Foreign exchange trading strategies

Foreign exchange trading strategies

The breakout trade is the easiest and the most difficult trade in the book so how can you accurately predict when the markets are finally going to breakout and how do you avoid those false breakouts come on let's explore you okay so in today's video I want to talk to you about a certain trading strategy known as the breakout strategy now we all love a breakout don't we and its determining whether the market is going to break out or be contained is what trading really is all about is the trend going to continue or is it going to reverse now a breakout is basically a break from support or indeed resistance and then for it to continue in that direction so in order to profit from a breakout we need to determine whether the breakout is confirmed or indeed it is a false breakout and it really is the false breakouts that catch many traders off guard and result in multiple losses so how do we determine if the breakout is indeed confirmed or is it a forced breakout it's a million-dollar question right well maybe it's not maybe it's not as difficult as you may think certainly if you apply certain rules and look at certain price action ahead of the breakout and we're going to discuss those in a few minutes but before we do I want to talk to you about the different market conditions where you could potentially see a breakout so there are basically three market conditions where we look for a potential breakout first of all you've got the ranging market this has been price is oscillating between two levels of support and resistance these are horizontal lines drawn on the chart usually where price is respected more than twice and a breakout trader is looking for a breakout of a particular range either to take it higher or indeed take it lower as no markets are contained in a range forever same as trends no market or in state of trend forever so then we have the trending market okay so this could be the market making a series of higher highs higher lows and then respected at a level of resistance a trend follower will look to see for the breakout in order to take that trend higher and eventually prices may indeed break the resistance line and move higher of could be a force breakout and it could result in the reversal in which case there will be a camera trend coming on then you have the counter trend trader that looks for breakouts potentially you'll see an uptrending market here following a particular trend line a breakout trader using counter trend will look for a breakout of this trend line in order to take the market low so this three market conditions they're all looking for the breakout you've got the range you've got the trend and you've got the counter trend so how best do you do determine whether indeed the market is going to breakout or indeed is it going to be a false breakout okay let's have a look at that now now one thing I think we are all in agreement of is the uncertainty on what price is going to do next none of us know for sure when you get these levels of resistance and support there's a big unknown what is above resistance is there so much supply that that's going to push any move back down we don't know below support is there so much demand enough demand to take the market back higher again and this isn't the same for trendy markets or ranging markets it is the same theory let's assume now we're looking at a trendy market so this market is trending up okay we're making a series of higher highs typically what you'll see ahead of resistance is some consolidation and the as these buyers all taking long positions well at some point want to take profits and as it comes into existence there's uncertainty because they don't know what's above that resistance level so quite often you'll find a head of resistance some consolidation and that is indeed what you're seeing here but a good indication for me is if as you see this consolidation if we're making a series of higher lows into that resistance that is an indication to me that the demand is getting stronger than the potential supply so this is an indication that the market could potentially break out a series of high highs into existence or indeed into his support it would be a series of lower lows now as a breakout trader by the other people do the guesswork I'd like to see other people put their hard-earned money on the line and I like to keep mine in my back pocket I like them to test the water and possibly get their fingers burnt so I'd like to see more kids do the breakout and then I react I will react with price action once the breakouts happened and indeed once the breakout does indeed happen this unknown becomes known the market is either going to be taken up by all this demand in which case the market is going to move back up or indeed the supply will over over way the demand and push the market back down resulting in a false breakout so I like to react after the breakout so indeed if the market were to have huge supply the market is going to come back down here again ok moving back down but in if this supply is taken out by the demand and the demand becomes stronger then this market could potentially close higher than that level of previous resistance so I like the market to break the level of support or resistance then come back down and then trade the continuation of that trend in this case an uptrend once I see price action confirming what is above here here you can see that there definitely that the buyers were in control they were taken down the sellers got exhausted buyers took control and closed the market higher so it's only after the breakout will I like to get involved and the complete than the opposite is exactly the same if you're looking for a Down trending market this is the same in the range trading market as well the range trading market you want to see what's above there you want the market to show its hand not use your hard-earned money for guesswork to train guess what's above or below and if indeed this does result in a false breakout and the market continues to go back down then others have lost their money and I've kept mine safely in my trading account and the same theory applies to a counter trend so for example here you see an uptrend depicted with this trend line ascending trendline price is moving up with the trend line a counter trend trader is looking for a reversal of that trend at potential levels of support or resistance so a counter trend trainer will be looking for a break of this trendline in order to take the market low if he doesn't know what's below in this trendline he doesn't know if there's big demand coming in below this trendline but I'll let him make that decision for me as a counter trend I want to look at price action at this break of trend line so yeah I look for the breakout this breakout could indeed just have been a false breakout and the market continues I want to see what happens once we break out I want to see the market come back to that trend line and then put in some price action could be a bearish engulfing or something like that there you have a small mother candle and the bigger outside candle a break of that indicates to me that yes this definitely could be a counter trend trading opportunity and once we've broken out of that trendline so I like to use price action in conjunction with these levels of support and resistance from my breakout I like the breakout to happen I like the market to show its hand either side of those support and resistance lines whether the trend lines are indeed horizontal levels or indeed even moving averages I like the market to show its hand and when the market shows its hand then I react as opposed to speculate into what is in the market this theory applies in all market conditions whether your range trading with your trend trading or indeed with it your counter trend training trade the breakouts but the market share its hand to you.

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Trading Brokers UK

Trading Brokers UK
Top Forex Brokers in UK for Forex Trading

Britain has a long and proud history of trade and currency exchange. Known as a nation of merchants, the Brits have always seen trade as a way to increase their wealth. And currencies are amongst the most traded and most sought after goods in the world. London has been hailed as the financial centre of the world, mostly due to its geo-strategic position and the historical circumstances.

The pound sterling is the oldest currency still in use and it is the fourth most traded currency in the world, after the US dollar, the Euro and the Japanese yen. It is also a popular reserve currency.

