in terms of the scope of their respective offerings. Then we narrowed the list down to the best 5 online stock trading brokers, which we present to you here.
Daily market research and Autochartist access
High level regulation in multiple jurisdictions
Impressive range of tradeable assets including vanilla options and gold options
High floating leverage + fast execution
CFD service 72% lose money
Best platform for new Forex traders
CFD service 72% lose money
Marketsi strategy builder helps traders trade smarter
Competitive trade execution with low slippage
5.0/5 in this category
ECN trading with leverage up to 1:500
Founded in 2005, FP Markets is a forex broker based in Australia and is one of the world’s most popular forex and CFD brokers. FPMarkets offers the MetaTrader 4 (MT4) as well as the MetaTrader 5 (MT5) trading platforms, alongside WebTrader and IRESS platforms, low forex fees and very fast transaction turnarounds. In addition, clients can enjoy trading in over 10,000 different shares and stocks, as well as over 60 forex pairs and crosses, 5 cryptocurrencies, 11 equity indices, all of the major commodities, and a number of top publicly traded shares traded on both the Sydney and the Hong Kong stock exchanges. FPMarkets features multiple licensing through top regulators including the Australian Securities and Investments Commission (ASIC) as well as the Cyprus Securities and Exchange Commission (CySEC). In addition to those, FPMarkets is regulated through the Financial Services Authority of St. Vincent and the Grenadines. FPMarkets has its main offices in Sydney, Australia and, since its main regulator is Australian, traders will generally be able to benefit from a more relaxed view on leverage. This essentially means that you’ll find that leverage at FPMarkets can be as high as 500 to 1. CFD fees at FP Markets are on the high side and product variety is somewhat limited to CFDs (indices, metals, and equities), forex, and cryptocurrencies.
MetaTrader 4, MetaTrader 5, Web-based, IRESS
FPMarkets Pros & Cons
Choice of trading platforms and auxiliary trading tools
Very competitive cost structure and excellent asset selection
Low minimum deposit requirement and leverage of up to 1:500
Well-regulated and trustworthy
5.0/5 in this category
Highly regulated, choice of fixed or floating spreads
AvaTrade was founded as far back as 2006 making one of the true pioneers in the online brokerage space. This online stock brokerage has a long track record and well-established, high reputation to protect which is always something which can help traders feel secure.
AvaTrade is headquartered in the Republic of Ireland within the European Union, ensuring that the broker gets a high standard of regulation. AvaTrade is also regulated in five other jurisdictions: Australia, Japan, South Africa, Canada (via Freidberg Direct), and the British Virgin Islands. The British Virgin Islands is used for clients who are not resident in the European Union or any of the aforementioned jurisdictions.
AvaTrade allows trading in over 100 different stocks and shares listed on the NYSE, NASDAQ, FTSE, and certain other major exchanges. The stocks are traded wrapped as CFDs. Leverage of up to 20 to 1 is offered on stock trading.
AvaTrade’s stock trading fees are low. Stocks offered are essentially focused on major market listings in traditional stock markets of interest such as the U.K. and U.S.A. but crucially, a wide enough selection is offered to ensure a reasonable level of diversification can be secured when required by the trader.
AvaTrade has excellent trading tools, including an easy-to-use mobile trading app.
5.0/5 in this category
Best all-around: high floating leverage + fast execution
FXTM was founded in 2011 and is headquartered in the U.K., Cyprus, and Mauritius. It enjoys a very high level of regulation including by the regulatory authorities of both the U.K. and the European Union, so depositors can feel like they enjoy a high level of security here.
FXTM offers trading in Forex, commodities, equity indices, and of course individual stocks and shares.
Fees are on the low side, especially in the ECN-style account type option if chosen. FXTM also offers its clients access to a unique copy trading program called FXTM Invest.
Most residents outside the U.K. and the European Union are serviced through FXTM Mauritius which makes available a very high level of maximum leverage to those clients wanting to use it.
FXTM offer online stock broking for the top American shares in two different formats: a wide selection of over 120 stocks can be traded as certificates for deposit (CFDs), while 10 stocks can be bought and sold directly without any wrapping of legal ownership. Leverage as high as 10 to 1 is offered.
