What are the best online brokers for commission-free stock trading?
Gone are the days of expensive stock broker commissions — or any commissions for that matter — among many online brokerage accounts.
As you look to build wealth through paper assets like stocks and bonds, the first step involves choosing a stock broker. Today you have more affordable options than ever before.
Best Online Brokers Offering Commission-Free Trades
These are the best online brokers that offer commission-free trading for stocks, mutual funds, ETFs, and sometimes other types of securities. All are reputable outfits that are fiercely regulated by the Securities and Exchange Commission.
Our top overall pick offers the best value of any entrant we evaluated. Each of the others does one or two things really well. Your choice will depend on what you value most in your relationship with your broker.
Best Overall: Charles Schwab
Charles Schwab was the first major brokerage to introduce commission-free stock trading. It did so in 2019 — years after Robinhood but ahead of its main competitors.
That’s not the only reason Schwab tops this list, of course. It offers an unusually broad array of account types, including taxable brokerage accounts and traditional IRAs, Roth IRAs, health savings accounts (HSAs), education savings accounts, and more. And it has a slew of additional selling points:
- No account minimums
- A free robo-advisor platform (Schwab Intelligent Portfolios) for those who invest at least $5,000
- Thousands of commission-free ETFs and mutual funds
- Inexpensive Schwab index funds that enable diversification at very low cost
- A broad array of investing options beyond stocks and funds, including options, cryptocurrency, fixed-income (bonds and more), and futures
Best for Sophisticated Traders: TradeStation
TradeStation is designed for active traders. Stock and ETF trades are always commission-free on its mobile and Web apps, and they’re totally free for TS Select members on TradeStation’s powerful desktop platform as well.
Despite catering to serious traders, TradeStation is beginner-friendly thanks to YouCanTrade™, a sister company that offers multimedia training tools and educational modules for beginner, intermediate, and advanced traders alike.
- FuturesPlus, an institutional-grade futures interface with no platform fees
- TSCrypto, a crypto trading platform with one-click order entry, advanced order routing, and interest on eligible crypto holdings
- A simulated trading module that lets you test different trading strategies without risking your own funds
Best for Beginners: Robinhood
Robinhood is the best free online stock broker for beginners because it’s the easiest to use. Its mobile app is streamlined and stripped down, focusing the user on what they’re there for: placing trades. And though its celebratory, even game-like interface has attracted criticism, Robinhood is undeniably fun to work with.
- Direct access to cryptocurrencies
- Fractional share investing
- A premium membership (Robinhood Gold) that offers margin investing, Level II Nasdaq data, professional research from Morningstar, and bigger instant deposits
Best for Investor Flexibility: Axos Invest
Axos Invest offers commission-free stock and ETF trading alongside real-time research and market data resources that many no-frills discount brokers can’t match. Users have access to more than 10,000 mutual funds here as well.
Users who upgrade to Axos Elite enjoy a degree of flexibility that’s unmatched elsewhere. Benefits include:
- Fully Paid Lending, a P2P securities lending service for Axos Elite users with account balances greater than $25,000
- Extended hours trading (until 7pm ET on trading days)
- TipRanks™ market research, a digital platform that synthesizes stock recommendations and other key data from thousands of market analysts to significantly reduce research time
- Instant funds transfers for users with Axos Bank accounts
- Margin trading privileges for qualifying account holders
For a limited time, new Axos Self-Directed Trading users can earn a $100 bonus when they begin trading with just $1,500. Terms apply.
Best Combined Brokerage and Bank: Ally Invest
Ally Invest is another solid choice for commission-free stock, ETF, and options trades. It doesn’t require a minimum to open an account and has a surprisingly robust set of research tools.
But Ally Invest’s real selling point is its connection to one of the best online banks around: Ally Bank. Ally is one of the few true one-stop financial institutions around thanks to:
- Free, no-minimum interest checking, savings, and money market accounts
- A nice lineup of high-yield CDs
- A full set of home and auto loans
- Self-directed and passive investing platforms
- No asset management fees for passive investors who keep at least 30% of their portfolios in cash
- Access to alternative investments like forex and futures
- 24/7 phone support
Best for No-Cost Investment Funds: Fidelity Investments
Fidelity stands apart for its selection of in-house index funds that charge no expense ratio. This selection is wide enough to support a decently well-diversified portfolio for general investing. Anyway, few Fidelity competitors even come close in the no-fee funds department.