The pound’s value in respect to other currencies fluctuates frequently, and many individuals have gained a significant benefit from these fluctuations. Moreover, the UK has always been regarded as a country with quite liberal legislation and low-rate taxes on trade and investment. Therefore, it is not surprising that forex trading is quite popular with a large number of British citizens.
Broker    Offer    Devices    Review
1st
   

Deposit: $5
Leverage: 1:500
    [Desktop] [Mobile] [Tablet]    
Review!
2nd
   

Deposit: $100
Leverage: 1:300
    [Desktop] [Mobile] [Tablet]    
Review!
3rd
   

Deposit: $10
Leverage: 1000:1
    [Desktop] [Mobile] [Tablet]    
Review!
4th
   

Deposit: $50
Leverage: 1:1000
    [Desktop] [Mobile] [Tablet]    
Review!
Legal Framework and the FCA

Forex trading in the UK is in the domain of the Financial Conduct Authority(FCA), the successor of the Financial Services Authority (FSA). The FCA was founded in 2013 and it has an annual budget of over £450 million. The organisation is independent and it isn’t directly responsible to the UK government. Its budget is provided by the membership fees paid by companies which are in the financial services industry. The powers and the role of the FCA is substantial.

Trading Brokers UK

    It regulates the marketing of financial products and services.
    It can investigate individuals and companies, if there are any suspicions of fraudulent or illegal behaviour.
    It can ban certain financial products, up to a full year, with the power to enact a permanent ban afterwards.
    The FCA can also set the minimum requirements and standards for products and services.
    It can also instruct companies to change their promotions and other offers if it finds that they are contradictory or misleading.

Due to the fact that the market is completely regulated and opening an online forex account is easy-peasy, the number of traders in the UK is growing by the minute. Still, the fact that the there is a lot of interest, has always been a magnet for shady characters and companies who try to attract possible traders and convince them that they are legitimate.

The FCA warns UK traders to be aware of unauthorised brokers and avoid such websites by all means. There are companies which offer forex trading and other types of online trading, often offering unrealistically high returns and even guaranteed profits. That alone should ring a bell, as there isn’t anyone who can guarantee that you will make a profit. If you see such a ‘guarantee’, you can practically be certain that the website isn’t legitimate.

Forex brokers that are based in the UK have to be authorised by the FCA. But, there are quite a few websites which claim to be based in the UK, and even provide a UK address, usually a posh London postcode to make it seem like they’re based in the City of London. The reality is that many of those companies have nothing to do with the UK and aren’t actually registered at the address that they claim to be.

Such companies often offer better exchange rates than most of their competitors and many customers initially make some hefty profits. But afterwards, they experience unpleasant things, like account suspension and closure and by the time they want to complain and address the issue, they realise that the company wasn’t even legally allowed to offer forex trading in the first place.

By then it is usually too late. The FCA makes attempts to identify and then prevent such websites from offering trading services to UK citizens. In many cases the fraudsters will use the name and the registration number of actual certified brokers in an attempt to convince potential traders. If you suspect anything contact the FCA immediately. That is the first step for every UK trader before they start trading forex – make sure that the company is registered with the FCA.
Forex Trading Offer

Checking the legal status of the forex broker is the essential and the very first thing that you should do when choosing a broker, but definitely not the only one. There are few other things that you should take into consideration, especially regarding the trading offer.

    Currency pairs
    Leverage
    Spread

The more currency pairs a broker offers, the better. Even if you plan on sticking to the major currency pairs, or restrict yourself to pairs which include the UK pound, it is still good to have a choice if you decide to, so to say, broaden your trading horizons.

Some forex traders offer more than 30, and sometimes even up to 60 different currency pairs, which means that it would be hard to find a pair of currencies that are even remotely important that aren’t traded. Typically, better spreads are offered on major currencies as they are the most traded ones, but if you think you know and understand the movements of less influential currencies you can make a solid profit.

Unlike some other countries, most notably the US, where there is a limit on the leverage that the brokers can offer, in the UK, forex traders are allowed to offer pretty high leverage and for some pairs it can even reach 1000:1. This will allow you to trade amounts worth up to £100,000, with an initial capital of just £100.

Higher leverage allows you to increase your profits significantly, but you also may suffer severe losses. Make sure that you understand how leverage works and always be prepared to act quickly in order to prevent further losses if you see that things aren’t working out well. Remember that you can, but you don’t have to use high leverage rates when you’re trading.

Most forex brokers, or at least the ones that want to stay competitive and attract as many traders as possible don’t charge any fees or commissions on trade deals. Instead, they earn their profit through the spread, which, as you probably know is the difference between the buying and the selling price for a particular pair.

A tighter spread means that there is a bigger opportunity for traders to earn more money and minimise their losses. Leading forex brokers offer quite competitive spreads, as they are aware that traders can compare the spreads that are offered by different websites and always choose the ones that offer more competitive ones. As a trader, you are not prohibited from having accounts at more than one forex broker, therefore you can trade one currency pair with one broker and another with someone else, depending on the spreads that they offer.
Other Important Aspects

In addition to the most important aspects which include the licencing, as well as the specifics of the trading offer, there are other things which every trader should consider before choosing the most suitable UK forex broker. These things may seem unimportant, and perhaps they are less important compared to the offered pairs and the licence which are quintessential, but the following are also significant.

    Trading platforms
    Bonuses
    Payment methods
    Customer support
    Learning resources

Most brokers offer more than one trading platform. In addition to being able to trade on your mobile device, you may also have access to an advanced platform which includes more interesting trade features and options aimed at more experienced traders.

Many brokers offer a No Deposit, or a First Deposit Bonus to all new players, and some have few more regular bonuses which can be highly beneficial.

A confirmed FCA authorisation is a sign that the broker offers secure financial transactions, but there are differences in terms of the number of accepted methods and the speed at which the transactions are processed. Some brokers charge fees on deposits made via some of the accepted methods.

