The Best Trading Platforms to Begin Your Investing Journey
In this article, I’m going to describe what a brokerage account is and the two platforms I recommend if you are new to investing. To preface this post, I’m not sponsored by any of these companies, and my recommendations are based on my experience. With that being said, here’s how this article is broken down:
- What is a Stock Brokerage Account
- My 2 Favorite Stock Brokerage Platforms
- Conclusion: What to do after opening a brokerage account
What is a brokerage account?
A securities brokerage account, or in our case a stock brokerage account, is like a bank account, but instead, it holds securities for us: stocks, bonds, ETFs, mutual funds, and sometimes options. In addition to holding the securities, stock brokerage companies will help you trade, sell, and buy them. They will also notify you of any voting occurring for companies whose shares you own and will handle dividend payments and stock splits.
As you dive deeper, you’ll also find that some stock brokerage accounts will offer additional services such as:
- Options Trading
- Trading on Margin (i.e. they will lend you money to trade with)
- Foreign Exchange Trading
- ETF and Mutual Fund Research
- Automatic Stock, Mutual Fund, or ETF purchases on a schedule
- Automatic Dividend Reinvesting
- After-hours trading
- Day Trading (buying and selling the same stock multiple times in a short time frame)
My favorite stock brokerage platforms
Robinhood
If you are new to investing and want to get started right away on your phone, then Robinhood is a great platform to get started with.
Here’s what I like about Robinhood
- “Mobile First” platform makes it really easy to get started and buy stocks. Just download the app from the app store, create an account, link your bank account to fund it, and you can literally buy your first stock within 30 minutes.
- Great UI (User Interface) that makes buying and trading stocks or options very easy. I do warn that with great power comes great responsibility. Robinhood makes securities trading into a game-like experience, which is great if you’re a beginner investor, but it can lead to trouble if you don’t have discipline and if you don’t have a strategy.
- You can buy fractional shares – that means if you don’t have $3000+ to buy a share of Amazon, you can buy 1/100th of a share for $30.
- As with most trading platforms nowadays, Robinhood offers commission-free trading (you don’t have to pay to buy or sell).
- Robinhood provides great visual learning guides to understand what you’re doing: for example, what’s a limit order and what’s a trailing stop order, what’s a call, etc.
- Robinhood lets you trade cryptocurrencies like Bitcoin (BTC)
- Robinhood allows you to trade on margin (not advised unless you really know what you’re doing)
Here’s what Robinhood could do better
- Robinhood doesn’t offer IRA accounts, Individual 401Ks, or Educational Savings Plans.
- Robinhood doesn’t have statistical indicators, such as moving averages and relative strength indices, to plot alongside your stock price.
- Robinhood doesn’t have great research or search features. For example, if you wanted to search for a municipal bond mutual fund with a 4-5 star Morningstar rating, you won’t be able to do this on the Robinhood app.
TD Ameritrade
TD Ameritrade is my other favorite trading platform. Where it lacks in user interface and educational content, it more than makes up for in the services it provides as well as their customer service.
Here’s what I like about TD Ameritrade
- Great search tools to find different mutual funds and ETFs that fit your diversification plan.
- Offers Roth IRA, IRA, Individual 401K, and Education Savings plans in addition to the personal brokerage account
- You can plot moving averages, RSI, and other indicators when looking at securities on their app.
- Great customer service when you call them
- Their mobile phone user interface isn’t as great as Robinhood, but it’s not that difficult to use
- Commission-free trading + trading on margin
Here’s what TD Ameritrade can do better
- TD Ameritrade allows you to trade options; however, their option’s trading user interface isn’t as great as Robinhood.
- You cannot buy fractional shares of a company. If you want to own some of Amazon, you’re going to need $3000+
Conclusion: What to do after opening a brokerage account
There are many companies offering brokerage accounts (E-Trade, Meryl Edge, Fidelity, and Wealthfront), but Robinhood and TD Ameritrade are my favorite. I personally have a Robinhood account (for speculation) and a TD Ameritrade account (more serious investments); I recommend opening an account on both to see which you prefer. Finally, I want to warn that investing in securities is inherently risky. When I first started investing I had no clue what I was doing; I bought only companies that I knew, and I believed articles that screamed: “Buy this stock!”. I also followed the FOMO (fear of missing out) crowd. I would take some time to research and develop strategies if I’m short term trading, and I would try and understand the benefits of long term holding.
Now that you’ve opened an account, the market is your oyster! Here are some posts I’ve written to help you take your next steps: