Online Discount Brokers Review For Canada And The USA 2018
The world is becoming ever more interconnected and information is flowing at a rapid pace. “Fintech”, or financial technology, is taking the world by storm and old methods of doing business are disappearing. We now have access to amazing tools on the screens of our phones and computers. This article is about one such tool – your brokerage account. In particular, this article covers the best discount stock brokers in the US and Canada for 2018.
Before we get to the broker review, here is a quote from Bruce Lee – “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” Why are we using this quote? Much of the investment and trading world is repetition, and the earlier you start the more repetitions you can make. Warren Buffett, one of the greatest investors of all time, started investing when he was just a child. The one advantage that Buffett did not have, was a plethora of online brokers at his expense.
Here’s an interesting story for you: A college student was given a book titled “Learn to Swim”. He read that book every day for 30 days and then became an Olympic champion. Doesn’t make sense, right? How can reading a book make you good at swimming, let alone an Olympic champion? You can’t learn if you don’t jump into the pool! Books are a great way to learn, but sitting at home reading a book is not going to prepare you for the markets. A combination of the two is an ideal method for success.
The same is true for trading and investing in stocks. You cannot learn to invest unless you start trading with real money. Practice accounts work well, but there is a certain pressure placed among investors who are involved in the markets with real money. You have to become familiar and comfortable with that pressure to succeed. A lot of the discount brokers in this review offer zero minimum deposit to their clients for this very reason.
Why should I go through the headache of trading and investing through an online broker? Why not just invest in a mutual fund?
The answer – we now live in a different world. Lets explain why:
First – there is no reason to pay the exorbitant high annual fees and potential front-end or back-end sales charges to mutual funds when ETF indexing is on the rise.
Second – investing in stocks is a learnable skill and there are more resources now than ever to get you started. We have one such resource on our website that teaches you how to buy stocks here.
Third – the internet has made it possible for common folks such as you and I to have access to information that analysts a few years back could only dream of. This means that investing is an informed and calculated decision rather than a game of Russian roulette.
Fourth – you have already been thinking like an analyst all these years whenever you bought something. The process of research, comparison, investment based on future potential etc. It is something that we do all the time! Investing and trading will only sharpen these skills and help you in other areas of your life.
Finally, the most successful people on this planet own something; that is why they are successful. They have either money or people working for them around the clock. If you own a stock in a company such as Apple or Coca-Cola then you own something that will work you for you even when you are sleeping.
Now, let’s look at the flip side. What will happen if you don’t learn to invest?
If you don’t speak the language of the market then you won’t know when your analyst is trying to sell you a sour deal. That is what led to the financial crisis of 2008, and the dot com bubble of 2000. If people were aware of the basics of the markets then they would have never made those subpar investments.
So what’s the first step? Where should you start?
The only way to jump into the metaphorical pool is to have a pool in the first place, which in this case is a brokerage account. Selecting a broker can be difficult task because there are a number of factors to take into consideration. However, we have made things easier for you by reviewing these discount brokers based on 4 main criteria:
Cost/price point: This is important because high fees will eat into your profits.
User Interface: Better interface means easier trades.
Extra tools (research and reporting): Better information leads to better decisions.
Bonus section: (for those who want a bigger bang for their buck!)
Before we begin, a little on the brokerage industry in general.
The dynamics in the business have changed considerably over the past few years and consumers are slowly and surely gaining the higher ground. Gone are those days when a select group of individuals had control of the market. During those years, brokers depended on sales skills and demanded high commissions from both the consumer, and the exchanges. Technology and changes in government regulations led to an increase in competition and consequently, a decrease in the fees and commissions.
Life has become difficult for brokers and they are trying to beat each other by offering better services in every way possible. There was a time when Canadian banks used to charge $29.95 for every transaction and discount brokers such as Questrade were the new kids on the block.
We are lucky to be alive in such a time of change and innovation. The market is not an exclusive playground for the rich anymore!
Now, let’s begin with the evaluation of the top discount brokers in the US and Canada
There are hundreds of brokers and it would be inefficient to review all of them. Therefore, we will focus only on the top 5 discount brokers in the US and Canada. It’s important to know that most of these American brokerages are open to Canadians!
