Choosing The Right Brokerage
Introduction
Robinhood… WeBull… Thinkorswim…; how do I know which one is best? The process itself of opening a brokerage account is easy. It is where you choose to open your brokerage account that may become the more difficult decision. Some trading platforms come with an easy-to-use interface that makes trading simple, but may fall short when it comes to more advanced trading. Other platforms may operate smoothly, but look and feel like you’re back in the 90s. We’re here to help you choose the right brokerage platform for you!
Where to Start
Before you make a decision on a brokerage, it is important to first determine how you are going to use this brokerage account. Here are a a few questions you’ll want to ask yourself:
What do you want to trade?
There are three main types of trading; stocks, options, and futures. Determine which type(s) you plan on trading, even if you aren’t too familiar with one yet. Planning ahead here is important as you will quickly start to learn new ways to trade as you gain more experience.
Where do you want to trade?
Are you planning to mostly trade from your phone, at work, or on-the-go? Or would you rather sit down at a computer? Or have the option to do both?
What are you willing to pay?
Most all brokerages will charge some sort of service fee in certain areas of their platform. Each brokerage has different ways of making money, and some cost more than others. For example, some brokerages do not collect any commission on trades you make, and only charge you for add-on services like margin-trading (borrowing money), or advanced news feeds. Other, usually more-advanced brokerages, may collect a commission on each trade you make.
What is my current level of trading knowledge?
Are you just getting started in trading and don’t really have any prior experience? Or are you familiar with the basics of trading already?
Brokerage Options
Now that you have answered those questions above, it’s time to find which brokerage suits your needs best. We’ve gathered three popular brokerages that we feel offer a good variety of choice; from beginners on the go, to intermediate and advanced solutions for more serious traders.
Robinhood
Known for its simple and easy-to-use interface, Robinhood aims to make investing accessible to beginners. It offers a user-friendly mobile app and allows you to trade both stocks and options. Robinhood is free to use, but offers paid services for things like margin trading, instant withdrawals, and premium news. Robinhood is also getting more involved in personal financial management with interest-building cash accounts, IRA and 401(k) matching, and even a debit card.
✅ Pros:
Easy-to-use mobile app
Stocks and options trading
Can be free to use
Personal finance features
Available instant withdrawals
Offers 24-hour markets on supported stocks
🚫 Cons:
No desktop app
Does not offer futures trading
No advanced charting
Webull
Webull gained popularity for its clean and intuitive interface, making it a good choice for traders of various skill levels. Additionally, it provides a paper trading feature for practice. Webull offers both a desktop and mobile app, and allows users to trade both stocks and options. Advanced charting tools and a customizable interface allows for further flexibility as you become more experienced.
✅ Pros:
Intuitive user interface
Stocks and options trading
Paper trading
Customizable interfaces
Advanced charting
Desktop and mobile app
Can be free to use
🚫 Cons:
Can be confusing/overwhelming for beginners
Does not offer futures trading
Limited options in regards to personal finance
Thinkorswim
Thinkorswim (ToS), by TD Ameritrade is praised as an advanced solution for experienced traders. It is also recognized for its intuitive interface that allows for lots of customization. It offers extensive research tools and a customizable layout. Offering trading for stocks, options, futures, futures options, bonds, and ETFs, ToS has the most variety of trading options out of the three we are listing here. Like Webull and Robinhood, ToS does not collect a commission on trades. However, they do collect a per-contract options fee of $0.65.
✅ Pros:
Expansive trading options
Advanced charting tools
Free for some types of trading
Customizable interfaces
Desktop and mobile app
🚫 Cons:
Small fee on options contracts
Very advanced systems can be confusing and overwhelming for beginners
Notable mentions
E*TRADE: E*TRADE's platform was known for its easy-to-navigate interface and comprehensive research tools. It also had a user-friendly mobile app for trading on the go.
Fidelity: Fidelity's platform was appreciated for its straightforward design and a range of educational resources. It offered both beginner-friendly features and advanced tools for experienced traders.
Charles Schwab: Schwab's platform offers a balance between simplicity and comprehensive features. However, some of the interface can feel dated at times.
Interactive Brokers: While often considered more suitable for experienced traders, Interactive Brokers also has a user-friendly interface for beginners. It provides access to a wide range of markets and investment options. This is a good option if you eventually want to utilize some of the more complex investment vehicles available (such as futures or forex trading).
Merrill Edge: Merrill Edge, especially if you're already a Bank of America customer, was commended for its integration with banking services and its easy-to-use platform. However, the trading interface can feel very dated and can occasionally be frustrating.
It's always a good idea to explore demo accounts or take advantage of free trials to get a feel for the platforms and determine which one aligns best with your trading style and comfort level. Still not sure what brokerage to go with, or not all too familiar with trading in general yet? Join MoonRoom! Our host of educators are a great resource for getting started in your trading adventure.