Home Brokers Best 5 Brokers For Beginners

Best 5 Brokers For Beginners

151
0
Regal Wallet Banner

Top 5 brokers for beginners – 2019

There are literally hundreds of brokers to choose from, and none of them offer the same things. Sure, all of them help with investing, but some are focused on options trading, others on advanced automated trading, others on expert traders, and still others on beginners. At Business24-7, beginners are defined as “traders with less than one year of active trading experience.”

The Top 5 Brokers for Beginners listed here provide resources, training, and support to investors who are just starting out.

  1. Robinhood
    1. Best mobile app.
    2. Zero fees
    3. US and Australian clients only
  2. eToro
    1. Best for social trading
    2. Competitive fees
    3. Non-US clients
  3. DEGIRO
    1. Best discount broker
    2. Low fees
    3. Solid trading platform
  4. Swissquote
    1. Best educational tools
    2. High fees
    3. Good trading platform
  5. Tastyworks
    1. Best for options trading
    2. High fees
    3. High-quality video channel

All five of these brokers are heavily regulated by entities in the US, the UK, the Netherlands, and Switzerland. If you are unsure about which brokers are available in your country, try out our broker finder tool which filters brokers by country.

Good brokers for beginners

There are six main categories of features that we use to evaluate each broker for beginners. Those categories are:

  1. Fees
  2. Educational Tools
  3. Trading Platform
  4. Account Use
  5. Deposit and Withdrawal
  6. Trust

Robinhood (Best For Beginners: 4.1)

Based in the United States, Robinhood is a discount broker that has the distinction of being the only zero-fee broker on this list. This is limited; however, to customers in the US and Australia. It is regulated by the US-based FINRA (Financial Industry Regulatory Authority) a maximum of $500,000 in investment protection and up to an additional $250,000 of protection for cash in deposit.

Robinhoodis highly recommended for beginners who are following the “value investing” or “buy-and-hold” strategy.

Pros

  • Top-quality web and mobile trading platforms
  • Commission-free stock trading
  • Fully digital account opening and management

Cons

  • Product catalog is limited
  • Australian and US clients only
  • Limited trading platform tutorial videos

Web trading platform

Pros 

  • Clean design
  • Transparent fees
  • Intuitive

Cons

  • Limited customizability

Fees

Robinhoodprovides free US stock trading to all account holders. There are no transfer fees, deposit fees, withdrawal fees, or inactivity fees. Commissions on non-US stock trades are surprisingly expensive.

Pros

  • $0 inactivity fee
  • $0 withdrawal fee
  • $0 commission on US stocks

Cons

  • Expensive fees for non-US stock trades
  • High percentage for leverage and financing

All stock commissions, financing, and spreads are based on opening a $2,000 position and then holding it for one week.

All Forex commissions, financing, and spreads are based on opening a $20,000 position and then holding it for one week.

Education

Robinhood provides minimal direct educational tools. Since all accounts are free, there is no demo account. Demo accounts can provide a benefit for beginning traders because it allows them to”practice” in current market conditions using fake money.

Pros

  • None

Cons

  • No demo account
  • Little educational material
  • Few platform tutorials

Account Use

While accounts are only available to US- and Australian-based clients, Robinhood’s account opening process is secure, fully digital, and completed within a day.

Pros

  • $0 Account minimum
  • Intuitive
  • Fast and fully digital

Cons

  • US and Australian clients only

Deposit and withdrawal

To provide free deposit and withdrawal services, Robinhooduses the free bank transfer service (ACH) available in the US and Australia.

Pros

  • Intuitive
  • $0 deposit fee
  • Deposit up to $1000 per week instantly

Cons

  • No deposit or withdrawal through credit or debit cards
  • Bank transfers can take up to five days

Conclusion

For beginning traders who want to trade US stocks for free and I are looking for an intuitive platform, Robinhoodis by far the best choice. There are zero fees, zero commissions, and both the mobile and web trading platforms are fast, easy, and user-friendly.

The negatives attached to Robinhoodrelate mostly to the limited scope and what can be traded. For example, while European stocks can be traded using Robinhood, they are far more expensive than other brokers. In addition, many investors prefer having access to their broker through live chat, phone, and email. Robinhoodonly offers email as a means of contacting support. This may be a drawback for some as it can cause delays in response time.

eToro (Best For Social Trading – 4.5)

An Israeli fintech startup, eToro focuses on social trading. Social trading is when traders can copy the trading activity of other traders. Established in 2007, eToro is actively regulated by authorities in Australia, the UK, and Cyprus. It has been voted as one of the top five trading platforms for Europeans.

eToro also offers three main asset types: stocks, cryptocurrencies, and CFDs. You can read the full review of eToro here

Pros

  • Social trading
  • Easy account use
  • Free ETF and stock trading in the European Union

Cons

  • Customer support problems
  • Platform instability
  • eToroprovides an attractive and intuitive web trading platform.