Traders want to know that should any problems arise they will be able to get all the necessary help and assistance. Customer support is usually provided via phone, email and live chat.

Last but not least, most reliable and respected brokers give you an opportunity to learn more and get better and trading, via a range of learning materials, including videos, e-books, webinars and other useful tools.

FAQ
1. What body is in charge of regulating forex trading in the UK?

The Financial Conduct Authority is in charge of regulating various branches of the financial industry, including retail forex trading. This independent body has an official remit and a range of tools at its disposal.


2. Am I only allowed to trade major pairs, or pairs that include the UK pound?

No, you are also able to trade a vast range of other currency pairs, even so called exotic currency pairs which don’t include any of the major or influential currencies.


3. Is there a limit on the leverage that brokers can offer?

Unlike the US market, where there are restrictions on the leverage, UK brokers offer trading at pretty high levels of leverage, often up to 1000:1.

Trading Brokers UK
4. Do UK forex brokers charge any trading fees?

Most, if not all, reliable UK forex brokers don’t charge any fees on forex trading, they make their profits through the spread.


5. What are the forex trading market hours for UK brokers?

The trading market hours depend on the currency pairs that you want to trade. Different markets open and close during different hours of the day. You will have at least a few trading options at any time of the day, during working days. The markets are closed on Saturdays and Sundays.

Cheapest online broker

The Best Cheap Online Stock Broker  - Cheapest online broker

The best cheap online stock broker offers a variety of investment options at a low cost. We compared fees, account minimums, and other costs of the cheapest brokerage accounts to find which best suits different investing priorities. While most online brokers have dialed down their costs, we found three that we like more than the competition.
How We Chose the Best Cheap Online Stock Brokers
Major brokerages

We focused on major names and newer players that were doing more to disrupt the space. We considered seven brokerages in total: Ally Invest, E*trade, Fidelity, Interactive Brokers, Charles Schwab, Merrill Edge, and T.D. Ameritrade — all major brokerages that have made a name for themselves offering exceptionally low rates. To find the best online brokerage among them, we investigated their platforms and compared fine print to see how they stack up in fees, learning resources, and trading technology.
Low account minimums

Whether you’re new to the stock market or a seasoned investor, choosing a brokerage with low overhead is a smart financial decision: Spending less money on fees means your investments have more room to grow. And while cheap trading platforms may not offer the same level of counsel or market research as a traditional firm, you can still find plenty of tools to make trading decisions smarter and faster. For the novice investor who wants to start small and spend small, we sought out accounts that have a low minimum balance (the amount you’re required to keep in your account at all times), no minimum activity rules, and as many $0 fees as possible.
Low trading fees

We didn't want to neglect experienced investors, though. For investors who've had time to let investments grow, a low minimum balance probably isn’t a top concern. But putting more money in shouldn’t make your fees swell proportionately. We looked for brokerages that kept fees low for larger accounts — or, better yet, offered more discounts for frequent activity. Some of the most important: broker-assisted trade commission, monthly activity fee, price per trade, and price per share. Though the numerical difference between two brokerages’ fees can appear small — an extra $2 per trade or a 2% bump in margin rates — those dollars and percentages still eat away at your investment. We looked for brokers that kept fees and commissions as low as possible.
Feature-filled trading platform

For any type of investor, a superior investment platform provides an array of research and learning resources, flexible trading options, and a usable interface compatible with most devices. We also looked for a full set of asset options, including advanced investment vehicles like forex and futures.
The 5 Best Cheap Online Stock Brokers

    Ally Invest -

    Best for New Investors
    Charles Schwab -

    Best Resources
    Interactive Brokers -

    Best for Active Investors

Best for New Investors
Ally Invest
Ally
Ally Invest
Learn More
A clean and accessible online brokerage that provides investing newbies with a simple platform and no investment minimums.
Pros
Easy entry point
Room to grow
Managed portfolios
Cons
Difficult to find account specifics
Light on education
Return to top 
Why we chose it
Easy entry point

If you’re a relative newcomer to the stock market, you should look for an broker with low costs, plenty of educational resources, and, importantly, a low account minimum. Your best bet is Ally Invest. Because Ally Invest doesn’t maintain brick-and-mortar branches or run advertising campaigns, it is relatively unknown outside of the trading world. However, Ally does better than most online brokerages at making investing accessible to newcomers. The real welcome mat in front of Ally’s door: some of the cheapest rates in the industry. With a no minimum for independent brokerage accounts, just about anyone can get started investing with Ally.
Room to grow

Just because Ally makes investing approachable doesn’t mean it isn’t an expansive company. There are plenty of tools and opportunities to expand your investment horizons. Ally offers all the same major investment vehicles as other brokerages — stocks, options, ETFs, bonds, forex, futures, mutual funds. And on the subject of mutual funds, Ally provides access to nearly twice as many mutual funds (around 10,000 vs. 5,000) and charges a much lower mutual fund commission than the competition (around $9 vs. Schwab’s $75).
Managed portfolios

In addition to Ally’s swathe of investment vehicles, the brokerage also offers a host of accounts that fall under a managed portfolio.These portfolios are comprised exclusively of exchange-traded funds (ETFs) — bundles of investments that trade on the open market like stocks. They offer similar diversification to mutual funds, but typically carry lower expenses. In addition to small fees for holding the ETFs themselves, Ally charges a 0.3% advisory fee. That's a pretty middle-of-the-road percentage in comparison with other full-service brokerages but slightly higher than companies that offer only managed portfolios. We discuss these robo-advisor companies below.
Points to consider
Difficult to find account specifics

Ally boasts an aesthetically pleasing and easily navigable site, but buries much of the hard data that we were craving. From the easy-to-reach pages, scout out fine print hyperlinks promising “More Details” to find consolidated information about fees, investment vehicles, and account types.
Light on education

Ally takes a light approach to education and research. While having more in-house resources would improve the overall client experience, you can still find plenty of information elsewhere on the internet. And in-house improvement is on the horizon: Since Ally’s merger with TradeKing, its original system has seen a boost in tools and technology.

