Best Free Trading Platforms in 2021
It’s a little difficult to distinguish investment platforms based on price. Not long ago, platforms competed on a combination of features, fees and commissions. However, in recent years most services have converged on a fairly standard pricing model. Almost all trading platforms now offer free stock and exchange-traded funds trading, as well as options priced around $0.50 to $0.65 per contract. Platforms set mutual funds at a typical rate of $30 to $50 and futures at around $2 to $2.50. A financial advisor can help you pick the trading platform that best fits your goals, time horizon and risk profile.
Readers should note that almost every platform says that it offers zero-dollar options, which is technically true. They simply price options per-contract rather than by commission. In point of fact, there are very few reputable platforms that offer actually free options trading.
Although there are some outliers, ultimately there’s not much room left in the market when it comes to price. Investors who want free stocks and ETFs pretty much have their pick of the platforms, but there are still some differences here and there, as with the following five platforms. In a market that has converged on an increasingly standardized pricing model, these five stand out.
Best Free Platform Overall: M1 Finance Pros
M1 Finance offers one of the more unusual services on the market today. This hybrid platform offers a combination of robo-advisory and active trading. Investors can use M1 to select from a series of pre-built preferences in a standard algorithmic trading model. The software then automatically manages and balances your portfolio based on your specific choices, such as appetite for risk, trading timeline and the pre-built portfolio (known as “Expert Pies”) you’ve selected.
At the same time, you can also buy and sell individual stocks and ETFs as you see fit. This actively traded segment of your portfolio exists alongside your automatically managed segment. This is particularly valuable in that it lets you add a degree of speculation to the generally conservative robo-advisory model through stock trading.
M1 Finance’s basic account is completely free. It does not charge commissions on its algorithmic portfolios, nor does it charge trading fees for its stocks and ETFs. The platform’s advanced account, M1 Plus, charges $125 per month and adds a series of banking services.
There are few cons to M1 Finance. This is one of the strongest robo-advisor platforms on the market today, however, this does mean that you have to use a robo-advisory. You won’t have access to sophisticated trading tools, nor will you have access to assets beyond stocks and ETFs. In this regard M1 Finance has prices in line with the market at large. While it offers significantly more sophisticated services than a standard trading platform, ultimately M1 Finance offers free stocks and ETFs … just like everybody else.
Best Free Platform For Stocks: TD Ameritrade Pros
TD Ameritrade is one of our favorite online trading platforms. For beginners, this service offers a basic trading platform under its flagship eponymous brand. This service is comprehensive and well designed, with a clean interface and a massive series of learning tools. Investors can learn the market while they navigate it and will still have access to most mainstream financial assets in the process.
For sophisticated investors, TD Ameritrade offers its thinkorswim platform. This is simply one of the best retail trading platforms on the market today, full stop. thinkorswim offers virtually all of the data and all of the tools that a trader could want, whether you are setting up multi-leg derivatives or day trading penny stocks.
As we have made clear, free stock trading is the standard on the market today. If you are looking for a broker on that basis, pick TD Ameritrade. You’ll be glad you did.
This may be a well-designed platform, but that doesn’t mean it’s an easy one.
For beginner investors, TD Ameritrade’s platform will offer a fairly steep learning curve. This isn’t a flaw in the service’s design. It’s simply the nature of a full-service platform. There is a minimum amount of complexity that comes with offering a wide range of financial products and tools and learning that system will take time. It’s worth the effort, but it can look pretty daunting.
Best Free Platform For Choices: E*TRADE Pros
E*TRADE is one of the biggest names in online investment. It has been around since the first dot-com boom and is largely credited with kickstarting the era of retail investment. However, when judged on price, what makes it stand out from its competitors is the sheer volume and quality of the choices it offers. This platform offers two different platforms: the core E*TRADE brand and its sophisticated Power E*TRADE product. Each of these offers its own website and mobile app, and Power E*TRADE offers desktop app as well, all of which come with their own very real strengths.
And these strengths are where E*TRADE shines. It is common among trading platforms to offer a variety of tools such as a web portal and a mobile app, but often it’s clear that the firm has tried to stretch or shrink the same basic toolkit into different space. E*TRADE takes advantage of each medium, creating a strong trading platform no matter how you interact with it.
