As investors, any of us are logging in and out of our brokerage accounts multiple times per day. We want an intuitive system that is easy to use and without too many trading fees. Choosing the right trading brokerage is the first step toward gaining access to the stock market. It’s an important decision for every new trader and not one that should be taken lightly! So what are the best brokers for small accounts?
Choosing the Right Brokers for Small Accounts
There is a long list of brokerages available to US traders but which one is the right one for you?
Specifically, we can assume that most new traders will be opening relatively small accounts.
There’s no shame in it, everyone has to start somewhere!
No matter what your style of trading or investing is, the ultimate goal for everyone is to grow their personal wealth. With that being said, some brokerages are definitely better for new traders than others.
Here’s what every new trader should be looking for in a prospective brokerage!
Best Brokers for Small Accounts Have Ease of Use
This is the most important thing, isn’t it? With any brokerage, you’ll want to make sure that the trading process is smooth and intuitive. The last thing you want is to be confused or worse, make a mistake, and miss out on a good trade.
The best brokers for small accounts have the simplest layouts: buy or sell, number of shares, market, or limit price. That’s all you really need when you’re first starting out as a trader.
How can you ensure that a brokerage is easy to use? Do some research. There are usually YouTube videos on how to use a specific brokerage system. Most brokerages also offer a tutorial or demonstration of how to use the platform.
I highly recommend educating yourself before jumping into trading with your real money. Furthermore, if you are brand new to trading, you might also want to start with a paper account.
Low Trading Fees
In the US, most of the best brokers for small accounts have implemented zero commission trading fees.
While this is the case, always make sure you read the fine print. Some brokerages have no fees on buying but they do when selling.
Others will charge fees if you don’t hit a certain number of trades per month.
Before you sign up for a new account, make sure you completely understand the fee system involved.
Be especially aware of paying for a premium account with a brokerage. If you are signing up for a specific brokerage for certain perks, make sure you don’t have to have a premium membership to use those perks. You could be in for a surprise monthly or annual fee that you weren’t expecting!
Approval For Margin and Options
You might be wondering why this is a good thing when looking for the best tbrokers for small accounts. To be honest, if you’re just starting out in the stock market you don’t need easy access to margin or options.
If you don’t know what you are doing, this is a fast way to liquidate your account in a hurry! Most brokerages need to approve your access to options trading, but some are willing to give this access out to any new traders.
Margin trading is another feature that has really been glorified by sites like the WallStreetBets subreddit. For most traders, margin accounts are used for advanced trading strategies and only when you know what you’re doing. New traders are better off sticking to a normal brokerage account and learning the ropes.
Mobile App
Let’s face it, almost everything in our lives can be done through our mobile phones.
As a trader myself, I don’t always find it easier to trade from a mobile phone, but I get the appeal.
It’s convenient for checking balances and the performance of your portfolio.
I always think it is easier to trade from a computer because you can have everything you need open.
This includes things like charts, stock market news, and any other tools you might use to trade. So look for the best brokers for small accounts that have mobile access.
Great Customer Service
As a new trader, you might be prone to making some mistakes or having some questions. Find the best brokers for small accounts with good reviews for its customer support, especially one that has a phone or live chat agents available during trading hours.
There’s nothing worse than waiting around for a response for days while you miss out on trading opportunities! You might be thinking that you never contact customer service, but why not have a helpful option the one time you do!
Best Brokerages for Small Accounts
So now that you know exactly what to look for with the best brokers for a small account, it’s time to start looking at your options! Just google brokerages and you’ll see exactly how many choices there are on the market. But are all of them appropriate for new traders? Definitely not. Simplicity is the key when you have a small account, so let’s check out which brokerages made the cut.
Best Brokers for Small Accounts: TD Ameritrade
TD Ameritrade is one of the largest brokerages in the US with over 11 million registered users.
The best brokers for small account is simple to use and has highly rated web and mobile apps.
The best thing about TD Ameritrade in my opinion is the educational programs that it offers to new traders. What’s more, TD Ameritrade is a great platform for both beginners and advanced traders.
This means that as you learn more about trading, you will likely stick with the platform as you get into more advanced strategies.
TD Ameritrade offers free stock trading and ETF investing but does charge up to $0.65 per options contract. The platform has even added Bitcoin futures to allow its users to get exposure to the cryptocurrency market.
One thing that TD Ameritrade does not offer is fractional shares, which are popular for those with smaller accounts. If you only have a few thousand dollars in your account, it’s not easy to invest in companies like Amazon or Tesla.
Another box that TD Ameritrade checks off is that it is widely known that its customer service is top-notch. TD Ameritrade offers a number of different ways to contact customer service. You can call its toll-free number 24 hours per day, talk to its live chat agents, and even reach out via other apps like Apple Business Chat, Meta Messenger, Twitter direct messaging, and even on the popular app, WeChat, for Asian users.
Robinhood
Robinhood has made a lot of negative headlines over the past couple of years, but it’s not all bad. In fact, as a platform that introduces people to trading, it’s quite a good app.
Robinhood has both a web app and mobile app that are both simple to use and makes learning how to trade a breeze. Robinhood offers no commission trading for stocks, ETFs, and cryptocurrencies. It also offers fractional shares which is always a nice option for new traders.
The app gets a lot of criticism for its payment for order flow system. This means that it actually sells user trading data to institutions so they know what retail traders are buying. It’s not great, but it’s how Robinhood can afford to offer free trading.
One thing to note with Robinhood is that to get premium services, you’ll have to upgrade your account. This costs a monthly or annual fee so make sure you know what you need before signing up.
Robinhood is not known for its customer support, as it only has a live chat app and email. There is no phone number to call, so don’t expect to be able to talk to anyone live.
Other than that, Robinhood is a great place for you to start out as a trader. When you are ready for more advanced strategies, you might want to look elsewhere. But this can be apart of the best brokers for small accounts and an excellent first step in your trading career.
E*Trade
E*Trade routinely gets reviewed as the simplest platform to use for executing trades. Simplicity is good for new traders. And both its web and mobile apps are excellent to ease you into things.
E*Trade also offers Prebuilt Portfolios, which takes a lot of the research out of investing. If you aren’t sure what you want to trade, take a look at the Prebuilt Portfolios to get a better idea!
E*Trade offers no fees for trading stocks and ETFs, and its options contracts cost between $0.50 and $0.65 per contract depending on your trading volume.
The platform offers two different mobile apps: E*Trade and Power E*Trade for more advanced trading strategies. Both apps have received great reviews and like TD Ameritrade, ensure users stay within the ecosystem.
E*Trade has 24 hours per day telephone customer service, as well as live chat or email. The company even has over 30 brick-and-mortar locations in the US, if you are really stuck.
It has a wonderful education system for new traders and has not had any major data breaches. This means the company takes its security seriously and is dedicated to protecting its users. Hence why we consider it one of the best brokers for small accounts.
Conclusion On the Best Brokers for Small Accounts
These are just three of dozens of the best brokers for a small account available. I chose TD Ameritrade for its excellent customer service and trading fees, Robinhood for its simple trading system, and E*Trade for its diverse ecosystem and Prebuilt Portfolios.
New traders will want to ensure the brokerage meets all of their needs before signing up. These include a simple trading system, low fees, and great customer service. What’s your favorite brokerage for small accounts?