Best Resources
Charles Schwab
Charles Schwab
Charles Schwab
Learn More
This old guard brokerage has stayed on the leading edge of trading technology, while providing plenty of support and advising resources.
Pros
Stellar research
Robo-advising options
Traditional brokerage feel
Cons
More expensive than Ally
Complex tech
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Why we chose it
Stellar research
cheapest online broker

Schwab puts extensive information on accounts, products, as well as wider investment education front and center, hitting you with its expert counsel and breaking news. Not only does the firm provide access to independent research, it also publishes relevant in-house research.
Robo-advising options

Charles Schwab offers a managed portfolio option, Intelligent Portfolio, available for a large number of managed account types ($5,000 account minimum). Unlike every other managed account we looked at, it charges no advising fees. Instead, Schwab makes money by holding some of the underlying assets of the accounts. The only fees associated with the account come from the investments, and while that percentage increases to a substantial amount (from 0.07% to 0.21% as risk builds), it’s still lower than most.

Automated financial advisors are the wave of the future, but many people don’t feel comfortable putting their life’s savings in the digital hands of a computer. Charles Schwab has developed a half-and-half solution: A hybrid service, Intelligent Advisory puts both financial professionals and financial algorithms to work. A nice little solution, so long as you have $25,000 to plunk down.
Traditional brokerage feel

Charles Schwab has retained more of a classic brokerage feel through its in-person presence (you can schedule a free consultation with a financial advisor) as well as its more traditional account minimums. Charles Schwab offers a deluxe set of services, but depending on the account you choose, you don’t have to invest a correspondingly huge amount. Opting for an independent brokerage account gives you access to the resources of a traditional, full-service brokerage without putting down a traditional amount. And no brokerage can compare with Charles Schwab for ETFs: Over 200 trade commission-free.
Points to consider
More expensive than Ally

Just about every basic fee charged by Charles Schwab goes toe-to-toe with Ally. The price between the two does jump in certain instances — broker-assisted trades go up by $5 and mutual fund commissions go up nearly $70 — and while Ally lets investors start a brokerage account with any amount, Charles Schwab requires $1,000 to start. However, the breadth of tools and resources available with Charles Schwab does a lot to justify the extra expense.
Complex tech

If you need personalized settings and advanced features, StreetSmart Edge provides both in spades. You’ll just have to learn how to use it. User feedback about clunky trading tech has led the company to revise its approach, but if you still find the desktop platform unwieldy, there’s also a web-based platform, Trade Source, which offers streamlined trading and market insights on the go. Investors that are new to the game may find the web-based option more accessible.
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Best for Active Investors
Interactive Brokers
Interactive Brokers
Interactive Brokers
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A top choice for experienced traders, this brokerage boasts a complete lineup of investment products, plus pro-grade trading tech.
Pros
Rewards active trading
Exceptional platform
Protegés get perks
Cons
Trading tech learning curve
Futures trading violations
Return to top 
Why we chose it
Rewards active trading

For pure trading and competitive prices, no other brokerage comes close to Interactive Brokers.The two elements that make IB a bit unwieldy for new investors make it a perfect tool for the experienced: Once you meet the hefty minimum account balance — $10,000 — the rest of IB’s demands on your wallet are light. And the relatively high $10 monthly activity fee is charged only if your trades don’t rack up at least $10 in commissions. With the tiny $1 per-trade fee, that means you’ll need to make ten trades every month or pay the difference, e.g. six trades will leave you with a $4 activity fee. It also offers extremely low margin rates (their highest interest bracket still charges less than 3%) as well as the choice of fixed or tiered pricing, giving investors the opportunity to choose what makes more financial sense for them. Tiered structures like this will typically benefit high-volume traders.
Exceptional platform

Interactive Broker’s incredibly rich platform offers trading technology advanced enough for professional day traders. Choose from the web-based trading platform WebTrader and the more advanced, downloadable platform, Trader Workstation. Both are included for Interactive Brokers clients at no additional cost. Serious traders will likely gravitate to the Trader Workstation’s more in-depth features.
Protegés get perks

If you are savvy investor who also happens to be under 25, you can open an Interactive Broker account with a reduced minimum balance — the required deposit is just $3,000 — and the monthly fee bumps down to $3. For an IRA, the minimum deposit is $5,000.
Points to consider
Trading tech learning curve

Navigation in Trader Workstation is far from intuitive as tools are located in discrete sections. However, it is also customizable, allowing you to group together the resources you make frequent use of and hide the ones you don’t. The interface, like the rest of an IB account, only benefits experienced traders. However, IB has recognized the learning gap. To supplement the educational tools on Traders' University, IB has introduced a layout library (choose from pre-made setups and templates for different trading strategies) as well as an AI assistant. IBot can answer plain-English questions. But, like any other voice-activated helper from Siri to Alexa, it has its limits.
Futures trading violations

Back in 2012-2013, the company was fined for several violations relating to the management of futures market funds. The result was a pair of fines totaling $925,000. Because the fines occurred several years ago, and because futures trading is a fairly niche investment area compared to stocks and funds, we don’t think this is enough to cancel out Interactive Brokers’ overall value. However, if you’re planning on doing a substantial amount of futures trading, be aware of this mark on their record.
How to Choose a Cheap Online Stock Brokerage
Choose with your investment habits in mind

Your financial goals and your personal investing style will be the two biggest factors in choosing the right brokerage for you. We set out to find the strengths and weaknesses of the cheapest brokerages we could find, but you’ll still have to decide which offers the right combination of savings and services for your needs.
Weigh the worth of special offers

Special offers for opening a brokerage account can include a set number of free trades or even cash bonuses for investing above a certain amount. Read the fine print to be sure that these early benefits outweigh later costs, and whether those new client perks align with your investing practices. In other words, don’t be enticed into choosing a broker offering deals on investment products you don’t understand or aren’t ready to use. Since special offers are by definition short-term, we focused on set account pricing. In the long run, those are the savings that will impact your financial goals.
Start with virtual trading

One of the many reasons we prefer Ally Invest for new investors is because it offers virtual trading. With virtual trading, you can test out strategies before putting your own cash into the mix.
Online Stock Trading FAQ
How much money do I need to start online trading?