FXTM’s stock trading fees are acceptable. The trading fees for trading stocks with direct ownership beat FXTM’ direct competitors for the same service. Trading is restricted to the hours when the underlying stock exchanges are open to ensure accurate pricing and deep liquidity.
FXTM offer outstanding trader tools that includes the mobile app, which is our favorite for active traders.
4.5/5 in this category
Wide range of CFDs + trailing stop losses
Plus500 was founded in Israel in 2008. Its de facto headquarters is in the U.K. and it is a publicly listed company in the U.K. on the FTSE 250. This broker’s status as a publicly traded company in one of the world’s most well-regulated financial centers gives its clients an extra level of security. Its long track record and good reputation also contribute to the aura of safety here.
Plus500 enjoys a very high level of regulation: it is regulated not only in the U.K. but also in Australia, New Zealand, South Africa, Singapore, and Israel.
Plus500’s stock trading fees are very low, and an extremely wide variety of stocks and shares are offered for trading. Many brokers list only the top one or two hundred of the most highly traded global shares by volume in the major stock market indices, but Plus500 takes it much further, offering more than ten times the variety of most brokers with stocks and shares on the menu.
Although the maximum leverage offered can vary depending upon the trader’s country of residence, the maximum leverage offered by Plus500 is relatively low, at only 5 to 1. However, this is undoubtedly more than enough for any trader who wants to trade stocks. Plus500’s mobile app is a winner for investors because it is easy to use, packed full of market research, and includes a wide variety of trading tools.
4.5/5 in this category
Excellent educational offerings
Markets.com offers stock traders a number of useful and professional features including the Marketsi strategy builder, designed to help traders trade smarter. In addition, Markets.com offers competitive trade execution with low slippage. This Forex and CFD brokerage is considered to be a safe option for both professional and retail traders, thanks to its- high level of regulation. This is comprised of no less than five regulatory jurisdictions, which includes two tier-1 regulators by way of the United Kingdom (FCA), the European Union (CySEC), as well as Australia (ASIC), South Africa (FSCA), and the British Virgin Islands (BVI FSC). Markets.com offers stock traders the option to trade as well as to invest, thanks to a wide range of assets. This allows traders to implement trend following strategies and retail platform diversification. Another feature that makes Markets.com so attractive to both seasoned and novice traders, is easy to use technology and attractive, well-designed tools and platforms. There are two main trading platforms that are available at Markets.com: Marketsx and Marketsi. Marketsx is designed to serve the needs of forex and CFD traders, while the Marketsi platform is designed for investment and long term speculators. For forex traders, Markets.com offers very competitive fees, although their fees for commodity and CFDs are a bit more expensive. That said, you can expect 0,7 pips charge on benchmark USD/EUR currency pair, which is favourable when compared to the industry average.
Markets.com Pros & Cons
Very Competitive Forex Fees
Very Wide Choice of Assets
Choice of Trading Platforms
Excellent Customer Support
ECN trading with leverage up to 1:500.
Highly regulated, choice of fixed or floating spreads.
Best all-around: high floating leverage + fast execution.
Wide range of CFDs + trailing stop losses.
- Account Security, i.e. the security of your deposit judged on the regulatory position and reputation of the stockbroker. You need to be sure you will get your money back if and when you ask for it.
- Trading Fees (spreads, commissions) are not the only determining factor you should consider when choosing an online stock trading broker, but you should not be paying more than the industry average unless you are getting access to some service which gives you a special benefit.
- Choice of stocks and shares to trade.
- Account minimums – some brokers will not let you open an account without a minimum cash deposit. Can you afford the minimum deposit required by your first-choice stockbroker?
- Other fees, such as overnight financing, inactivity fees, and withdrawal fees which may be charged. These are always worth checking.
- Speed of order execution
- Market research (not usually very important)
- Customer service
- Free trading tools
- Retirement / investment account options (tax compliant)
- Banking options
In many ways, the best online stock trading brokers for beginners are the same as the best for everyone else – safety, regulation, and the cost of trading being basically the same for all clients. However, there are a few special issues which beginners would be wise to consider when choosing a broker:
- Low fees / cost of trading may be especially helpful to beginners, as beginners usually need as much help to profit as possible. Beginners also tend to overtrade which can increase overall costs.
- Does the broker offer truly good education and market research, or just a gimmick packaged to look like it?
- Easy, intuitive trading platform.