The top online discount brokers in Canada that made the list were:
- Interactive brokers
- Virtual brokers
- Scotia Itrade
The top online discount brokers in the USA that made the list were:
- TD Ameritrade
- Merill Edge
Stocktrades Top Online Discount Brokers Of 2018 Canada
|Stocks: $4.95 minimum/ $6.95 maximum |
($0.01c per share)
Options: $9.95 +$1 per contract
ETF’s: Any North American traded ETF is FREE!
|Amazing user interface for both mobile, desktop and web based.|
Clean, modern and friendly with a rich set of features. Definitely wins this category.
|Minimum cap for trades might not suit all investor types||Also offers a lite version of the web based for fast access|
Research platform and advanced data subscriptions
|-Free transfer from other brokerages|
-1 month free trades and advanced data with $25K funding
–$50 dollars in free trades when you signup through Stocktrades.
|Stocks and ETFs: $0.01c per share, minimum of $1.00|
Options: $1.25 per contract, minimum $1.50 per order
|At first glance their desktop and mobile app look a little bit technical, but don’t let that stop you. Full featured with plenty of depth.||$10,000 minimum balance||Access to over 50+ markets|
Ability to implement trading algorithms
|With the trader referral program you can receive a bonus of up to $200 if you send an invitation to someone you know, and they end up opening an account|
|Stocks: $9.99 per trade (4.95 if over 150 trades per quarter)|
Options: $9.99 + $1.25 per contract
ETF’s: All ETF’s FREE!
|Clean and easy to use web platform, the focus is on simplicity. Up there with the best of them in terms of usability.|
Multiple desktop platforms available depending on the level of data you need and other features (e.g market routing or charts)
|Most expensive trades of the group||Fully fledged research centre for equity, mutual funds, bonds , technical analysis etc.||Cash referral program |
Various contests to win items likea Apple gift card and Apple watch.
Advanced research data (5i research) available when an account with a minimum of $1000 is created
|Stocks: $8.75 per trade ($6.95 if >150 trades per quarter)|
Options: $8.75 + $1.25 per contract ($6.95 if more than 150 trades per quarter)
ETF’s: Free if you choose from their list of 60 ETF’s otherwise $8.75 per trade
|A bit more of a plain looking user interface. It does the job, without some of the extra frills.|
Has the extra financial planning tools to supplement as well as a good mobile app and support for the apple watch (if that is important to you)
|Limited selection of free ETF’s||In depth research and analyst reports||Transfer $25,000 or more and Qtrade will reimburse your transfer-out fees up to $150.|
Invest by February 28, 2018 and get up to $1,000 cash back.
|Stocks & ETF’s: : $4.99 if you make 150+ trades per quarter. 50 commission free ETFs.|
Options: $6.99 + $1.25 per contract
|A carefully designed interface that is easy to navigate and quite comparable to that offered by Questrade.||The fees are low only when you make a certain number of trades. Otherwise commission structure is tiered. Check it out here.||If you are trading with Scotia, you are trading with one of Canada’s biggest banks, which in turn means excellent customer service. They also offer real time streaming with their flight desk platform.||Referral system: 50 free trades or up to $100 in cash if your friends open a new account with Scotia Itrade.|
Get up to $500 of free trades depending on the amount of money you deposit in the account.
Stocktrades Top Online Discount Brokers Of 2018 USA
|Stocks: $9.99 per trade.|
Options: $9.99 plus $0.75 fee per contract
ETFs: No commission on free etfs and $9.99 on others.
|There is a choice between two platforms based on your level of experience. One is for experienced traders which provides tools such as back testing and a huge array of features. The other is a lighter version aimed towards beginners.|
Ameritrade also includes a mobile app in case you want to track the market on the got first glance their desktop and mobile app look a little bit technical, but don’t let that stop you. Full featured with plenty of depth.
|The fees are on the high side in all areas.|
In terms of ETFs the company will levy a fees for short term trades (less than 30 days).
