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The world of online brokerages has changed in the last decade. Discount brokers have become the norm with their basement busting pricing, while the full-service broker has become more of a rarity as a means for handling all your investment needs in one place.

Discount brokers offer you access to the stock market without paying trading fees, allowing you to have commission-free stock, ETF, options and cryptocurrency trading.

Learn more about the best discount brokers and brokerage accounts available online.

App Rating (out of 5)FeesBest ForPromotions
Webullwebull logo4.7Commission-free tradesSelf-directed investors and intermediate tradersTwo free stocks with $5 deposit, valued between $11 - $2,300 and $5 SHIBUSD w/1 crypto trade
TradeStationtradestation squarelogo4.6Commission-free tradesAdvanced traders, Options and Futures traders, Active stock traders$50 - $5,000 deposit bonus tiers for depositing various qualifying assets
SoFi Invest: iOS, Android and Desktopsofi logo4.6Commission-free tradesInvestors looking for automated investing already using SoFi’s other personal finance productsFree stock worth between $5 - $1,000
Public.compublic logo4.7Commission-free tradesSocial theme-based investing interests$10 free stocks for signing up
M1 Financem1 finance logo4.3Commission-free tradesFee-free active trading and automated investing$30 sign up bonus with $1,000 deposit; 1 year free M1 Plus
Axos Self-Directed Tradingaxos sdt logo4.2Commission-free tradesCurrent Axos Bank customers looking for a basic trading solution or Axos customers seeking premium research and attractive active trading capabilitiesNone
eTradeetrade logo4.5Commission-free tradesOptions tradersFree account bonus commensurate with contributed funds
Firstradefirstrade logo4.5Commission-free tradesMutual fund and target date fund investorsFree account bonus commensurate with contributed funds
eToroetoro logo4.6Commission-free tradesU.S. investors focused on crypto-tradingNone
Vanguardvanguard logo4.2Commission-free tradesBasic ETF investingNone
Robinhoodrobinhood logo4.4Commission-free tradesBasic stock, crypto and ETF investingFree stock with sign up
TDAmeritradetdameritrade logo4.6Commission-free tradesTraders interested in more asset classes like Forex and FuturesFree account bonus commensurate with contributed funds
Acornsacorns logo4.8$1/month - $5/monthInvestors in college looking for a complete personal finance solution; Roth IRAs$10 sign up bonus when making first deposit at account opening
Interactive Brokersinteractive brokers logo4.6Commission-free tradesProfessional investorsNone

Best Discount Brokers and Online Brokerage Accounts

1. Webull: Best Stock Trading App for Beginners


webull sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Self-directed investors and intermediate traders
  • Account Minimum: $0
  • Sign up here

Webull first hit the investing world in 2018 by offering commission-free stock trading in addition to free trades of ETFs, options and cryptocurrencies.

This online discount broker allows you to trade on your smartphone, tablet or desktop, track your stocks and charges no commissions for the trades you make in your portfolio.

It also recently began allowing fractional shares for you to buy smaller portions of stocks with higher share prices.

Why Choose Webull as an Online Broker to Trade Stocks?

Webull also provides you access to several powerful tools useful for in-depth trading analysis. These easily make the service one of the best stock research and analysis apps for conducting technical analysis.

For traders, in addition to the commission-free trading and analytic tools, the discount broker offers a subscription to Nasdaq TotalView for $1.99/month, allowing you to see Level II quotes.

This can help you better understand the supply and demand for a stock outside of the national best bid offer (NBBO).

These advanced quotes will give you a deeper look into the market for understanding market direction and any potential supply and demand imbalances for a stock you pick.

If these brokerage account features sound attractive, the best part might also come with knowing setting up a Webull online stock broker account is free and comes with no account minimums you must meet or maintain.

If all the free listed above isn’t enough, Webull also runs frequent promotions involving receiving free stocks.

Read more in our Webull review.

 

2. TradeStation: Best for Intermediate to Advanced Traders


tradestation

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Advanced traders, Options and Futures traders, Active traders
  • Account Minimum: $0 (TS Go)
  • Sign up here

TradeStation is one of the best online discount brokers for those needing a powerful stock trading platform.