Web Trading Platform

Pros

  • Attractive
  • Social trading
  • Intuitive

Cons

  • Fee report is unclear
  • Restricted customization

Fees

Although eToro has high non-trading fees and high financing rates, their free European stock trading and low fees for non-US clients are a major strength.

Pros

  • Clear fee structure
  • Non-EU clients pay low fees
  • Free ETF and stock trading in the EU

Cons

  • Monthly inactivity fee of $10
  • Withdrawal fee of $25
  • High financing rate

Education

eToro offers very few videos about investing, and most are of low to medium quality.

Pros

  • Introductory guide
  • Demo account

Cons

  • No educational videos

Account Use

Pros

  • Fast and easy
  • $0 Account minimum
  • Intuitive
  • Fast

Cons

  • None

Deposit and withdrawal

Both deposits and withdrawals can be made using a variety of tools, including bank accounts, debit cards, and credit cards. All accounts are in US dollars, and there is a surprisingly high withdrawal fee.

Pros

  • No deposit fee
  • Deposit and withdrawal using credit or debit cards
  • Intuitive

Cons

  • All accounts only in US dollars
  • High withdrawal fee

Conclusion

2017 was a challenging year for eToro because the massive demand for cryptocurrencies caused platform problems and significant challenges for customer support. Our more current review in 2019 demonstrates a more mature eToro experience.

eToro is one of very few brokers to offer zero-commission stock trading. This is a significant benefit for clients looking at low-cost options. Account opening and management is straightforward. The shining star at eToro is their social trading tools, which are among the best in the world.

However, customer service is not as high quality, and there are still reports of platform instability. Despite the limited range of investment products and relatively high non-trading fees, and eToro is probably one of the best brokers for cheap stock trading and social trading for beginners.

Degiro (Best Discount Broker – 4.7)

Based in the Netherlands, DEGIRO is an online discount broker that is regulated by the AFM (Authority for the Financial Markets) and the DNB (De Nederlandsche Bank).

Pros

  • Extremely low fees
  • Intuitive mobile and web platforms
  • Extensive access to international markets

Cons

  • Limited educational tools
  • Limited research tools
  • No Forex trading

Web trading platform

Intuitive and straightforward, the web platform at DEGIRO is designed for beginners, even if it is a bit difficult to customize.

Pros

  • Attractive
  • Dual factor authentication
  • Intuitive

Cons

  • Missing price alerts
  • Difficult to customize

Fees

Fees in all categories are extremely low at DEGIRO. There’s even a small list of ETFs that can be traded for free, once per month. Recommended for beginning investors following the “buy and hold” or “value investing” strategies.

Pros

  • Low fees
  • No withdrawal fee
  • Some fee-free ETFs

Cons

  • Rates higher for smaller exchanges
  • Mutual funds incur a service fee

Education

The limited educational resources are only available through the UK and Dutch websites.

Pros

  • Video tutorials
  • Educational resources

Cons

  • Little educational documentation
  • Dutch and UK resources only
  • No demo account

Account Use

With no minimum deposit, DEGIRO offers and account opening process that is fast and easy.

Pros

  • Intuitive
  • $0 account minimum
  • Paperless account opening and management

Cons

  • None

Deposit and withdrawal

Deposit and withdrawal at DEGIRO are available via free bank transfer.

Pros

  • $0 withdrawal fee
  • $0 deposit fee
  • Multiple account currencies available

Cons

  • Unable to deposit or withdraw using credit or debit cards

Conclusion

Their simple, low-cost platform make DEGIRO an excellent choice for Europeans who want broad access to international markets. Currently, only Interactive Brokers has a similar fee structure to DEGIRO for European clients.

The lack of fees means there is little funding for educational materials and no forex trading for beginners.

Swissquote (Best for mutual and exchange traded funds (ETFs) – 4.5)

With more than 25 billion Swiss Franks under management, Swissquote Group Holding is one of the largest brokerages in the world. Based in London, this is a subsidiary of Swissquote Bank and is regulated by the United Kingdom’s FCA (Financial Conduct Authority). Since Swissquote has a base in the UK, it can offer European-based traders higher quality execution and liquidity on funds, bonds, commodities, and Forex.