|Access to high-quality research and data without any extra cost. This includes streaming from CNBC and analysis from organizations such as Morningstar, S&P Capital IQ, etc.||$0 account minimum which is highly beneficial for beginners.|
|Stocks: flat fee of $4.95|
Options: $0.50 per contract + $4.95 base. Only one base charged per spread
ETF’s: $4.95 flat fee.
|Web-based platform that is designed for fast and easy execution.|
The interface is state of the art as the services were exclusively focused on professionals in the beginning.
|Very thin on commission free ETFs.||This broker is specifically geared towards options traders and offers professional grade tools for that genre.|
A virtual trading platform where you can trade with virtual money to test the waters.
|Again, no minimum like TD, which is great for beginners. |
Suitable for active traders as there is no penalty if minimum number of trades is not achieved.
Get 60 days of free trades by depositing $5,000 into a new account if you sign up through Stocktrades. (expires: June 30, 2018)
|Stocks: Flat rate of $4.95 and $0.01 per share on the entire order for stocks priced less than $2.00.|
Options: $4.95 plus 65 cents per contract.
|Offers a web based platform which means that you can trade from different computers with ease.|
A highly customizable and user friendly interface without compromising on features.
|$50 dollar inactivity fee will be charged if you don’t make at least one commission charged trade or have a minimum balance of $2500. |
Limited commission free ETFs.
|Ability to make charts and technical analysis, which is great for the visual learners.|
A number of calculators to help you come up with the right numbers.
|$1000 dollars in free commission when you fund an account with over $5000 and sign up with Stocktrades|
A social network for traders where users can trade ideas and share strategies.
If you trade more than 10 times a month then you get customizable data and real-time streaming quotes.
|Stocks & ETF’s: $6.95 flat rate|
Options: $6.95 +$0.75 per contract and $29.95 + $0.75 per contract for telephone assisted trades
|Two options: Website trading and an active trader platform called Merrill Edge Market Pro.|
Both of these options are carefully created to provide an interactive and intuitive feel.
|The MarketPro platform requires Java and is available to only those who maintain a balance of more than $50,000.|
Level II quotes are available to only those who make 30+ trades per quarter.
|Merrill Edge is a subsidiary of the Bank of America. As a result, if you have a BOA account then you can have benefits such as real-time transfers and checking balances with a single login.|
Access to research from the broker’s own research house called BofA Merrill Lynch Global Research.
|An ongoing promotion which gives 30 commission free stock and ETF trades each month to users with a balance of $25,000 or more.|
|Stocks & ETF’s: $9.99 per trade; $7.99 with 150+ trades per quarter.|
Options: $9.99 +$0.75 per contract
|Two platforms: E-Trade 360 and E-Trade Pro.|
Basic users and beginners who want to track their accounts, watch stocks, view steaming market data and make trades will be more than happy with E-Trade 360.
|The commissions are among the highest and access to the advanced trading platform is contingent on requirements that a beginner cannot or may not want to afford.||Users can install a Google Chrome plug-in which allows them to research and trade from their browsers. The extension is pretty intelligent as it can scan news stories and stocks symbols, process the information and then display the price and other data in real-time.||Offers a number of educational resources such as online seminars on topics related to retirement planning, stock market basics and analyzing trade ideas. |
Great interactive widgets for retirees that work with user’s actual financial information
$600 dollars free when you open an IRA with 250k+, or transfer your IRA from another firm to Etrade.
Plus get 60 days of commission-free trades when you open an account with $10k or more
Our top pick among US brokers is TD Ameritrade.
TD’s fees are among the highest in the industry, but the customer service offered along with the platform are hard to beat. Their research and trading tools are excellent and cater to the needs of everyone, whether it be a beginner or a seasoned investor. Also, TD recently acquired Scottrade which would make the conglomerate the biggest in terms of number of brick-and-mortar customer service outlets.
Optionshouse and TradeKing are tied at number two. OptionsHouse is an excellent discount broker with an exceptional user interface, but it might be a bit overwhelming for a newcomer. Also, it lost points to Ameritrade in the customer service and education for beginners departments. However, the low fees offered by the company are hard to beat, and the platform will become a lot more enjoyable once you get a feel of the interface.