The service is one of the premier online trading platforms which caters to active traders looking to leverage stock analysis tools. The platform comes equipped with brokerage services and educational resources recognized by respected industry reviewers.

Much like every other online brokerage account found on this list, the commission-free stock trading platform charges no commissions for stock and ETF trades on its TradeStation Go platform. It also assesses low fees on options and futures contracts.

TradeStation works well for its target audience: advanced, technically-minded and active traders. Beginning traders likely will be overwhelmed by this service and may even face fees.

The technical tools and screeners provided by TradeStation are all at or near the top of the class, making it the best stock trading platform for active traders looking for discount brokers on this list.

What Makes TradeStation Different?

TradeStation is one of the most high-powered stock trading platforms on this list.

The stock trading platform helps you analyze stocks, options, ETFs, futures, and crypto markets. If you open a TradeStation brokerage account, you can use the company’s robust TradeStation Analytics platform for free.

You have access to backtesting, historical intraday data, and extensive charting capabilities.

TradeStation Analytics helps you find the right opportunities in real-time, get into and out of trades, and discover hidden opportunities with technical analysis.

You can use the commission-free TS Go platform to trade stocks and monitor and rank up to 1,000 ticker symbols in real-time with access to more than 180 technical and fundamental indicators helpful in valuing a stock and identifying likely price action.

If you’d like to purchase the analytics software without using the platform for making your trades, you can pay a monthly fee of $99 for non-professionals and $199 for professional subscribers.

TradeStation Support

If you use TradeStation, you can also receive personalized, strong customer service from the company’s brokerage professionals.

Further, TradeStation provides state-of-the-art trading technology, catering to active individual and institutional traders who may or may not need support.

Consider signing up and opening your account with TradeStation.

 

3. SoFi Invest: Best for Personal Finance-Focused Investors


sofi invest free stocks

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Investors looking for automated investing already using SoFi’s other personal finance products
  • Account Minimum: $0
  • Sign up here: (iOS), Android, Desktop

SoFi Invest is an app that allows you to track and trade stocks. The service is the latest from the SoFi financial wellness platform and offers commission-free trades on stocks, ETFs, cryptos and more.

The discount broker allows you to be an active trader by buying and selling offered assets daily or passive through its automated investing service.

The discount broker wants to serve all customers interested in improving their financial situation alongside participating in their other personal finance products like student loans, money management, credit cards and more.

Related: 6 Best Stock & Portfolio Trackers [Investment Tracking Software]

4. Public.com: Best Discount Broker for Theme-Based Investing


public.com sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: New investors with limited capital
  • Account Minimum: $0
  • Sign up here

Public.com is another commission-free investment app that targets Millennials and Gen-Zers who have attuned their senses to social media. These age groups want to align their investing with their social preferences and keep good company to socialize and learn from others.

The stock investing app boasts an increasingly-common feature geared toward younger investors who may not have enough money to buy some higher-cost shares at one time: fractional investing.

This product feature plays on the company’s mission of making the stock market an inclusive, educational investment opportunity that can be fun. They accomplish the latter point by allowing people to invest alongside friends and other well-regarded investors.

Much like social media platforms that provide the standard blue checkmark logo to verify public figures, Public.com provides visibility into trade activity and other insights these verified investors wish to provide to the Public.com community.

What Makes Public.com Different?

Unlike other commission-free discount brokers on this list, Public.com does not monetize its trading activity by receiving payment for order flow (PFOF).

In light of the GameStop market mania in early 2021, Public.com announced a change in its revenue model, breaking with how many commission-free stock apps generate income.

They no longer generate revenue from PFOF and have introduced a tipping feature in the app, acting as a de facto (optional) commission.

The company believes they have a responsibility to lead the industry in a different direction and no longer receive compensation for routing orders to market makers for trade execution.

With the Robinhood blow-up, we saw how this created a conflict of interest between brokerage and customer.

By doing this, Public.com will better align its financial incentives with the best interests of its customers.

For those interested in starting to trade on Public.com, the online brokerage platform offers a free $10 sign-up bonus if you make an initial deposit. Further, you can share your unique link with others and gift them free stocks (fractional shares) as well.

If this sounds like an interesting micro-investing app, open an account and make an initial deposit to see if the app meets your social and investing needs.