Pros

  • Competitive fee structure
  • Daily multilingual reports
  • Easy set up on the desktop and mobile apps

Cons

  • Only three products can be researched at a time
  • Limited customization with desktop watchlists
  • No technical indicators on mobile charts

Trading platform

Swissquote offers different trading platforms for their different clients. Clients registered with their Switzerland-based division will most likely use Advanced Trader with deep functionality and simple design. UK based clients will most likely use MetaTrader 4. However, despite the robust feature set offered by MetaTrader 4, UK clients will only be able to trade in Forex and CFDs.

Pros

  • Multilingual support
  • Dual factor authentication
  • Price alerts

Cons

  • Disappointing search function
  • Limited variety of order types

Fees

While there is no inactivity fee at Swissquote, there are trading fees and non-trading fees which range from average too expensive.

Pros

  • No inactivity fee

Cons

  • Withdrawal fee
  • Expensive trading fees

Education

The educational materials provided by Swissquote are both valuable and professional. They come in three main formats: seminars, videos, and webinars.

Pros

  • Tutorial videos for the trading platforms
  • Demo account
  • Well explained

Cons

  • None

Account Use

Opening an account with Swissquote is attractive because it has no minimum account balance requirement. The process is also easy, fast, and fully digitized.

Pros

  • No minimum account balance
  • Paperless account opening

Cons

  • Identification of some documents may be difficult or impossible by region

Deposit and withdrawal

Swiss quote only offers withdrawals through bank transfer. However, you can deposit using credit cards, debit cards, and bank transfers. There is no deposit fee and the process for depositing is intuitive.

Pros

  • No account deposit fee
  • Multiple base currencies for each account
  • Depositing through credit and debit card available

Cons

  • Unable to withdraw to a credit card
  • Unintuitive withdrawal process

Conclusion

Being attached to an exchange and a bank give Swissquote a level of trust that few brokers enjoy. Accounts opened in Switzerland have far more features, but UK based accounts have higher investor insurance.

Account opening is fast, and account management is straightforward for both countries.

Moreover, with no minimum deposit and no inactivity fee, Swissquote is an excellent choice for beginning investors who are interested in trading bonds, stocks, mutual funds, or cryptocurrencies.

Tastyworks (Best For Options Trading – 4.5)

Based in the US, tastyworks focuses on options trading and was built by the same people who built thinkorswim. Regulated by the US FINRA, tastyworks is highly recommended for options traders based in the US.

Pros

  • High-quality educational materials
  • Excellent customer service
  • Low fees for options

Cons

  • US-only
  • High barrier to entry
  • Occasional bugs in software

Web trading platform

The interface designed for the tastyworks web trading platform is exceptionally detailed and presents a vast amount of data in a single screen. This is excellent if you know how to interpret that data, but overwhelming if you don’t understand what it all means.

Pros

  • Fee report is straightforward
  • Search tools are robust
  • Core options strategies embedded in the interface

Cons

  • Overwhelming in the beginning
  • Customizability is limited

Fees

Options fees are the core strength at tastyworks and are among the lowest in the industry. Other trading fees are not as low but still competitive.

Pros

  • $0 inactivity fee
  • Low options fees
  • Clear fee structure

Cons

  • Expensive financing
  • Fee for all withdrawals

Education

Educational materials at tastyworks are among the best in the options trading game; high quality and entertaining.

Pros

  • Training videos
  • Straightforward explanations
  • HD recordings

Cons

  • No demo account.

Account opening

Opening an account at tastyworks is intuitive and does NOT require a minimum deposit. However, it can be rather slow (up to 3 days) considering the process has been entirely digitized.

Pros

  • Intuitive
  • $0 minimum deposit
  • $0 minimum account balance

Cons

  • Can take up to 3 days

Deposit and withdrawal

tastyworks focuses on US-based traders, and their tools are optimized for them. Non-US citizens will find some aspects restrictive such as a requirement to only use US dollars, only use bank accounts, and a higher than average withdrawal fee.

Pros

  • Intuitive
  • $0 deposit fee

Cons

  • No deposit or withdrawal via credit or debit cards
  • Expensive withdrawal fees
  • Accounts only in US dollars

Conclusion

For beginning options traders, tastyworks is an excellent broker but generally not recommended for other types of trading.