If this is your first foray into investments, the general wisdom suggests you dedicate around $1,000. Less, and it can be too difficult to gauge the success of your strategy or to weather any stock market storms. That said, no amount is too small. The concept of Time Value Money (TVM) suggests that money is always worth more the earlier you receive it because of its earning capacity. If you have the choice to get a spare $50 now or in three months, you should choose now because you could invest it and watch it grow. With no account minimums, there’s no reason to save up to invest.
How often should I check my stocks?

If you relish the thrill of quick trades, you won’t be asking this question at all. Performing multiple trades a day means that juggling stocks is your part-time or even full-time job. But if you’re interested in keeping investments a side hobby, and don’t have the time or interest to try and outwit the market, don’t stress yourself checking the numbers more than once a week. Any closer monitoring than that, and you may be tempted to make trades based on short-term fluctuations — and that’s bad for your long-term earnings potential.

What about robo-advisors?

The inexpensive trading platforms established by the likes of Scottrade and E*trade make it easy to invest by reducing or eliminating fees that make traditional brokerage firms elite. They are not, however, the newest rich kid on the block. A slew of robo-advisor investment portfolios — Wealthsimple, Wealthfront, and Betterment — have materialized within the past five years, with marketing and functionality geared toward a demographic used to automated services. Simply plug in your time frame and risk tolerance and an algorithm takes it from there. Wealthsimple's slogan says it all: “Investing on autopilot.”

A nice side effect of AI investing — even lower fees. Wealthsimple and Betterment both allow you to open an account with $0 down; Wealthfront asks for $500. Wealthsimple charges an annual 0.5% advising fee; Wealthfront and Betterment charge just 0.25%.
The Best Cheap Online Stock Brokers: Summed Up

Ally Invest

Charles Schwab

Interactive Brokers

Best for New Investors

Best Resources

Best for Active Investors
Account Minimum

$0

$1,000*

$10,000
Price Per Trade

$4.95

$4.95

$1
Per Share Fee

$0

$0

$0.005
Margin Rates

4.25%-8.75%

6.825%-8.575%

1.78%-2.66%

*Waived with monthly direct deposit of $100
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Best online brokerage

Best online brokerage

The StockBrokers.com annual review sets the official industry benchmarks. Our data is used by executive teams, and our ratings are referenced on earnings calls, national TV commercials, US Senate hearings, and throughout the web. We spend more than one thousand hours testing online brokerage accounts every year. Industry leaders trust us because our rigorous testing is totally independent and 100% unbiased.

Choosing an online stock broker is one of the most important decisions you will make as an investor. Every trader has a different investment style of stock and options trading, and the variety of services brokers offer allows individual traders to be highly selective in determining which online broker best fits their needs.

To help stock traders, this guide aims to introduce online trading and offer indispensable advice relating to unique and helpful aspects of these online platforms, the way they function, and how they can best be utilized.

As the head of research here at StockBrokers.com, I have been an online stock trader for over 17 years and have placed several thousand buys and sells over that time. To conduct my testing, I have a funded brokerage account with over a dozen different brokers.
Best Online Brokerages for Trading

Here's a breakdown of some of the best online brokers for stock trading.
Fidelity

Fidelity - Best for Investors

Fidelity Investments charges $4.95 per trade and received 5 stars in our 2018 Review, including being awarded Best in Class for 12 different categories. It is our top recommendation for discount trading. The company also took home the #1 awards for Research, Order Execution, and Ease of Use. Finally, Fidelity’s mobile app was rated Best Mobile App for Investors.
TD Ameritrade

TD Ameritrade - Best for Traders

Rated our #1 online broker for traders in 2018, TD Ameritrade charges $6.95 per trade and offers the largest variety of trading tools through its desktop-based thinkorswim and Mobile Trader platforms. It also ranks #1, alongside its Best in Class rating, for numerous other categories including New Investors, Active Trading, Options Trading, and Customer Service, among others. Read more...
Charles Schwab

Charles Schwab - Best for Retirement

Charles Schwab charges $4.95 per trade and was rated 4.5 Stars Overall, alongside its #1 for Retirement Services and 5 stars for Research. Extensive research access along with consistent customer service, ample tools, the largest selection of commission-free funds, and industry-leading market reports combine to present a great full-service brokerage.
ETRADE

E*TRADE - Best for Options, Mobile

E*TRADE, with its $6.95 stock trades, finished fourth overall with 4.5 stars in 2018. E*TRADE was awarded 5 stars and #1 for Options Trading, thanks to its OptionsHouse by E*TRADE trading platform. The broker also won first place for Mobile Trading, and offers well-rounded access to quality research, trading tools, education, and more.
Interactive Brokers

Interactive Brokers - Best for Professionals
Exclusive Offer: New clients that open an account today receive a special margin rate.

Designed for professional traders serious about their craft, Interactive Brokers offers only per-share pricing ($.005 per share with a $1 minimum per trade), and charges up to $20 per month between two minimum activity fees. Traders who can meet its $100,000 minimum deposit for margin trading are rewarded with an industry-leading commissions schedule, margin rates, and full support for international trading. Read more...
Merrill Edge

Merrill Edge - Best Rewards Program

Merrill Edge ($6.95 per trade) was awarded #1 for Banking Services, thanks to its parent company, Bank of America. Not limited to just BofA customers, Merrill Edge's Preferred Rewards program is excellent, offering $0 stock trades among other perks such as bonus rewards on credit cards and discounted mortgage rates.
TradeStation

TradeStation - Best for Platform Technology
Current Offer: Low Fees and Free Market Data. Trade with TradeStation.