- Access research from 20 third-party data suppliers, including Thomson Reuters, Recognia, Ned Davis, and McLean Capital Management
- 24/7 live phone, chat, and email support
- No minimum opening deposits
- More than 3,500 commission-free mutual funds
- No commissions on options trades (which isn’t always the case for brokers that waive stock trading commissions)
Best Hybrid Investing Option: M1 Finance
M1 Finance‘s investing platform, M1 Invest, splits the difference between robo-investing and self-directed trading.
If you prefer a hands-on approach, you can build your portfolio from scratch (selecting all your own stocks or portfolio slices) or start with any of more than 80 expert-built portfolios as a template and customize your holdings as you wish.
If you prefer a hands-off approach, simply choose one of those expert portfolios to work and let M1 Finance do the rest. M1’s periodic dynamic rebalancing ensures your allocations never get too far off track.
- Portfolio line of credit for qualified investors at very low interest rates with no credit check or repayment schedule
- Free checking account with FDIC insurance and at least one ATM fee reimbursement per month
- Upgrade to M1 Plus to earn interest and cash back on eligible checking balances and purchases, lower your portfolio line of credit rate, and unlock additional trading capabilities
Best With a Robo-Advisor Option: SoFi Invest
SoFi Invest offers one of the few truly free robo-advisors — one with a surprisingly strong lineup of features. These include:
- 100% free access to human investment advisors
- A token minimum investment ($1)
- Automatic rebalancing at no additional cost
- Bespoke financial planning (with or without a human’s help)
Separately from its robo-advisor, SoFi Invest offers value-adds like:
- Access to alternative investments like crypto
- Early access to IPOs before the general public
- Fractional share investing for self-directed traders
- Free career counseling for all SoFi users
Best for Crypto Investors: Robinhood
Robinhood makes a rare second appearance on this list because it’s (still) one of the few mainstream brokers to offer easy cryptocurrency access.
Unlike some competitors, that access isn’t limited to the still-small set of crypto ETFs. Nor does Robinhood charge hefty transaction fees common on purpose-built crypto exchanges.
You can start with just $1 and trade heavyweights like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, plus second-tier products like Dogecoin. Cold storage (for most clients) and crime insurance (to protect against breaches) sweeten the deal even further.
Methodology: How We Select the Best Commission-Free Brokers
We use 7 metrics to evaluate commission-free brokers. Each ties back to the user experience in some way.
Though all of the brokers on this list are technically commission-free, you’ll notice a couple of factors that relate to cost in some way. That’s down to advisory or fund fees that brokers either can’t control directly or treat differently than commissions.
Market Research, Analysis, and Trading Tools
Some brokerages have an abundance of market research resources and analytical tools to make investors and traders better at what they do. Others are less generous on this front, leaving their users to pursue information off-platform.
Likewise, some brokerages have much more sophisticated trading tools that enable rapid execution and high-level order management. If you’re a serious trader or want to become one, these are the platforms you want to use. If you’re not trying to beat the market or profit from short-duration, time-sensitive trades, you don’t need their firepower.
All of the brokerages on this list offer access to U.S.-listed stocks. Most offer access to U.S.-listed ETFs as well.
Beyond that, your choice of platform does matter. If you’re looking for easy, low-cost access to alternative investments like forex and cryptocurrencies, your choices will be much more limited. In fact, our top pick for crypto investors (Robinhood) is still one of the only mainstream online brokerages that dabbles in crypto.
Investment Model (Self-Directed vs. Robo-Advisor)
Once you approve their recommended division of assets, they invest your money automatically for you and rebalance your portfolio as needed. Some even optimize your portfolio for tax purposes by tax-loss harvesting.
Some brokerages with robo-advisors also allow self-directed trading. We refer to these as “hybrids” and recommend them to anyone who wants to keep their options open.
Others, like Robinhood, stick exclusively to self-directed trading. That’s fine too — just don’t expect as much hand-holding from them.
Asset Management Fees (Robo-Advisor Fees)
Although some robo-advisors cost a pretty penny, others remain free or charge a low fee relative to human investment advisors. Generally speaking, the fee varies based on the flexibility of the robo-advisor service and your access to human advisors. And of course, self-directed trading platforms don’t charge asset management fees at all.
We prefer robo-advisors with low fees relative to the level of service they provide.
