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There has basically never been a better time to get started with trading. Why is that? Simple: We are on the edge of a recession, if not at the beginning of what has already started. But what makes a recession a good time to start trading? That’s when money gets less valuable and trades less profitable.
Yes, that is true. But if you are just getting started trading, then you are unlikely to make huge profits anyways. There are two reasons for this: First, you probably won’t be putting much money into your trading accounts. In all honesty, you probably shouldn’t put much money into your trades at this stage.
And the second reason is that if you are just starting out, then you are not going to be very good at trading anyways. Nobody likes to admit this, least of all the people doing the trades, but trades take skill.
Let’s address that first point. We advise starting trading with something between $25 and $200. The reason is that you do not want to pour too much of your savings into trading and lose it all.
But it actually goes even deeper than that. Let’s say you put $25 into your trading account. Naturally, once you start trading you are going to want to set a goal for yourself to see how much money you can make. Having $25 in your trading account will naturally demand that you have more reasonable goals.
Even if you tell yourself something ridiculous like, “I want to double my money.” That is a common, though often impractical, goal. Doubling $25 is not exactly “easier” than doubling $100. But it will always involve less risk and less volatility than doubling $100 just due to what you have access to.
The less money you use to learn, the less damaging the lessons you learn will be. Start with more than $25 so that you can still afford to trade at all, but less than $200 so that you can’t afford to trade anything too expensive or in great amounts.
The easiest answer to this question is “failure”, though we know failure is not usually considered a skill. But failure to make money off of trades is the best way of learning how trading works in a few ways. Losing money takes far less effort and yields far more reward than any other method of learning.
Part of the educational value brought by losing money in trades and failing to make money (which are basically similar, so we’ll lump them together even though they have a few nuanced differences) is that you almost have to choose when it happens. Let’s say you buy a stock for $25, and its price drops five seconds later. Will it continue to drop, or rebound off the drop and go above $25, giving you a profit?
Most people know that it will continue to drop while hoping it will go back up. But what wins out? The knowledge that you will lose more if you hold it, or the hope that you will make money if you hold it?
You don’t really lose money until you sell. But if you hold onto the stock, then you can’t initiate another trade due to your money being tied up in that stock you’re holding. This is why you have to choose when to lose money. Sometimes giving up and admitting that you made a bad trade is harder than it seems.
One of the most important skills of trading is knowing when to take a loss, as only when you lose money can you examine how your expectations were mismatched with reality.
Once people have an idea of how they are going to start trading and what they are going to do when they start trading, they begin to wonder: Where does one start trading? Luckily, the answer to that question is actually the simplest of all of the questions we have asked so far.
Trading platforms are the digital spaces where people go to trade all sorts of things. You might have noticed that while talking about trading, we have only mentioned trading stocks specifically when we were giving an example of a trade. That is because you can trade much more than stocks.
We also didn’t give much detail about how to build the skills involved in trading. And that is because most trading platforms will have avenues for learning the finer points themselves.
What we will do is give you the top 5 trading platforms you can access right now. We will be judging these trading platforms based on a few criteria, including what they allow you to trade and how they teach you to do it. That way you can make the most out of what you learn about trading as you do it.
At this stage in history, calling Robinhood a good trading platform at all is a bit controversial. Calling it the best trading platform will make you seem like a crazy person.
But it cannot be denied that Robinhood has a few things going for it that a lot of trading platforms still haven’t gotten right.
Let’s start by looking at what Robinhood brings to the table: First, it is incredibly easy to use. You can get it on your phone or use it through a browser. You can easily search for assets, sort them, create watchlists, and (perhaps most importantly) place orders for those assets with just a few clicks or swipes.
People who have not used trading platforms before might be surprised to hear that not all trading platforms allow you to do all of these things, much less make it easy. But ease of use will only get you so far. Another of Robinhood’s advantages is that it allows you to trade in stocks, options, ETFs, and crypto.