Tradeking is a broker that has the potential to finish at the top, but goes down in the ratings because of its inactivity penalty – accounts without any commission-generating trades in the past 12 months and a combined household value of less than $2,500 are subject to a $50 inactivity fee. If this inactivity fees is not a deal breaker for you then Tradeking should be your first choice.
At number three we have Merrill Edge. Merrill Edge has an excellent and informative interface but a higher fee structure than those of other brokers. However, investors who have more than $25,000 to invest can take advantage of 30 commission free trades per month – an excellent bargain!
For Canada, the top online discount broker in 2018 is Questrade.
Questrade wins our broker review again. With our Questrade review, we have found it is a very well-rounded broker accessible to most investors. Furthermore, it has the second lowest prices, no minimum deposit and free ETF’s – this is a HUGE plus for the average investor. We aren’t the only ones either. Most Questrade Reviews rank them number one of all the discount brokers available.
In our Interactive Brokers review we found they were a very a close second to Questrade. They score high on affordability but loses on functionality to Questrade’s platforms as well as the $10,000 minimum which is a tough pill to swallow for those new to investing.
Should I stick with a big bank instead of a discount broker?
In the year 2016, Royal Bank of Canada was our top pick among the big banks. It had made drastic changes and reduced its fees significantly, a reduction of 66% from $29.95 to $9.95. Furthermore, RBC was pouring huge amounts of money into further developing its trading platform, and we expected things to continue in a positive direction. However, that has not been the case. As a result, we do not have RBC Direct Investing on the list anymore.
TD and Scotia ITrade were honourable mentions in 2016, but now, Scotia Itrade is among our top picks. The reason – an extremely easy-to-use and intuitive interface that cannot be matched by any of the big banks, and a competitive free structure. CIBC has a rate at $6.95 but is lagging behind in terms of functionality and interface. BMO InvestorLIne, another great trading platform with a state-of the art user interface, but extremely high fees. Unless you make a good amount of profit on each of your trades, the fees will always eat into your profits.
However, in the end, big banks are no match for other discount brokerages on our list for one big reason – a complicated fee structure. Even though the fee may be advertised as “flat-fee”, that is true only when you make a certain number of trades. For instance, with Scotia you enjoy a $6.99 rate only when you make 150+ trades per quarter. Hence it would be best to shy away from the big banks for now but keep a close eye on the changes that they are making to their platforms and fee structures
In the end, your broker all depends on your preferences
In the end, we want to point out that what may be the best for a retiree may not be the best for a young college student. However, you should not get bogged down in an attempt to pick the perfect broker.
The longer you wait the more opportunities you miss. Imagine being someone who had invested in Microsoft or Netflix at the right time. Many people did it, and made a huge profit! Why not you?
Still not certain? Below are some more criteria that you can use to make a decision.
- Availability of an amazing mobile app or desktop platform.
- Access to more than the US/Canadian Markets.
- Ease and speed of transfer in-between brokerage/bank accounts.
Again, Questrade and TD Ameritrade win in all of these categories.
But you may be someone who wants specific order routing, and in this case Virtual Brokers is the right choice. Scottrade may have a low rating in our table but no one can compete with them in terms of the number of local branches they have and the personalized service. If you are a social butterfly then TradeKing has an online network where you can interact, learn and make friends with other traders.
Just like buying everything in life, whether it is a car, or a meal at a restaurant, you have to weigh in the pros and cons of each of the options.
If you want even more information then we encourage you to register for an account and get a feel of what these brokers have to offer. You can do so by clicking on the logo of the broker of your choice in the above tables.
Take the car for a spin before making a choice!
After that, make your first trade! You don’t have to be a millionaire to do that. There are plenty of penny stocks that you can trade with just a small amount of capital.
That’s it folks! The top 5 brokers in the US and Canada. We hope that you found this article useful and if you think that someone else could benefit from it then click on one of the buttons below to share.