Read more in our Public.com investing app review.

 

5. M1 Finance: Best Brokerage Account to Automate Investing


m1 finance

  • Available via desktop, Apple iOS and Google Android
  • Best for: Passive Investors
  • Account Minimum: $0 (Taxable); $500 (IRA)
  • Sign up here

M1 Finance works as one of the best stock trading apps because it provides self-directed and automated investing options according to your predetermined investment decisions. This high level of customization makes this stock trading app this site’s top robo-advisor pick.

Robo-advisors, which are almost exactly what they sound like, are automated investment managers who handle administrative investment actions on your behalf. Things like investing contributions, rebalancing your portfolio or making automated withdrawals.

Once you set up your portfolio, you can edit it as you wish or let the app handle all the nitty-gritty while learning how to increase your net worth with a growing account balance.

Specifically, clients can create a portfolio of stocks and ETFs tailored to their exact specifications, down to the last dollar, thanks to their ability to trade fractional shares.

However, one prominent callout before going further is that while M1 Finance offers pre-made portfolios aligned to several investing goals, the company is not an advisory service.

That said, the firm has attracted billions of dollars in assets under management and has had over one million users on the stock trading platform since its founding in 2015—no small feat in today’s competitive brokerage account market.

Why M1 Finance?

Sophisticated investors and beginners alike can use this stock trading app to build wealth through customizing your portfolio for free, automating additional contributions and dynamically rebalancing it over time to keep your assets allocated to your wishes.

With all these benefits, this best free stock trading app has a primary selling point: an orientation toward medium and long-term investors interested in building wealth through automated diversified investing.

The robo-advisor provides the ability to buy and sell individual stocks and ETFs hence, why M1 Finance is this site’s best passive investing platform.

Additionally, you can choose from 80+ expert portfolios or even purchase fractional shares if your target companies carry too high of a price tag.

For example, if you wanted to buy an entire share of a major tech company like Google or Amazon but couldn’t float the entire cost, you could buy a fractional share.

Finally, investing with M1 Finance can be as simple as depositing money, setting your stock and index selections and having the platform automate your investments on your behalf.

This truly automates your investments if you set up recurring deposits, allowing your wealth to build.

Over time, M1 Finance will also rebalance your portfolio in line with your stated asset allocation targets. Regular rebalancing has been shown to improve portfolio performance over time, all things equal.

Consider opening an investment account with M1 Finance. If you deposit $1,000, you can even earn a free sign-up bonus.

Read more in our M1 Finance review.

Related: How to Know Which Stocks to Buy: Pick Stocks for the Long-Term

6. Axos Self-Directed Trading: Best Online Broker for Research Tools


axos self-directed trading sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Self-directed investors currently banking with Axos
  • Account Minimum: $0
  • Sign up here

Axos Self-Directed Trading (SDT) offers no commission trading on US-listed equities—providing you with an easy-to-use platform and the tools you need to succeed.

Axos SDT also saves you time with an intuitive interface and mobile access so that you can trade anytime or anywhere.

So, how will Axos help your self-directed investing experience?

For starters, Axos SDT offers commission-free equity and exchange-traded funds as well as access to 10,000+ mutual funds.

Where Axos SDT differs from its competitors is its unified financial dashboard with its other Axos Banking products, allowing you to sync all of your accounts in one convenient place.

If you’d like to upgrade to a higher level of service, you might consider Axos Elite. This service provides:

  • Instant fund access
  • Lower fees
  • Increased buying power with leverage
  • Enhanced market knowledge through real-time market data expert insights and premium TipRanks market research

You can open individual taxable accounts, joint accounts and retirement accounts (IRAs).

Related: How to Get Rich Off Stocks [Steps to Invest in the Stock Market]

7. E-Trade: Best Online Brokerage Account for Options


e-trade sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Options trades
  • Account Minimum: $0
  • Sign up here

E-Trade has long been seen as a leading stock trading app for retail investors. E-Trade provides investors access to educational resources that assist you with conducting investment research and analysis and diversifying your portfolio.

The online brokerage platform also has a significant amount of options trading and data functionality after the company acquired OptionsHouse.