- Consistently reliable execution is more important than average execution speed.
Advanced traders will probably be trading larger accounts and are likely to be trading in higher volumes too. More experienced traders will also probably be more interested in trading a wider variety of stocks and can benefit from the provision of advanced trading tools.
For these reasons, we think Plus500 is the most suitable broker for advanced traders looking for an online stock trading broker.
A stockbroker is a business which sells and buys stock, or some instrument tied to the value of a stock, to its clients. Online stock trading brokers are a bit unique as they are effectively obliged to return the other side of any transaction initiated by a client once it has begun. This means that if you buy a stock from an online brokerage, they are obliged to let you sell it back to them, and if you sell a stock short, they are obliged to let you buy it back. The timing is up to the client, although online brokers are usually only open for trading in individual stocks during the hours the relevant stock exchanges are open.
Stockbrokers traditionally make their profit from spreads (small differences between the buy and sell price which tend to persist) and/or commissions. However, online retail stockbrokers may also profit from their client’s trading losses when they make the relevant market instead of acting as an exchange or intermediary.
When it comes to how much money you need to start trading with online stock trading brokers, there are two issues to consider.
Firstly, most stockbrokers have a minimum deposit requirement, so you are going to need at least that amount of money to start investing – mind the minimum deposit requirement. Secondly, ask yourself how much do you need to trade stocks successfully given the anticipated win rate of your trading strategy, as well as the minimum position size and margin requirements imposed by your stockbroker of choice?
For example, if you accept that you might have 20 losing trades in a row as a worst-case losing streak, and the minimum trade size accepted by your broker is $50, and you use maximum leverage at 20 to 1, and you will on average lose $20 per losing trade, you will need to plan for a potential loss of $400 (twenty times $20 stake per trade). If you want to aim for a worst-case maximum drawdown of 20%, then you will need to multiply that $400 by five to determine your overall starting account size.
Simply put, it is important to work out your worst-case scenario, decide the biggest account drawdown you are prepared to accept, and then apply that to the terms your broker imposes. It is a good idea when choosing an online stock trading broker to apply this data to each potential broker you are considering, as you will then see which broker is best suited to the amount of money you have available to deposit.
Why do investors use discount brokers?
A discount broker is a brokerage which offers its clients the ability to trade assets such as stocks and shares, but which does not also offer ancillary services which are traditionally also provided by brokerages such as market research, investment advice, and estate or even tax planning. Investors use these brokerages because discount brokers can keep their costs down by dispensing with any requirement to finance the necessary cost of these activities, and hopefully pass the savings down to their clients in terms of lower spreads, commissions, and overall trading fees. This is especially logical for clients who feel they either do not require any of the aforementioned supplemental services or cannot afford them as “nice to haves” rather than as “must haves”. It comes down to economy.
How do I buy stocks online?
While it is possible in theory to buy stocks online from individuals who happen to own them, this is neither practical nor widespread, and potentially runs afoul of several regulatory issues, especially when the stocks being bought are stocks in publicly traded companies. The best way for an individual to buy stocks online is by opening an account with a regulated, registered online stock trading broker. Once the account is open, you can go about buying stocks online from your chosen broker. The broker takes care of ensuring underlying legal ownership is registered in the name of the customer and also all other necessary bureaucracy which is imposed upon any change in ownership in shares of a publicly traded company, with the exception of a few unlikely obligations which might theoretically fall upon the individual client – for example, many countries require special regulatory filings of information by any individual amassing control of over 10% of the entire issued stock of a public company, but this is not going to happen in the case of a private investor in trader who is not already extremely wealthy.
Can I earn interest on a brokerage account?
Yes, you can earn interest on a brokerage account, but this is usually only possible under certain restrictive conditions making it unlikely that most retail stock traders will benefit from it. It is usual for online stockbrokers to stipulate that they will pay interest only to an account which maintains an average positive balance above a certain amount, and then interest is paid only on that amount. For example, one stockbroker currently pays interest only on the amount of average positive balance above $10,000.
An additional obstacle to receiving any meaningful interest on a brokerage account is that although interest rate environments can change from month to month or year to year, for the past several years all developed countries have been operating within a very low interest rate environment. This means that even banks will pay very low rates of interest on savings accounts. So, even if you do qualify to receive interest on a positive balance on your brokerage account, you will receive very little while low base interest rates are in force concerning the currency in which your account is denominated.