TradeStation's advanced trading platform has been awarded Best Platform Technology for the past five years. For active traders, TradeStation was rated 5 stars and comes packed full of tools and functionality. Trades are just $5 and users can even code their own apps using the broker's proprietary EasyLanguage programming language. Read more... Advertisement
Ally Invest

Ally Invest - Best for Ally Banking

Ally Invest (previously TradeKing) provides $4.95 trades, and is a simple choice for current customers of Ally who are looking to invest in the stock market. Like Merrill Edge and Capital One Investing, customers can easily manage their banking and brokerage accounts under one login.
Choosing the Best Online Brokerage

When looking for a new online broker, make sure you meet your most important needs as an investor. Are low-cost trade commissions most important? What about customer service, the trade platform, mobile trading, active trading, or a community to trade alongside? With many brokers specializing in different areas, it is vital to evaluate and compare all the possibilities.

Here is a list of the most important factors to remember when selecting an online brokerage:

    Trading Costs - When trading stocks online, it is important to understand what the costs are to place buy or sell orders. Most online brokers charge a flat rate to buy and sell. That said, other miscellaneous day trading costs can be incurred for direct routing fees or accessing market data. If you are investing in a retirement account, it is important to avoid choosing a broker that charges annual IRA fees.
    Trading Tools - One of the most common misconceptions newer investors have is that low trading costs are the most important consideration. This couldn't be further from the truth. Having access to a fully featured desktop-based or web-based trading platform can make a big difference, especially when conducting technical analysis.
    Investment Products - Are you only trading stocks online, or are you interested in ETFs, mutual funds, options, futures, and forex too? In the United States, different regulations are required for brokers who support more complex asset classes. Beyond trading different assets classes, having access to online banking and advanced order types, such as conditional orders, are also considerations.
    Mobile Trading - Managing a stock brokerage account on the go is certainly important for traders who travel and frequently use their smartphones. While nearly all online brokerages offer mobile trading apps, not all are created equal. Features can vary dramatically.
    Customer Service - 24/7 support is important to some investors, while others may just want to use online chat during regular market hours or receive an email back within one business day. Having access to quality customer support can really be the cherry on the top of a great client experience, especially during market crises like a flash crash.
    Stock Analysis - Conducting fundamental research is critical to successful long-term investing. SEC filings, short interest, corporate debt levels, earnings growth, and more are all examples of important criteria to be investigated during fundamental investment research.
    Regulation - Stock brokers based in the United States and governed by US law will be regulated by the SEC and must be members of FINRA and SIPC. The easiest way to verify whether your online brokerage is regulated is to scroll to the footer of their homepage and read their disclosures. Using the FINRA broker check tool is another easy way to verify proper compliance.
    Banking Services - Online brokerage accounts are not limited to just stock trading. Instead, customers can take advantage of banking services offered by full-service brokerages (see the list above for three great examples). Some online brokers offer checking accounts, savings accounts, credit cards, and more with deposits of up to $250,000 backed by the FDIC.
    Account Security - Fortunately, today’s investors don’t have much to worry about when it comes to account security as long they choose a brokerage that is large, well known, and properly regulated. Reference our list above or below for a sampling. Every website should be secured with SSL encryption, and client data should be stored in secure servers. Dual-factor authentication and Touch ID are other security protocols quickly growing in popularity.
    Order Execution - It is important to understand how your order is routed and executed. Make no mistake, there is a wide variation between quality execution and poor execution. Unfortunately, most online stock traders can't tell the difference.
    International Trading - The US stock market is the most respected in the world. If you are living in the US and want to trade internationally, or are living abroad and want to trade stocks online with a US-regulated brokerage, you must do your research beforehand and find a broker that supports your requirements.

Best Trading Tools

Based on 59 different variables, here is a summary of the top five brokers for stock trading tools and trade platforms.

    TD Ameritrade - Scored 100%
    TradeStation - Scored 93%
    Fidelity - Scored 93%
    Charles Schwab - Scored 91%
    Interactive Brokers - Scored 89%

To trade online successfully, some investors rely purely on their trading tools. Today’s trading platforms are not only web based, but also desktop based, and are becoming increasingly mobile based as well. Advanced charting, options tools, screeners, hotkeys, virtual trading, watch lists, ladders, Level II quotes, and back testing are just a sampling of the functionality brokers make available to their customers.

    Over the years, I have learned it is not just the trading tools that separate brokers, but the design, depth, speed, and overall execution of delivering the ultimate trading experience.

Over the years, I have learned it is not just the trading tools that separate brokers, but the design, depth, speed, and overall execution of delivering the ultimate trading experience. This is where brokers such as TD Ameritrade’s thinkorswim and TradeStation really excel. After spending hundreds of hours on both desktop platforms, we give thinkorswim the edge, thanks to its modern feel and outstanding trader tools; however, both platforms execute so well that it truly comes down to personal preference. Die-hard fans exist for both, and either one is a great choice for seasoned active traders.

TD Ameritrade thinkorswim platform

Behind thinkorswim and TradeStation, Fidelity’s Active Trader Pro and Schwab’s StreetSmart Edge are two desktop platforms worth looking at closely. Active Trader Pro and StreetSmart Edge have one distinct advantage over thinkorswim and TradeStation, and that is ease of use. While these platforms do not offer the same depth of trading tools, historical data, chart studies, etc., both are very well designed and user-friendly. In some respects, their balance of power and design make them a better fit for certain traders.

