A discount broker can give online traders reduced commission rates on their trades. These discounts can help traders to save on overall trading costs in the long term, especially for retail traders who are day trading on a frequent basis. Although most trading brokers do not have fees that are considered that expensive, they can add up and eat into profits, especially for specific trading strategies that take advantage of small price movements.
For that reason, the trading brokers review team have compiled a list of our best discount brokers who we discovered to have some of the most competitive fees along with top class trading services.
ASIC, BVI, CBI, FFAJ, FSA, FSCA, IIROC
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Each broker chosen in our best discount brokers category is the result of thousands of hours research and analysis across hundreds of brokers over a number of years. The trading brokers review team have done all of the hard work for you to help identify the best discount brokers available today. Hopefully this can save you time and trading fees in the long run.
Each trading brokers fees will vary depending on the trading products and services that they offer. Some brokers will charge a commission, some will charge a spread and others will charge both. Then there are other fees to consider which can include account funding fees, inactivity fees and platform fees. There is usually the rollover/swap fee for holding a trading position overnight with a brokerage firm, unless using an Islamic trading account that complies with Sharia law. These are swap free but usually incur a spread or commission mark-up to cover the brokers costs.
In general, the less the broker charges in fees, the more you can save in online trading costs over the long term. Many traders will always look to identify which broker has the tightest spreads and lowest commissions to save on costs, but it is important to consider other factors such as the brokers regulation, trade execution speeds, slippage, customer service, trading platforms and tools. These can also have an impact on the overall performance of an online trading strategy. It is perhaps not that beneficial having zero fees and zero spreads if the broker is lacking in other areas.
Discount brokers will let you use their trading platforms to buy and sell various assets with low trading fees. Usually, discount brokers can afford to offer discounted trading fees as they are well established and have enough trading volume to compensate for the lower fees that they charge.
Discount brokers may also not mark-up spreads or charge as much commission as other brokers, especially if they use a vast array of liquidity providers (LPs) and can therefore provide some of the best bid/ask quotes to ensure spreads are as tight as possible and trade execution speeds fast. If a broker is a market maker and uses a dealing desk, there can be a conflict of interest. These brokers can mark-up spreads and charge an extra commission which increases overall trading costs.
Whichever trading broker you choose, you will need to pay some fees. It therefore makes sense to shop around and identify the best discount brokers as this can save money from your online trading in the long run. You may wish to read our guides on how to choose a trading broker and how to open a trading broker account.
The best discounted brokers will have the lowest fees for trading and conducting other related activities such as making deposits and withdrawals to and from your trading account. Tight spreads can also help to save on trading costs, especially for active retail traders. In addition to offering discounted trading costs, they should have a range of online trading products and services.
The main thing to check for is the commission that the broker charges for the assets you wish to trade along with the spreads and other general fees. When choosing a discounted broker to trade online with, it is also very important to consider the other brokerage services that they offer. Whilst low fees are good, they may not be as useful if the broker does not have any other services that would be useful to you because they cannot afford them due to providing discounted trading.
The best discount brokers will not only offer low fees but they will also have a range of trading products and services. They should be regulated by a respected authority and have a range of trading instruments across multiple asset classes. The broker should provide a selection of trading platforms and tools to choose from along with flexible account types and convenient funding methods. Other things to look out for include educational materials, social trading platform integration, daily market analysis and excellent customer support. These are all things we cover in-depth in our detailed online broker reviews.
All of the brokers in our best discount broker list are regulated by at least one top tier regulator such as the FCA, ASIC or CySEC. These regulators can help to give investors the peace of mind that they are using a reputable brokerage firm that must comply with strict ruled and regulations that are put in place to protect investors. Of course, as with any company, brokers can also run into difficulties. In this instance, it is vital to be aware of what will happen to client’s funds. If using a regulated broker, they must be held in segregated accounts and thus should be safe in a worst-case scenario. Furthermore, some brokerages are covered by compulsory or optional insurance policies to give extra protection to client funds.
With so many online brokerages to choose from and all of the different broker fees to consider, it can be overwhelming at first when deciding which is the best discount broker for your individual trading needs. Hopefully this guide has helped determine some of the most important things to consider whilst also making you aware of potential options if you are looking for a discount broker. Remember, the lower the brokers commission and spreads, the less your trading costs can be over the long term. However, there are other additional fees to consider and it may not always be ideal to sacrifice additional brokerage services for low fees.