These tools can assist with making more-informed options investment decisions. The company also acts as a stock futures app for more experienced investors.

As another service, E-Trade also offers retirement planning to clients and in-person informational sessions annually in certain areas.

E-Trade has three platforms, and all are free and have no minimum investment limit.

  1. Power E-Trade offers investors real-time data and studies.
  2. E-Trade Web provides live market commentary and stock analysis.
  3. E-Trade Pro gives you strategy scanners and backtesting.

Each stock trading platform gives you access to a dashboard for tracking your investment accounts, types of investment vehicles, and your trades. E-trade does have small fees for options contracts and some fees involved with retirement accounts.

Related: 8 Best Swing Trade Alerts Services [Identify Profitable Trades]

8. Firstrade: Best Discount Broker for International Investors


firstrade sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Mutual fund and target date fund investors
  • Account Minimum: $0
  • Sign up here

Firstrade is a leading online brokerage firm offering a full line of investment products and tools designed to help investors improve their financial position through sound investing practices.

Like every other investing app provided on this list, it too does not assess trading commissions for making stock trades.

Firstrade combines proprietary trading technology with an intuitive user interface, offers customer service availability and utilizes a mobile application like all others in this article.

In short, the platform offers access to over 11,000 different investments, including index funds, stocks, bonds, target-date funds, mutual funds, and more.

Firstrade offers a comprehensive solution for all of your investing needs, committing itself to excellence and putting customers first.

Related: 13 Best Stock & Investment Newsletters for Inbox Alpha

9. eToro: Best Discount Broker for Crypto Trading


etoro sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: U.S. investors focused on crypto-trading
  • Account Minimum: $50
  • Sign up here

If you’d like to invest in more than just stocks or ETFs and also invest in cryptocurrencies like Bitcoin, Ethereum and Dogecoin, you might want a high-powered, user-friendly app like eToro.

eToro is the world’s leading social investing platform, offering a social trading feature where you can learn and copy the strategies of other traders.

If you are a profitable trader, you can have eToro users follow you and earn income based on how well you perform and how many people follow your trades.

The platform offers multi-asset trading capabilities with over 2,000 instruments available through the brokerage. You can trade crypto and other assets in 14 exchanges worldwide.

eToro can fulfill your needs for crypto investing by offering commission-free trading on 17 cryptocurrencies and other assets. Opening an account is simple and only takes $50 to start.

The bad news is that the forex fees are high, and a $5 withdrawal fee is charged.

Transacting in virtual currencies is subject to various risks, such as price volatility, and is therefore not suitable for everyone. Your capital is at risk.

10. Vanguard: Best Discount Broker for Vanguard ETF Trades


vanguard sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Investors looking for a simple index fund investing app
  • Account Minimum: $0
  • Sign up here

Vanguard has long been regarded as the low-cost index fund investing service provider. John Bogle originated the idea of index fund investing and first offered them to retail investors as mutual funds and eventually exchange-traded funds (ETFs).

The company has slashed fees over the years in a bid to outcompete other companies in the space and will always advocate for a low-fee index fund approach to investing.

Vanguard excels as a free stock trading platform when you wish to buy and sell Vanguard securities like index fund ETFs. You pay no commissions on their products like VTI or VTSAX, or VFIAX.

Vanguard recently announced it would no longer charge trading fees on competitors’ ETFs, a departure from a long-standing position. Vanguard also carries no account minimums.

What Vanguard lacks compared to some of these other apps is its clunky nature. I use the app to manage my work’s 401k plan and admit to its bloat and lack of clarity on calculating investment returns on a percentage basis.

My main beef with their interface is my performance statistics will not save after I add them to assess how my funds have performed. All that said, Vanguard might have made this by design, incentivizing you to check your funds less often and thus living by their index fund ethos.

11. Robinhood: Best Discount Broker for Simple Trading


robinhood

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Investors looking for a simple, no frills investing platform
  • Account Minimum: $0
  • Sign up here

Robinhood became the first free stock app to slash trading commissions to $0. This shook up the industry and caused several competitors to rethink how they make money and follow suit.

Many merged as a result in the hopes of shedding costs and remaining competitive to this investing startup.

Likewise, many new apps like Robinhood have cropped up in recent years, many feature on this list.