TradeStation desktop platform

Unfortunately, not all active trader platforms are free to use or available to all customers. For example, to gain complete access to Fidelity’s Active Trader Pro offering, 36 trades or more must be placed in a rolling 12-month period. Similarly, E*TRADE Pro requires at least 30 trades per quarter or $250,000 in assets. Finally, Lightspeed charges $100 per month for access to its flagship platforms if certain minimums are not met. Platform fees and minimums are set in place to control costs, and while these serve simply as examples, investors should be aware of them if they are considering an online broker based solely on its platform.

Fidelity Active Trader Pro platform

Investors who prefer a web-focused experience have a choice of many great browser-based platforms. Our top pick again this year, OptionsHouse by E*TRADE, combines the best of both worlds: ease of use with fantastic trading tools. The platform is just “ok” for equities trading, but is terrific for options trading. See: Best Brokers for Options Trading.

optionshouse option snapshotanalysis

Ultimately, TD Ameritrade takes the overall No. 1 spot for Platforms and Tools because it offers investors fantastic trading experiences on desktop and on browsers. Trade Architect (browser) appeals to newer and intermediate investors, while thinkorswim (desktop) is built solely for seasoned active traders. The icing on the cake? Both platforms require no minimums or fees for access and use. All customers have access.

TD Ameritrade Trade Architect

Before selecting a broker based on its platforms and tools, take time to read our online broker reviews, narrow your search to two or three brokers, compare their offerings, then make a decision. Start with questions like: What specific trader tools must I have to trade successfully? Will I reach the minimums to maintain fee-less, consistent access throughout the year? Do I prefer a more user-friendly browser-based platform or a more advanced trader-focused desktop platform?
Best for Stock Analysis

Based on 60 different variables, here is a summary of the top five brokers for stock research:

    Fidelity - Scored 98%
    Charles Schwab - Scored 97%
    TD Ameritrade - Scored 97%
    E*TRADE - Scored 92%
    Merrill Edge - Scored 90%

It is not surprising that the largest, most publicly known online brokers excel, and all vie for the top spot for research. With larger client bases and higher commission costs, high-quality research is expected.

Comparing apples with apples, all five brokers are fairly similar. They all use Morningstar as their primary provider for Exchange Traded Funds (ETF) and mutual fund research, all of them offer a slew of data and graphs for researching stocks, and all offer fixed-income research. Slight differences begin to show only when you assess specifics such as total third-party research reports available for equities, for example Apple (AAPL). In that category, the title goes to Fidelity, with 12 total reports offered, followed by Charles Schwab with eight, and TD Ameritrade with seven.

    While any of these brokers will more than satisfy most investors’ appetites, deciding on a winner based on checklists alone is not enough.

While any of these brokers will more than satisfy most investors’ appetites, deciding on a winner based on checklists alone is not enough. Quality and design matter just as much as quantity, not to mention the fact that many brokers will go “above and beyond” to differentiate themselves.

Fidelity, which earned our No. 1 spot again this year, stands out for its 12 equity research reports and fantastic stock comparisons, allowing customers to compare up to five stocks at once with 21 different metrics. Fidelity also distributes high-quality market analysis and personal finance education through its Fidelity Viewpoints weekly distribution. What excites us most about Fidelity is its fully responsive (mobile friendly), carefully laid out research area. Content flow and personalization are at the heart of the experience, which is unlike any other broker in the industry.

Fidelity account stock quote

Charles Schwab, on the other hand, offers customers its own proprietary A – F ratings, called Schwab Equity Ratings, for some 3,000 US stocks. Even more impressive, Schwab boasts a full lineup of 26 in-house experts who provide numerous articles, known as Schwab Insights, on a variety of market topics throughout each week. Some experts, such as Chief Investment Strategist Liz Ann Sonders, can often be seen on TV discussing the market. Schwab also provides the best video experience out of all the brokers, thanks to its market updates and Schwab LIVE events.

Charles Schwab Insights

Not to be outdone, TD Ameritrade won our Best New Tool award in 2017 for the earnings analysis tool offered on its thinkorswim platform. TD Ameritrade also offers what it calls Social Signals analysis for individual equities. Using proprietary algorithms, the Sentiment Score shows what percentage of tweets are positive and displays other relevant metrics. Additionally, in the social realm, TD Ameritrade analyzes data from its six million retail customers to create what it calls the Investor Movement Index (IMX), which displays and analyzes the sentiment of its retail investors’ portfolios.

td ameritrade thinkorswim earnings analysis

All in all, when it comes to researching stocks, ETFs, mutual funds, and fixed income, any top five broker is going to provide an excellent experience for investors. With such similar offerings, it’s the unique experience, features, and functionality that differentiate the brokers.
Best for Investment Products

Based on 40 different variables, here is a summary of the top five brokers for investment products:

    Interactive Brokers - Scored 96%
    TD Ameritrade - Scored 91%
    Charles Schwab - Scored 89%
    Fidelity - Scored 88%
    E*TRADE - Scored 87%

Investing covers a global spectrum, from investing in international equities to trading forex to purchasing US treasury bonds. To understand the true range of offerings, StockBrokers.com has focused on all the broad investment channels down to the specific order types each broker offers. In the process, we compare 40 different variables.

Starting with the US, services such as complex options trading, fixed income, and direct market routing are all very common. Other services, such as commission-free ETFs, are still growing in the industry. Just 46% of brokers offered commission-free ETFs heading into 2018, with TD Ameritrade leading the way (296). Every broker in the industry supports weekly options, and only four brokers – Capital One Investing, Firstrade, Just2Trade, and Merrill Edge – don’t yet support complex options. On the flip side, only 46% of brokers offer direct market routing for options.

As far as order types go, it is an industry standard to support market orders, limit orders, stop orders, and after-hours trading. Even more advanced order types such as trailing stops, OCO, OTO, OTOCO, and multi-contingent orders are supported by more than half the industry. The least common order type is algo, offered by less than half the industry. The leader overall is Interactive Brokers, which offers customers an arsenal of 63 different order types, some of which are exclusively designed for institutional investors.