As a US broker, tastyworks offers high protection to investors with low options fees. With a seamless account management process, no inactivity fee, no minimum deposit, excellent educational materials, and no monthly fees, tastyworks is a superb place for beginning options traders to build their skillset.

The 6 main categories for being a “Best Broker for Beginners”

There are many areas and criteria for evaluation of a broker. In our research, we evaluated each broker based on thousands of data points in a variety of categories. The most critical data points for being chosen on this list of Top 5 Brokers for Beginners of 2019 are fees, trading platform, education, account use, deposit and withdrawal, and trust.

  1. Fees
    1. There is tremendous variation in fees between brokers. Standard trading fees at one broker may be up to 15 times higher than at a second broker.
  2. Trading platform
    1. For beginners, it’s vital to have an intuitive and functional platform that allows for all of the trading styles and strategies a beginning trader would need.
  3. Education
    1. Investing has a wide variety of tools and vocabulary that are unique to the stock market. Useful educational tools help beginning investors to understand their wealth, investments, and future. Without a proper understanding of core investing concepts, it’s almost impossible to succeed.
  4. Account use
    1. One area in which fees vary tremendously between brokers is in the category of account use. In particular, opening an account with some brokers requires no minimum deposit while with other brokers the minimum deposit can be as high as $100,000. For beginning investors, a $0 minimum deposit and a $0 maintenance fee is best.
  5. Deposit and withdrawal
    1. Another place in which unexpected charges can appear is when depositing or withdrawing funds. Many brokers charge a fee for every deposit and withdrawal from your account. For beginning investors, it is best to keep these fees to a minimum.
  6. Trust
    1. The trustworthiness of the broker is a fundamental concept for all investors. Many brokers have gone bankrupt, which has caused their clients to lose all of the money they have invested with that broker.

All of the brokers on our list have high scores in each of the six categories. The high performance of these brokers in each of these six categories means that they provide the best tools, flexibility, and security for beginning investors as they start their journey in investing.

Next steps

Whether this is the very first article on investing you’ve ever read or you been doing this for a year or two, the next step for you is to learn more. There are many different ways to learn how to be successful in investing. It’s generally recommended to start with the safest kinds of investing first and then, as you gain experience and success, move on to more advanced strategies.

On this website, you can find many high-quality articles and materials that explain the positives and negatives of investing as well as the difference between investing versus trading.

Probably the safest form of investing is the “value investing” or “buy-and-hold” strategy. For beginners in this area, reading articles about how to buy shares, how to invest in bonds, asset management, and the pros and cons of the exchange traded funds are great places to start your journey.

For beginning traders, the most critical first step is still to learn more. Also, always remember that learning to trade and learning to invest are not the same thing. For example, most investors start with the”buy and hold” strategy. In contrast, most traders begin by trading Forex and CFD trading.

Note: CFDs have a high potential for profit but are among the riskiest financial instruments available. More than 70% of traders who use a CFDs lose more money than they make.

Conclusion

Robinhoodis the best broker for beginners in 2019 for US and Australian clients. If you are outside the US, eToro is the next best option and rated at #2 on our list. The third is DEGIRO for the lowest fees. Fourth is Swissquote for its massive product catalog and far-ranging tools. And last is tastyworks for their amazing educational content.

ALL of the Top 5 Brokers for Beginners are trusted and safe choices for beginning investors!

It is important to remember that all trading involves risk. For example, more than 70% of investors lose money in Forex and CFD trading. If you use leverage (money borrowed from your broker), there is a high risk of losing more money than you have deposited. Before attempting to participate in any form of investing, consider how well you understand what you plan to invest in, and if you can afford to lose your money.

Methodology

The mission of Business24-7 is to provide comprehensive, unbiased ratings and reviews of online brokers. User experience, the mobile experience, customer service, costs and fees, security, the quality of trade executions, the products available on their platforms are all part of our six-month evaluation of a broker’s platform. The rating scale was based on thousands of data points that have been weighted into the scoring system.

Brokerages were also required to fill out a multi-point survey regarding every aspect of their platform. In-person demonstrations and evaluations were provided by the majority of the online brokers we reviewed.

Štefan Grašič, along with our team of industry experts, conducted our reviews and developed this methodology for ranking what form is used in online investing.

Have you tried any of these brokers? Tell us about your experience in the comments!

LEAVE A REPLY

Please enter your comment!
Please enter your name here