The service boasts free stock trading alongside index funds, options, penny stocks and cryptocurrencies.

Robinhood’s app offers a simple and easy-to-use design. There aren’t numerous features called out to distract you from what you are using the app to accomplish: trade commission-free.

Like Webull, Robinhood has no fees upon account opening and includes no minimum balance requirements. These brokerages have been at the Vanguard for eliminating the common barriers associated with investing in the stock market.

Consider signing up for a Robinhood account to see what you think. The company makes it worth your while by offering a free stock for signing up.

Related: 12 Best Stock Picking Services, Sites, Advisors and Subscriptions

12. TD Ameritrade: Best Discount Broker for Traders in Forex and Futures


tdameritrade sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Best For: Traders interested in more asset classes like Forex and Futures
  • Account Minimum: $0
  • Sign up here

TD Ameritrade is another one of the best discount brokers on this list. It is a popular brokerage that recently purchased Scottrade and now is being purchased by the mega-retail brokerage Charles Schwab.

For the time being, the brokerage has managed to shed commissions on their clients’ stock and ETF trades (with competitive threats from Robinhood and Webull).

The company’s scale has garnered a sizeable retail trading presence, and many have come to use the service for many of its free or low-cost trading features.

You may have heard of the company through its thinkorswim stock trading platform, widely touted as a premier trading service. The company backs this platform with insights, education materials and a dedicated trading desk to place your trades.

It offers a fully-customizable trading experience that can pin down however complex a trading strategy or technique you might want to employ.

You will want to be careful about TD Ameritrade for some investment choices. When sorting through the company’s security choices, make sure you filter for no-load ETFs before buying.

Likewise for mutual funds and equity trades, lest you get hit with a fee for trading certain stocks and equities.

13. Acorns: Best Online Platform for Simple Investing


acorns

  • Available via Apple iOS and Google Android
  • Best For: Young investors for a complete personal finance solution
  • Sign up here

Acorns is an investing app for minors and young adults who wish to start with a small amount of money which will grow into a large portfolio over time. Hence the name, Acorns, and the company’s goal of maturing from an acorn into a mighty oak tree.

The service doesn’t charge money to make trades on your behalf, but it does charge an account fee depending on the services you select for your account. Currently, the service has two offerings including Acorns Personal for $3/mo and Acorns Family for $5/mo.

These subscriptions provide various products which fit well for goals of young adults and even allow the service to act as one of the best money apps for kids with its all-in-one platform (Acorns Family).

Their plans come as follows:

  1. Acorns Personal ($3/mo):
    • Acorns Invest: Invests spare change through the popular “Round-Ups” feature, earns bonus investments and provides access to financial literacy articles
    • Acorns Later: Tax-advantaged investment options like IRAs
    • Acorns Spend: Acts as your bank account, offering free withdrawals at over 55,000 ATMs nationwide and no account fees and the ability to earn up to 10% bonus investments
  2. Acorns Family ($5/mo):

Learn more in our Acorns review.

 

14. Interactive Brokers: Best Online Trading Platform for Professionals and Low Margin Rates


interactivebrokers sign up

  • Available via desktop, Apple iOS and Android App on Google Play
  • Account Minimum: $0 (Interactive Brokers Lite & Interactive Brokers Pro)

I used Interactive Brokers for several years as my central investing platform and found it to offer access to the most order types of any brokers listed.

The expansive array of order types from this discount broker allows you to place any and every trade, whether manual or in alignment with algorithm orders you set up—perfect for active traders.

Many institutions choose Interactive Brokers, and retail traders love it for the best margin rates in the industry.

This app focuses on professionals and has a high minimum deposit for margin accounts: $110,000.