E*TRADE is one of the best platforms on the market today, but it’s not the best. Whether you use it to access the market through a website, your smartphone or a desktop application, you will almost certainly be happy but will probably have a stronger option elsewhere.
The general strengths that make this product so good also keep it from specializing in any particular way.
Best Free Platform For Options Traders: Webull Pros
Webull is the only reputable platform that this writer knows of that charges zero fees to trade options contracts. As the firm’s website makes clear, some third-party market participants such as the SEC and FINRA can attach minor charges to options trades, but Webull charges no commissions and no contract fees.
The only other product which this writer has seen offer truly free options trading is Robinhood. Due to its combination of gamified trading, ethical concerns and legal troubles, no investor of any skill level should trade on Robinhood.
Webull is a well designed app-oriented trading platform. Active investors and those who want to trade from their mobile devices should also consider this service. So should anyone looking for free options trading.
Webull is an app-oriented trading platform, meaning it offers a fairly stripped down trading experience, with fewer tools and data sets than you will find on many competing services.
While this will not prove difficult for more casual investors, anyone who wants to conduct sophisticated trading will quickly bump into the limits of what Webull has to offer. Ultimately, the truth is that if you’re trading options enough for their price to matter, you’re probably better off paying a little more for a more thorough tool.
Best Free Platform For Hands-Off Traders: Acorns Pros
It’s rare to see a genuinely unusual product on the investment scene, which makes Acorns a breath of fresh air. When it comes to trading this might be the single-most hands-off product on the market today, and that’s by design. Acorns’ gimmick is that it pulls money automatically from your everyday transactions to deposit into your investment account, helping you to slowly build wealth over time without even realizing you’re doing it. You link this service to your bank account and credit card. Any time you spend money it automatically rounds your spending up to the nearest dollar amount, siphoning off the excess into your portfolio. (So, for example, if you spend $3.65, your bank account would record a $4 transaction and Acorns would deposit the excess $0.35 into your investments.)
This is a robo-advisory, which means your portfolio will be automatically managed according to a series of preferences you set. And each transaction you make is absolutely free. There are no commissions, trading fees or transaction fees attached to any of this.
Calling Acorns free is fudging the numbers.
When it comes to trades, transactions and commissions, it’s true that Acorns is a completely free service. However, you still have to pay a flat-rate for your monthly service fees. For most users this will be $3 per month, with a basic package priced at $1 and a family plan priced at $5.
This service is also mostly useful just for younger investors. If you have a teenager and you’d like to start them into investing, Acorns has a terrific pitch for you. Someone with decades to let this account grow can see real value from the platform’s literally nickel-and-dime approach to investment. However, pretty much anyone past 30 simply doesn’t have the time it takes to let those acorns grow into a mighty oak.
In other words, if you’re old enough to remember Blink 182 fondly or can think of “American Pie” as anything but an increasingly nauseating series of straight-to-video releases, this platform has long since passed you by.
The Bottom Line
When it comes to price, most trading platforms offer largely the same thing. From a general perspective, investors looking to trade for free should start with M1 Finance’s unusual combination of services. Those who want a standard platform should check out TD Ameritrade, while someone who values flexibility of options should look at E*TRADE.
If trading free options is an absolute must for you, then you should consider Webull, while completely hands-off traders might find a lot of value in Acorns.
Tips for Investing
How much should you spend? It’s a question that applies to most areas of life, whether you’re choosing a trading platform or deciding which securities to buy and sell. Happily, there are financial advisors who can help you answer that, and finding them doesn’t have to be difficult. With SmartAsset’s matching tool you can find a financial professional near you, in minutes, who can help you build a budget to match your personal needs and household goals. If you’re ready, get started now.
Whether you’re considering getting started with investing or highly experienced, an investment calculator can help you figure out how to meet your goals. It can show you how your initial investment, frequency of contributions and risk tolerance can all affect how your money grows.
Several of the entries on this list are robo-advisors. This 21st century trading model takes the algorithmic trading that has dominated Wall Street for a generation and brings it to the retail sector. Learn more about what robo-advisors are and how they work in our explainer on the subject right here.
Photo credit: ©iStock.com/chee gin tan, ©iStock.com/west, ©iStock.com/Thanumporn Thongkongkaew
The post Best Free Trading Platforms in 2021 appeared first on SmartAsset Blog.