Barrons Best Online Brokerage Firms

Barrons Best Brokers Survey

Barron's magazine published its annual online stock brokerage ratings/survey results for 2016 (see table at the bottom). One caveat of this study is that it's targeted towards high-net-worth active traders. If you don't fall into that category, the Barron's best brokers might not be the such a great fit for you. After all, active traders don't pay steep inactivity and trading platform fees that some of the Barron's top brokers charge. Wealthy investors and traders also get lower commissions at many brokerage houses. Check what your pricing is going to be before opening an account. 

In 2016 Barron's ranked just 16 United States brokerage companies that agreed to be reviewed. The companies were evaluated in the following categories: Mobile Trading, Trade Experience, Trading Technology, Usability, Ranges of Offerings, Research, Portfolio Analysis, Customer Service, and Costs. As in previous years, the Costs category (commissions and fees a customer pays) has the same weight on the overall score and broker ranking as the other categories. We believe it is by far the most important factor for majority of investors, and in our own Online Broker Comparison  we gave it much more influence on the final score as well as on brokerage ratings and rankings. 

Barrons Best Online Brokers

In 2016 Barrons best online broker is Fidelity Investments. The company in Barron's own words "made it to the top this year due to the variety of trading and investing tools, and the quality of its trade execution."

Interactive Brokers is the second best online broker in the Barron's magazine annual survey, even though customers who don't generate at least $30/month in commissions pay a $10/month inactivity fee ($20 for accounts with less than $2,000) and $10/month for market data.

OptionsHouse and TD Ameritrade are the next two best online brokerages according to Barron's magazine online broker rankings. In these two cases we strongly agree and we gave TD Ameritrade and OptionsHouse very high, 4.5-star and 4-star ratings in our 2016 brokers review.

The fifth place - TradeStation - is rated 4 stars by both Barron's and us. We would rate it higher if it wasn't for a $99.95 monthly fee charged if client not traded at least 5,000 shares in the previous month (or 50 options contracts; 10 round-turn futures or futures option contracts; or 50 round-turn single stock futures). The fee is also waived for accounts with $100,000 and above.

But what if you're not a wealthy, active trader? Can you use Barron's rankings to find the best online broker to match your style of trading? The answer is "yes" with a bit of legwork.

Let's start with the assumption that any brokerage with a rating of 3.0 or higher is above average and worthy of your consideration. Next, you need to make a few assumptions about your investment style.

Do you trade almost exclusively in mutual funds and don't do any short-term trading (usually 90 days or less)? Then narrow your choices to companies like TradeKing or Optionsxpress, which charge a very low $9.95 per mutual fund trade.

If doing your own research is the most important factor in choosing a broker, consider TradeKing, Fidelity, OptionsHouse, and Etrade. Those brokers were the clear leaders in online research tools and information.

If you need the reassurance of a human voice on the other end of the phone and customer service is of utmost importance, your best bet is TD Ameritrade, followed closely by TradeStation, Fidelity, and Charles Schwab.

Let's say you're an experienced trader but don't have a large account and trade infrequently. Let's further assume your favorite strategy is to buy stocks and then write covered calls on those stocks. You want to find a broker with good pricing on both stocks and options, along with presumed good service and reasonable trading tools and research. In that case, OptionsHouse's combined commissions on a buy/write trade of 100 shares/1 option is only $10.40. TradeKing charges only $10.55 for the same buy/write trade.

Bottom line, choosing the best online stock brokerage is more complicated than blindly signing up with the winner of a particular survey. No single broker is perfect for every investor. Taking the time to find a good fit for your trading style and assets may save you the most money in the long run.

Barrons Best Online Brokers Survey Results

Below you could see the comparison chart of 2016 Barron's best online brokers from Barron's annual investment firm survey:

Broker Trading
and Tech
Mobile Prod
Reports Client Service Costs Total Stars
Fidelity 4.7 4.5 4.9 4.4 4.5 4.8 4.9 1.8 34.9 4.5
IBKR 4.5 4.0 4.7 4.4 4.2 4.6 4.2 4.2 34.8 4.5
OptionsHouse 4.4 4.6 5.0 3.7 4.8 4.7 4.6 2.9 34.7 4.5
TDAmeritrade 4.5 4.7 4.8 3.9 5.0 4.9 4.8 0.7 33.3 4.0
Tradestation  4.5 4.3 4.1 3.9 4.5 4.3 4.8 2.6 33.0 4.0
 Merrill Edge 3.4 4.1 4.7 2.5 4.6 4.7 4.5 3.0 31.5 4.0
TradeKing 3.6 4.1 4.4 3.8 4.3 3.8 4.6 2.7 31.3 4.0
Schwab 3.8 4.4 4.5 4.1 4.6 4.2 4.8 0.9 31.3 4.0
 E*Trade 3.8 4.2 4.6 3.4 4.9 4.0 4.8 0.6 30.3 4.0
Lightspeed 4.4 3.9 3.5 2.1 2.8 2.5 4.3 4.1 27.6 3.5
Scottrade 2.3 3.3 4.1 2.3 3.1 3.1 4.2 1.2 23.6 3.0
SogoTrade 2.9 2.5 2.5 2.7 2.7 2.4 3.7 2.7 22.4 3.0
 eOption 2.5 2.8 3.6 2.4 2.3 1.9 2.8 4.0 22.3 2.5
Firstrade 1.9 2.9 3.9 2.1 2.6 2.9 3.8 1.9 22.2 2.5
TradingBlock 2.6 2.7 0.0 3.2 2.6 1.7 2.9 1.4 17.1 2.0
just2trade 1.4 1.9 3.5 0.7 0.6 1.1 2.6 3.8 15.6 2.0

Updated on 12/16/2016.

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