App Rating (out of 5)FeesBest ForPromotions
Webullwebull logo4.7Commission-free tradesSelf-directed investors and intermediate tradersTwo free stocks with $5 deposit, valued between $11 - $2,300 and $5 SHIBUSD w/1 crypto trade
TradeStationtradestation squarelogo4.6Commission-free tradesAdvanced traders, Options and Futures traders, Active stock traders$50 - $5,000 deposit bonus tiers for depositing various qualifying assets
SoFi Invest: iOS, Android and Desktopsofi logo4.6Commission-free tradesInvestors looking for automated investing already using SoFi’s other personal finance productsFree stock worth between $5 - $1,000
Public.compublic logo4.7Commission-free tradesSocial theme-based investing interests$10 free stocks for signing up
M1 Financem1 finance logo4.3Commission-free tradesFee-free active trading and automated investing$30 sign up bonus with $1,000 deposit; 1 year free M1 Plus
Axos Self-Directed Tradingaxos sdt logo4.2Commission-free tradesCurrent Axos Bank customers looking for a basic trading solution or Axos customers seeking premium research and attractive active trading capabilitiesNone
eTradeetrade logo4.5Commission-free tradesOptions tradersFree account bonus commensurate with contributed funds
Firstradefirstrade logo4.5Commission-free tradesMutual fund and target date fund investorsFree account bonus commensurate with contributed funds
eToroetoro logo4.6Commission-free tradesU.S. investors focused on crypto-tradingNone
Vanguardvanguard logo4.2Commission-free tradesBasic ETF investingNone
Robinhoodrobinhood logo4.4Commission-free tradesBasic stock, crypto and ETF investingFree stock with sign up
TDAmeritradetdameritrade logo4.6Commission-free tradesTraders interested in more asset classes like Forex and FuturesFree account bonus commensurate with contributed funds
Acornsacorns logo4.8$1/month - $5/monthInvestors in college looking for a complete personal finance solution; Roth IRAs$10 sign up bonus when making first deposit at account opening
Interactive Brokersinteractive brokers logo4.6Commission-free tradesProfessional investorsNone

Related Questions on the Best Online Brokerage Accounts and Discount Brokers

What does a Discount Broker Charge?


young man with coffee looking at phone

An online stock broker, usually a discount broker, sometimes charges trading commissions on stock and ETF trades, though many brokers have adopted the commission-free trading model.

These brokerage firms no longer earn money on trading commissions, instead opting for other avenues of earning revenue, discussed more below.

The best online stock broker for you will depend on the style of investing you prefer, your needs for advanced tools and educational materials, the ability to place mutual fund trades, cryptocurrency trades, or trades on more exotic assets like options, futures, forwards and more.

The best discount brokers charge low fees (or none) for standard stock and ETF needs and low fees on these other assets.

Some will also avoid any commissions and instead rely on account fees like a fixed monthly charge or a percentage of assets under management approach like robo-advisors use.

What is the Difference Between a Full-Service Broker and a Discount Broker?


successful man on phone

Full-service brokers offer many services to clients, such as investment advice, research and management, retirement planning, tax planning, insurance assistance and more.

Full-service brokers tend to charge commissions or a percentage of the assets they manage on your behalf in exchange for these tailored services.

Many refer to full-service brokers as financial advisors or investment advisors because they buy and sell stocks on your behalf, handle your investment strategy, and act as your customer support.

They can directly handle your customer service needs by maintaining the entire relationship with you and explaining the financial products used to prepare for your financial needs.

They offer all of this either for commissions on trades or financial products you purchase through them or through a management fee on the assets you hold with them on account.

Discount brokers, on the other hand, compare favorably on the cost to full-service brokers. Discount brokers don’t offer all of the value-added services full-service brokers do, and they reflect this pared-down offering through low-cost or commission-free stock and ETF trades.

Frequent traders, self-directed investors or people who wish to engage with financial markets themselves tend to use online brokers and discount brokers to do so, sidestepping trading fees (or paying low fees in some cases) and choosing to execute their trades.

This can also include mutual funds, options, cryptocurrencies, and other financial assets or securities regulated by the Commodity Futures Trading Commission (CFTC) or Securities and Exchange Commission (SEC).

These accounts carry Securities Investor Protection Corporation insurance for up to $250,000 in cash account value. Many brokers offer similarly to how the Federal Deposit Insurance Corporation (FDIC) offers insurance on cash held in a bank account.

How Does a Discount Brokerage Make Money?

Payment for Order Flow


In the ordinary business of buying and selling stocks, options and index funds through online brokers, they send your orders to market makers for execution.

Market makers act as individual market participants or member firms of an exchange to buy and sell securities for their accounts.