Fund Expense Ratios
Many brokerages offer their own mutual funds and ETFs, both managed and passive. Others offer access to third-party funds. In either case, most of these funds charge an annual expense ratio.
That expense ratio is an annual percentage fee, based on the amount that you own. If the expense ratio is 0.5%, for example, and you own $10,000 in shares, then you’d lose $50 in expense ratio fees to that fund each year.
Even so, expense ratios have trended downward in recent years, given the rise in popularity among passive index funds. Some brokerages go so far as to offer index funds with 0.0% expense ratios.
As with robo-advisor fees, we prefer brokers that select for funds with lower expense ratios.
Money Management Capabilities
Most brokerages have cash management accounts meant to temporarily hold uninvested funds, but some go farther. The very best online brokers for money management are associated with (or housed within) full-service online banks that have their own checking, savings, money market, and CD accounts.
Flexibility for Investors
Online brokers increasingly recognize the investing public’s desire for flexibility and responsiveness. They cater to this desire in a number of ways. The most useful are features and capabilities that increase investors’ liquidity or returns (or both):
- Securities lending programs that allow qualified investors to make extra money off their holdings without additional risk
- Margin trading programs that increase investor leverage (and also add considerable risk of loss)
- Portfolio lending programs that allow investors to tap portfolio equity at very low interest rates, albeit with some risk of loss
Become a Commission-Free Trading Expert: Your Questions Answered
You have questions about brokerage commissions and commission-free trading. We have answers.
What is a Brokerage Commission?
A brokerage commission or trading commission is the fee charged by a broker to process a stock trade (or any other type of securities trade).
Historically, brokers have charged commissions for both buying and selling. If the broker charged a $6.95 commission, and you wanted to buy one share of a stock costing $20, then you’d pay $26.95 total to buy that single stock.
That’s hardly an enticing proposition for small trades. So, if your broker charges trading commissions, it’s best to buy in larger quantities. If you bought 1,000 of those same $20 shares, then you’d pay $20,006.95 — a far more efficient transaction from a fee perspective.
Unfortunately, this is cold comfort to new investors without much money to invest. The flat fees they incur for buying and selling stocks make up a considerable portion of the total transaction value.
That’s why commission-free trading is so attractive for everyday investors.
What Are the Benefits of Commission-Free Trading?
As long as there’s no catch, free is of course always better. But the benefits of commission-free stock trading go deeper than that.
- It levels the playing field for both wealthy and beginner investors alike to buy and sell in any amounts.
- It makes it far easier to earn a profit day trading.
- It makes it easier to dollar-cost average. This is a strategy for reducing risk that involves making recurring investments at regular intervals. Small, frequent investments are much more efficient when you don’t have to pay commissions.
What Are the Risks of Commission-Free Trading?
One significant downside to commission-free investing is that it encourages bad investing behavior, such as frequent trading and emotional investing. Many investors don’t have the knowledge or discipline to avoid emotional investing mistakes like panic selling or buying meme stocks that could crash at any time.
How Do Commission-Free Brokers Earn Money?
Brokerages have a few tricks up their sleeves to earn money even when they don’t charge commissions.
One way that commission-free brokers earn money is through bid/ask spreads: the difference between what you can buy and sell a stock for. Part of that spread goes to the market maker for facilitating the transaction. As brokerages feel the pinch elsewhere, they may look to widen those spreads.
Brokerages also make money by investing your cash balances for their own gain. Many intentionally pay little on money market accounts and make it cumbersome to move money in and out, so fewer investors bother with them and simply keep more cash in their account. They then sweep that cash balance into low-risk money market funds where they earn a return on it.
Finally, brokerages earn money on margin accounts, where they lend investors extra money to invest — for steep interest. They may charge even more moving forward to shore up their balance sheets.
How to Select the Best Commission-Free Online Broker
Still wondering how to select the best commission-free online brokerage for your investing needs?
Our pick for best overall commission-free online broker, Charles Schwab, could well be the best choice for you. It’s the original commission-free digital brokerage and checks a lot of boxes for self-directed and passive investors alike.
But it’s not the only option worth exploring. Depending on your investing objectives and priorities, your best-fit brokerage might be our choice for best robo-advisor option (SoFi Invest), our top pick for sophisticated DIY traders (TradeStation), or our best combined brokerage and bank (Ally Invest).
Or it could be another brokerage altogether. The choice is yours.