    Looking at international trading, Fidelity and Interactive Brokers are, by a wide margin, the two best choices.

Looking at international trading, Fidelity and Interactive Brokers are, by a wide margin, the two best choices. Fidelity offers its customers access to trading equities in 25 countries. Interactive Brokers offers less equities support – in “only” 18 different countries; however, all investment types considered, the total comes to 26 countries and over 120 market centers. Both brokers also make it a seamless trading experience, allowing customers to trade from their primary account. Charles Schwab (12 countries in which to access equities) requires a separate account to be opened to place trades.

Plenty of options are available for futures trading, while forex trading is scarcely supported. Just two brokers, TD Ameritrade and Ally Invest, offer forex trading to US customers, and just over half the industry offers futures trading.

All variables considered, Interactive Brokers is the top choice for the largest offering of investments in 2017, earning 96% of the possible points. TD Ameritrade and Charles Schwab follow in second and third places, earning 91% and 89%, respectively.
Best for Banking Services

Based on 13 different variables, here is a summary of the top five brokers for online banking services:

    Merrill Edge - Scored 99%
    Capital One Investing - Scored 96%
    Charles Schwab - Scored 94%
    Fidelity - Scored 77%
    Ally Invest - Scored 76%

For full-service brokers, the client experience goes beyond just trading. Customers of Merrill Edge, Capital One Investing, Charles Schwab, Ally Invest, and Fidelity all fall under this category, meaning banking services are also offered.

To determine which broker is the best for banking, we dived in head first and explored all the potential services: checking accounts, savings accounts, debit cards, credit cards, and mortgages. We then looked at specialty offerings such as mobile check deposit, debit card ATM fee reimbursement, and no-fee banking. Lastly, the total number of branch offices was factored in, as access to local branch offices is just as important as managing an account online.

    It should be no surprise that our #1 choice is Merrill Edge, whose parent company is Bank of America.

It should be no surprise that our #1 choice is Merrill Edge, whose parent company is Bank of America. With a Financial Solutions Advisor (FSA) located in 2,167 out of a total 4,480 locations, Bank of America has, by far, the largest network.

Bank of America really shines with its rewards program, Preferred Rewards, which offers customers with certain account thresholds a range of benefits. The first tier, Gold, requires at least $20,000 in combined assets between Bank of America and Merrill Edge, while the top tier, Platinum Plus, requires at least $100,000 in total assets. Benefits include boosts to money-market savings, credit card cash back bonuses, free trades with Merrill Edge, and more. All in all, there isn’t a better marriage of brokerage and banking than Merrill Edge and Bank of America.

Merrill Edge Preferred Rewards

Alongside Merrill Edge’s parent company, Bank of America, another well-recognized brand is Capital One Investing, whose parent company is Capital One. Next to Bank of America, Capital One is the only other bank to offer every service type: retail locations, checking accounts, savings accounts, debit cards, credit cards, and home mortgages. Capital One is best known for its credit cards, and like Bank of America, its customers enjoy the benefits of universal login for easy access to all their accounts.

Together with our ranking, we present highlights from the rest of the full-service brokers. Fidelity has one of the best cash rewards credit cards on the market, with its 2% Fidelity Investment Rewards Visa Card (Fidelity cut its ties with American Express in early 2016). Of the remaining brokers, Charles Schwab is the only one to offer home mortgages. The list goes on and on.

When it comes to banking and brokers, the great news is that investors have multiple options from which to choose. Full-service brokerages generally do a very good job of catering to the specific needs of their customers, and provide a well-rounded offering. This is especially true for customers who already do their banking with Bank of America, Capital One, or Ally; the move to add investing as an additional service is just a few clicks away.
Best for Customer Service

Based on 260 phone tests over ten weeks, here is a summary of the top five brokers for customer service (view infographic):

    TD Ameritrade
    Fidelity
    Merrill Edge
    Charles Schwab
    TradeStation

When assessing customer service, one phone call is not enough. To gauge the quality of support properly, multiple tests across every channel must be conducted. Here at StockBrokers.com, we are proud of the fact that our testing is respected as the most rigorous in the industry.

    To ensure the highest quality testing data, we partner with professional private shopping group Confero.

To ensure the highest quality testing data, we partner with professional private shopping group Confero. With customers such as Coca Cola and Shell, Confero understands how to read between the lines and identify truly superior customer service. Using our StockBrokers.com industry-specific templates, Confero made 260 phone calls to branch offices and support numbers across the United States.

This year, TD Ameritrade was once again able to take the No. 1 spot overall, edging out Fidelity. Merrill Edge has been an extremely consistent performer, finishing third in 2018, second in 2017, first in 2016, and second again in both 2015 and 2014. The consistency and ability of TD Ameritrade’s support reps to repeatedly deliver an A or A+ experience is truly impressive.
Best Brokers Summary

Online Broker Best For Minimum Deposit Commissions Overall Rating
Fidelity Best for Investors $0 $4.95 5 Stars
TD Ameritrade Best for Traders $0 $6.95 5 Stars
Charles Schwab Best for Retirement $1,000 $4.95 4.5 Stars
E*TRADE Best for Options $500 $6.95 4.5 Stars
Interactive Brokers Best for Professionals $10,000 $.005 per share 4.5 Stars
Merrill Edge Best Rewards program $0 $6.95 4.5 Stars
TradeStation Best Platform Technology $5,000 $5.00 4 Stars
Ally Invest Best for Ally Clients $0 $4.95 3.5 Stars

Related Articles

Explore our other online trading guides:

    Best Brokers for Options Trading
    Best Brokers for Penny Stocks
    Best Brokers for Beginners
    Best International Stock Brokers
    Trade Cost Calculator
    Compare Online Brokers

References

    SEC
    FINRA
    SIPC
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    NYSE info - NYSE companies
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