This is hardly an exhaustive amount of assets; foreign currency and CFDs are both obvious missing pieces to that list. But it covers the most commonly traded assets. The platform is even set up to let you trade not just American stocks, but also foreign stocks, though to a limited degree.
So, why do people dislike Robinhood? This is a question with another simple answer: It has been fined by the Securities and Exchange Commission for doing some suspicious things with the market.
Namely, it will turn off trades for some particularly volatile stocks when other trading platforms do not. This is worrying to some people, as it is the most popular trading platform in the United States for retail investors (that is, people who do not trade stocks professionally). Robinhood could (and some would argue has) disallow tons of retail investors from getting in on a huge market boom.
Why would they do this? Most of the time, it is to protect the interests of their biggest traders.
Alongside this, you have the issue of not trading things like foreign currency and CFDs. Due to how foreign currency operates by its own rules and its own niche, no one is really bothered by its absence. It just means that some trading platforms are going to offer it, giving you a reason to ditch Robinhood.
And then lastly, Robinhood has almost no tools for actually teaching you how to trade. It has plenty of news that will tell you what is going on in the world, but it has no resources for teaching you how to apply the knowledge you get from those news stories to actually capitalize on them.
If you are to choose anything over Robinhood, then it should probably be Interactive Brokers. Of all of the trading platforms out there, Interactive Brokers is far and away the best for users who are willing to put in the work to figure out how trading works. They offer some of the best and deepest trading tools while also giving you access to tutorials on how to use them and information to act on with them.
Using this platform will also grant you access to a huge number of different types of assets. These include stocks, bonds, options, future contracts, foreign currency, and ETFs. This makes them one of the biggest trading platforms in terms of how many different groups you can buy from.
Stocks, options, and ETFs tend to be bought from corporations that are publicly traded. But bonds can come from governments as often as they come from private entities, and foreign currency will be traded between individual people as well as groups and governments.
In short, if you want to deal with a specific type of group (governments, corporations, or people), then Interactive Brokers is one of the only places where you will find a large diversity among the trades you make. And of course, the tools and research they give you are available for all of these trades.
For all that it offers you, Interactive Brokers is very much a victim of its own features. Anyone who uses it, particularly people who have no experience trading already, will notice that it is a bit overwhelming.
That is why we identified it as a trading platform for advanced users. Features that seem simple are hard to use on Interactive Brokers. A great example is searching for assets and buying them. The interface for these two tasks is separated out into two different interfaces.
It might not be obvious in theory, but in practice it means that if you are not used to it, you can easily go through a lot of work to find the exact asset you are looking for, only to find that you have to navigate into a completely different page in order to buy that asset. This is not intuitive.
The natural response is to say something like, “Just open two tabs or windows.” This is the modern solution, but remember that most people expect to be able to trade in just one window. This is not to mention that Interactive Brokers has an equally problematic phone app.
Similarly, Interactive Brokers’ copious research and analysis tools are as difficult to use as you might think. Their research tools are mostly articles instructing you on terminology and techniques, as well as providing their own analysis on recent news. The problem is that there is so much of it.
Being hard to use and hard to navigate is the only thing that sets Interactive Brokers behind Robinhood. But if you can tolerate that, then it is easily competitive with Robinhood, if not surpassing it.
When you are choosing which trading platform you want to use, it pays to think about why you want to use it.
For instance, Robinhood and Interactive Brokers are great for learning how to day trade (meaning you buy something and sell it on the same day). But not everyone wants to day trade.
For a lot of people looking to get into trading, they just want to find a way to grow their savings at the rate the economy grows. TD Ameritrade is easily the best trading platform for this kind of person.
The reason is that they have the best intersection of an interface that is easy to use at the same time that they have advice on how to make the most of them. But it is easy to imagine “trading advice” as being the domain of social media gurus who are preying upon people who are looking to get rich.