They do so at the prices displayed on the exchanges’ trading systems to profit from the difference between bids and asks (bid-ask spread).

Effectively, the quoted price differs from the ultimate settle price, with the difference going to the market maker for providing market liquidity.

This bid-ask spread capture allows market makers to receive compensation for holding assets if they deviate significantly in value over time.

In other words, if they must hold a substantial position in the security to create liquidity for the market, they must have some form of compensation to offset the risk of a significant decline in the security’s value, thereby causing a substantial loss on their books.

When you trade securities in many discount brokers’ brokerage accounts, they route these orders through a market maker for execution.

To compete with exchanges, market makers must offer rebates or discounts to brokers to use their service and not the exchange. These discounts go to discount brokers while you pay the quoted amount.

To maintain this profit opportunity, discount brokers maintain relationships with numerous market makers and send your orders to the ones they believe will have the best likelihood to execute your trade at an optimum price.

This lets you trade everything on these stock trading apps for beginners like stocks (including penny stocks), ETFs, options and cryptocurrencies commission-free.

Many discount brokers state they do not consider rebates when routing your brokerage orders and merely profit from the difference after the fact.

Interest on Cash Account Balances


Not all money in accounts held with online brokers gets invested, and some remain in cash. This cash can be deposited into a bank and earn interest when left idle in your account.

Most brokers earn money this way, supplementing other earnings they made on their trading platforms through online stock activities.

Other Brokerage Services and Subscriptions


Online brokers can also offer other services or subscriptions to supplement their income. This can include research tools, real-time data feeds, access to financial advisors, investment advice or priority customer support, and more.

Debit Card Interchange Fees


Some online brokers offer banking services attached to their online stock trading activities, and they may also offer debit card access. By providing debit cards to their customers, they can tap into revenue from the debit card interchange network.

Securities Lending


Suppose you decide to hold a position in your brokerage account. In that case, your discount broker may choose to lend these securities to other investors interested in shorting stocks, using your lent securities to sell stocks short in the hopes of profiting off the downward movement of a stock.

The borrower returns the lent securities once they close their short position. The discount broker earns interest on these lent securities.

Margin Lending


When you want additional capital to invest and are willing to pay interest to get it, the best discount brokers may have access to margin loans.

These loans use the account balance as collateral and may require the borrower to make a bigger deposit or face a margin call if account activity works against them.

Options Trading


Some of the best discount brokers offer options trading functionality and many charge commissions for facilitating this type of trading activity.

Monthly Account Fees


Some online brokers avoid commissions and instead use monthly account fees to earn money from their customers. This can be a fixed monthly account fee like those charged by Acorns or apps like it.

Assets Under Management Account Fees


Some brokers also choose to use the assets under management account fee approach. This sidesteps trading fees on stocks, ETFs, mutual funds and more and instead chooses to charge a percentage fee on the total assets invested on the platform.

This approach is a standard way a full-service broker charges their clients by taking a percentage of how much money you have invested with them.

Do Online Brokers Have Account Minimums?


Some online brokers have account minimums, though many do not. Most target no account minimums for their customers so more people can trade on their platforms.

Should Experienced Traders Use the Best Online Discount Brokerage Accounts for Trading Stocks, ETFs and Mutual Funds?


Experienced traders likely have a sense of where they should invest in getting the most from their money. This doesn’t mean they need to employ highfalutin trading strategies, use sophisticated investment products or research tools.

This can mean investing in online platforms that don’t charge trading fees and use their accounts to buy diversified investments like ETFs or mutual funds. These products are suitable for all investors because they tend to provide instant diversification.

Mutual funds also tend to be the mainstay of 401k plans, an investment vehicle many use to prepare for retirement.

About the Site Author and Blog

In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time.  My job routinely required extended work hours, complex assignments, and tight deadlines.  Seeking to maintain my momentum, I wanted to chase something ambitious.

I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity.  I launched the site with encouragement from my wife as a means to lay out our financial independence journey and connect with and help others who share the same goal.

Disclaimer

I have not been compensated by any of the companies listed in this post at the time of this writing.  Any recommendations made by me are my own.  Should you choose to act on them, please see the disclaimer on my About Young and the Invested page.

Invest, manage and plan your money with confidence.

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