Retail stock traders or investors should not be much concerned with earning interest from their brokerage account. Traders or investors looking to earn interest might consider investing in ETF bond funds which effectively pay an interest coupon every month, although this of course involves risk of the price of the underlying fund decreasing in value, so it is more risky than simply receiving interest on principal.
What is a stock trading fee?
A stock trading fee is any fee that a broker charges a client for trading in a stock: basically, this is any type of fee charged by a discount broker with the exception of account inactivity fees which may be levied by some after a specified length of time has elapsed without a client opening or closing any trades. It can be helpful for a client to look at the cost of all such fees together as a “cost of trading”, as it can then be seen more clearly whether the overall trading service is well-priced.
Stock trading fees are typically made up of the following components:
- Commissions – these are usually flat percentages based upon the cash value of the trade, i.e. the total value of the stocks being bought or sold. Some brokers apply a sliding scale of commissions which decrease as the trade size increases, meaning that proportionately less commission is paid on larger trades.
- Spreads – brokers will usually offer to sell you something at a slightly higher price than what they will buy it back for you at, even if you sell it back to them immediately within a split second of buying it. This difference between the buy (known as a “bid”) and sell (known as an “ask”) prices is called the “spread” and along with commissions, is the staple basis of the income stream of brokerages.
- Overnight Financing Fees – with the exception of Islamic trading accounts, or accounts which allow clients to buy direct ownership of underlying stocks, almost every retail online stock brokerage will apply a charge overnight to every account which holds a trade open past the day’s New York close. The charge is essentially justified by the use of leverage, which is effectively borrowing, so you can think of it as an interest charge on money borrowed to buy stocks, where it applies to a long (bought) stock position. Alternatively, if you have sold stocks short, you have borrowed them from the broker and then sold them back to the broker, so you are paying daily interest on the value of the shares which you borrowed in the first place. Overnight financing fees are usually much higher when short positions in stocks are held than when long positions are opened.
- Negative Dividends – most brokers pay dividends as they are paid by the company to their clients holding long positions in the underlying stocks. This means that if you have sold stocks short, and a dividend is issued, you are liable to pay the value of that dividend to your online stockbroker as part of the loan of the shares the broker made to you. This is not truly a stock trading fee, but it can be an unavoidable cost of making a short trade in stocks if the trade is kept open past a dividend date.
Is my money insured?
Clients depositing money with an online stock trading broker want to know if their deposit is insured in case the broker goes bankrupt and becomes unable to return client funds upon receiving a withdrawal request.
The answer varies according to the country in which the broker is based. Generally, if a broker is regulated in a country with good regulation, the regulator is already working hard to ensure that brokers keep client funds strictly separate from their own funds, and to ensure that the broker maintains a minimum amount of capital deemed as likely to be necessary to prevent the broker from becoming bankrupt.
Clients wanting to know whether the national regulator of a broker will insure their deposit or at least a part of their deposit should directly ask the broker about this, as well as whether the broker has arranged any insurance for clients themselves. In the U.S.A. depositors are typically insured to up to $500,000 on most assets, and many stockbrokers have their own excess insurance. Similar insurance is available in the European Union.
What type of brokerage account should I choose?
Some online stockbrokers offer different types of trading accounts, which typically require different minimum deposits, with the accounts requiring larger minimums usually offering lower trading fees or some advanced feature which may be useful.
If you are offered such a choice of account types by your preferred broker, the correct decision for you is certainly going to depend upon your individual circumstances regarding what kind of stocks you want to trade and the anticipated size and frequency of your trades.
How quickly can I start trading?
Modern online stockbrokers are required to verify proof of identity and secure an initial deposit before allowing a new client to start trading. The good news is that onboarding processes have mostly become so streamlined that taking the first step to open a new account and making the first trade there can often happen in the same day.
At DailyForex, we have assembled a team of expert traders who have experience in trading their own money with retail online stock trading brokers to conduct an overall assessment of what is on offer in this space. They examined the 100 most well-established brokerages offering trading in individual stocks, and gave most weight in their assessments of each concerning cost of trading, reliability of execution, and internal and regulatory client protection, while also giving some weight to additional features offered by each broker, mostly concerning ease of use and customer service. The result is a finalized rating for each broker.