In the case of TD Ameritrade, their advice is much more focused than just “making money”. Primarily, they focus on advising people on both how and where to invest their money to set up a retirement fund.
This is a complex process that everyone needs help on. Other trading platforms are so focused on facilitating trades that they often forget to tell people how to secure their money. TD Ameritrade focuses on that, while still enabling you to trade at a fast pace if you want to.
It helps that they also have a wide range of products. While TD Ameritrade is focused on helping people build retirement funds, it is not like the platform lacks tutorials on day trading. They even have commission free trading, meaning you don’t have to pay the platform to trade on it.
In short, this is the trading platform that is the most accessible to anyone who is new to trading.
Naturally, the abundance of tools to help you learn how to trade means that the platform is going to feel like it is holding your hand too much if you already have an idea of how you want to trade. Advanced users should be aware that it might still help them, but it can make the experience feel sluggish.
On top of that, while TD Ameritrade has a good number of assets to choose from, it is not as much as something like Interactive Brokers. They also lack the international assets that Robinhood brings, not to mention a lack of foreign currency and cryptocurrency. It strips away the assets that come with the most risk, which ordinary people and retail traders should stay away from anyways.
Some people only get into trading to essentially play the lottery though, and this platform is not for them. Another issue advanced users will grapple with is the fact that TD Ameritrade does not actually give you the analysis tools that they use to create their advice.
In short, if you do not want to worry about fast-paced trading and analysis, then TD Ameritrade is the trading platform for you. But since those are quite popular elements of trading, it is not for everyone.
Not everyone starts trading at the same level of wealth. Some people are working at Starbucks and putting $20 into their accounts a month, while others are plumbers making six figures or office workers getting paid in stocks that are more valuable than they realize.
In short, you might be interested in getting into a trading platform, but not interested in taking our “$200 maximum in your account” advice.
If that is the case, then Fidelity is one of the best trading platforms for your demographic of prospective traders due to doing the most for high yield trades.
High yield trading is really just trading that costs a lot of money—interestingly, those trades do not always make you a lot of money. Sometimes you buy $15,000 of stock and sell it for $15,002. This is not a common occurrence, but it can happen if you are trying to avoid selling for $14,998.
Fidelity specializes in working with people who have a lot of money to spend on their trades. They do this in two ways: The first is by having a dedicated “wealth management” support service. This is focused on helping you explore the different things that you can do to make big money bigger.
The second is the lowest margin investment rates. Margin investment rates have to do with margin trading, which is when you trade with a loan. This is more common than you might think, as most of the time a loan will be used to speed up trading. If you want to buy and sell stocks fast, a trading platform will usually give you the amount of money you would get off of a trade before the trade finishes settling.
You can then use that money for a tiny fee. The fee will rarely be that big, though it can get larger if you are dealing with high yield trades. Fidelity is significant for the fact that it has the lowest margin rate of any trading platform, meaning fast trades in large amounts have a lower upkeep.
Fidelity is not completely inaccessible to people trading in lower amounts, but if you use it while having less than $10,000 you will definitely feel like it is. The main reason is that all of their trading advice for people making $10,000 trades or less is limited to research articles and automated bots.
Granted, this is better than nothing. But far more effort and personnel went into giving advice to the high rollers. The interface itself is not the best out there either, making trades feel slow. You can pick up on this especially fast if you tend to spread your trades out over multiple stocks and companies.
Even if you are making use of a lot of money, unless you are spending it all in one place, you are likely going to feel like the interface is slowing you down. And indeed, everything loads and reacts to your inputs slower than something like Robinhood. It is not as complicated as Interactive Brokers, but the very fact that we are comparing its relatively simple interface to Interactive Brokers is a red flag.
They also lack a variety of different assets. This is probably for the best, as mixing high yield trading advice with something like stock options is a great way to turn $10,000 into $100.
But just like with TD Ameritrade, high risk and high reward assets are so popular that people might choose a different trading platform rather than going with this one.
While there is a lot of debate as to whether the economy is in a recession, near a recession, or past a recession, there is no question about how hard the cryptocurrency economy has been hit.
Tons of currencies have lost value and been traded away for far less than the price at which they were bought.
But as with any recession, while people trading in huge amounts suffer tremendously from this, people who are not already invested in the market will find it to be an opportunity.
Nowhere is this more clear than Coinbase. Coinbase is a cryptocurrency trading platform that is designed to help retain investors get started in the crypto space. That means they make it easy to access the currencies, they teach you how it works, and they give you the tools to keep it secure.
While we will spare you the specifics as to how crypto works, the simple version of it is that you need a special software in order to “hold” the crypto, which Coinbase provides. But the real boon of this platform is just how many different kinds of cryptocurrency Coinbase can offer you.
A huge breadth of currencies means that no matter what you hold, you can trade it for something.
The biggest drawback of Coinbase is the most obvious: It is completely focused on cryptocurrency. We found that it was worth mentioning this niche even though it is not nearly as in-fashion as it was a year or two ago. Sure, Robinhood has cryptocurrency trades, but it is incredibly limited by comparison.
Coinbase, however, is limited compared to everything else in every other way. There are no foreign currencies, no ETFs, none of that. It also lacks substantial information on the currencies available.
That means while you can trade almost any currency for almost any other currency, the currencies you trade for might have nuances that are not immediately obvious. For instance, some currencies will have special “protocols” associated with them that make selling them harder than you might expect.
This, of course, points to one of the main issues with trading cryptocurrency in general: It is complicated, and a lot of unexpected rules can hit you out of nowhere. It is also unregulated, meaning that some of these rules can essentially boil down to complex ways of scamming people.
Now that we have gone over the top five best trading platforms, let’s talk about what to avoid in a trading platform. After all, you might decide that you want to try your hand at trading something that these five trading platforms do not offer, or something these platforms don’t do very well.
If you are going to go off and find a different trading platform to use, then it behooves you to at least know some things to avoid in order to keep yourself safe.
Avoiding a specific kind of asset might seem like a strange piece of advice, but it allows us to talk about much more than just this one asset. Even if it didn’t, this one asset should be avoided. Why?
Because binary options are not an asset in the same way a stock, option, or CFD is. In the case of those, you are either buying a share of a company or planning to buy a share of a company. Binary options do not actually trade in shares of a company. They are a method of betting on the value of those shares.
The issue there is that you do not actually need a license to place these bets. And that means that there are no rules for the platforms that trade in binary options. They don’t answer to anyone.
This is especially important when dealing with trading platforms that deal in foreign currency and foreign stocks. You want to make sure that the trading platform actually answers to someone.
Similar to binary options, a trading platform that has not been regulated by the country it does business in is usually doing something shady or dubiously legal in order to execute those trades. That means they are on the verge of legality, which is bad news for you.
Imagine you get on a stock trading platform and rather than funding your account with your bank account, it has you buy stocks directly with a credit card. This is a signal that the trading platform is not actually entitling you to the stocks you might think you are buying for yourself.
If you are using a credit card, then there is a good chance that the company is taking a payment from you, and then buying the stock for themselves. They will display it as “your” stock, but the reality of the situation is quite different: if it was their money, it is their stock. PayPal famously does this with crypto.
Good luck withdrawing any value from a trading platform that does that.
We mentioned early on that recessions are good for people who are getting into trading for the first time. The explanation we gave was deliberately incomplete.
Recessions allow you to get in on the economy when it is smaller and cheaper. The issue with recessions is that they are rough for the common person and hard to predict for anyone who isn’t in the top 1% of wealthy people in the world. But if there is a silver lining to that cloud, it is that they allow you to get into the market at a lower price point than usual.
At the same time, recessions always end. And when they do, the market bounces back with growth. There is a good chance we have a rough year ahead of us. But invest when the market is struggling and you will see bigger rewards than you might expect.
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