ETF trading has been extremely popular in recent years, as it is a versatile investment method that appeals to both new and experienced investors. From bond ETFs to stock ETFs and everything in between, ETF trading can be used to access a variety of markets and assets while helping you diversify your portfolio.
In this guide, we help you find the best ETF trading platform for your situation. We’ll review the best ETF brokers for 2021, cover some ETF trading strategies, and walk you through you can begin trading ETFs today with the best online brokers.
In This Guide
With so many options at your disposal, finding the best ETF trading platform can be difficult. To help, here are some of our top ETF trading platforms for 2021:
The broker you choose will determine which ETFs you’ll be able to trade, the tools you’ll have access to, and the fees you’ll pay per trade. Deciding which trading platform is right for you can be difficult, but we’re here to help. We’ve reviewed some of the best ETF trading platforms available right now so that you can determine which one to start trading with.
Founded in 2006, eToro has grown to become one of the largest and most popular ETF trading platforms. It aims to make financial markets more accessible to all investors and is now home to over 20 million users around the world.
While it isn’t the most advanced interface we’ve come across, the platform is extremely user-friendly, which makes it easy to get started, even if you’re an active trader. One of its most notable features is social trading, which allows users to follow other traders to find out what they’re buying and selling, then copy their portfolio to mimic their trades.
eToro’s ETF trades platform provides access to over 150 equity, bond, commodity, and other ETFs that can be purchased outright or through CFDs. The company has options for both leveraged and non-leveraged ETFs index funds, along with the ability to purchase fractional shares. The best part is that it does not charge any trading commissions on its ETFs and has low fees on its ETF CFDs that are already built into its spreads.
Your capital is at risk.
If you're based in the US, then there is every chance that you have heard of Robinhood. Launched in 2013, this online trading platform is now home to over 10 million clients. Primarily, investors in the US use Robinhood to buy ETFs in a simple and cost-effective way.
In fact - and much like eToro, Robinhood allows you to buy ETFs on a commission-free basis. In total, the platform for charting offers hundreds of ETFs - most of which are US-listed. This covers both primary exchanges - the NYSE and NASDAQ.
A lot of Robinhood users opt to trade and invest on the Robinhood app which is available on both iOS and Android devices to place your stock trades. The mobile app gives you access to the very same account features as you will find on the main website. Finally, as a US-based broker, Robinhood is heavily regulated. This includes the authorization from both FINRA and the SEC, according to its legal disclaimer.
Vanguard Group is a US investment management company and a brokerage firm that was founded in 1975 and based in Malvern, Pennsylvania. It has a long history and is regulated by both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, so it is widely considered safe. While Vanguard is best known as one of the world's largest providers of ETFs, it also offers brokerage account services, meaning you can trade ETFs through its ETF trading platform in real-time.
As a major provider of ETFs, it comes as no surprise that Vanguard’s ETF trading platform offers a wide array of ETF products. Its platform is designed for long-term investors focused on financial planning who plan to buy and hold their investments, so it doesn't have some of the more common tools and resources that other online brokerages offer. With that said, it offers great resources for new investors, a great mobile trading app, and even has commission-free ETFs.
Founded in 1997, Libertex is another popular ETF broker that allows investors to partake in ETF trading. This ETF trading platform has over 2 million clients across 11 countries and is best known for its low minimum deposit requirements for new trading accounts. It's easy to sign up, but you'll need to verify your identity online in order to comply with international money-laundering rules.
If you're in the UK, you'll be able to trade forex, commodities, cryptocurrency, stock, shares, indices, metals, ETFs, CFDs, and more. It has zero spreads on all account types and instruments and instead takes variables commissions starting from 0.006%. Libertex also offers a suite of educational resources that can help new traders learn the basics and help experienced investors hone their skills. Experienced investors would also be happy to know that this ETF trading platform also offers MT4 along with an automated trading feature.
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Founded in 1971, Charles Schwab is an American financial services corporation that's headquartered in Westlake, Texas. It provides retail and commercial banking services along with wealth management advisory services to both retail and institutional clients and is a major provider of ETFs. The company is listed on the NYSE and regulated by both the SEC and FINRA, so it has a trusted reputation among investors.
While Charles Schwab is best known as a provider of ETFs, it also offers an ETF trading platform that has no commissions, account fees, or minimum deposit requirements. This platform comes packed with a wide selection of ETFs along with one of the most comprehensive research offerings available to retail investors. This, paired with its zero-commission ETFs, makes it one of the best ETF trading platforms for advanced trade.
However, if you are looking for a platform that offers a wider variety of assets so that you can diversify your portfolio then it's best to compare it to other options, see our TD Ameritrade vs Charles Schwab review for a more in-depth look.
Charles Schwab fees
Established in 2016, Capital.com is an innovative ETF CFD trading platform that is home to over 1 million clients.It is an international CFD brokerage that operates multiples subsidiaries in Belarus, Cyprus, and the UK. It is regulated by the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), and is authorized to operate in Belarus through the National Bank of the Republic of Belarus.
Capital.com provides access to over 3,000 markets and features the world's first AI-powered CFD trading platform that gives you personalised trading insights. There is a clear focus on user experience as the platform is extremely easy to use, and moving between the web and mobile platform is seamless. This company specialises in CFDs, so if you’re looking to trade ETFs, just be aware that you’ll only be able to trade ETF CFDs, and won’t be able to purchase shares in the traditional manner.
76.25% of retail investor accounts lose money when trading CFDs with this provider.
Founded in 1946, Fidelity is a financial services company that's based in Boston, Massachusetts, and serves over 35 million clients around the world. It also provides commercial services that support over 13,000 financial institutions and is regulated by both the SEC and FINRA, so it has an extremely trusted reputation. Fidelity aims to strengthen and secure its clients' financial well-being, offering a range of financial products and financial advisor services to 12 regional sites across the globe.
Fidelity's ETF trading platform offers a wide array of ETFs and other investment products, but unlike some of the other providers, does not offer CFDs. However, its platform is extremely easy to use and it has $0 commissions on a number of trading products, along with a comprehensive learning center that aims to help investors make better-informed decisions. Fidelity recently partnered with iShares, the world’s largest ETF provider to offer zero commission on over 350 ETFs.
Plus500 is a global CFD broker that was founded in 2008 and currently listed on the London Stock exchange. The company is overseen by several financial regulators and regularly discloses its financials, so it has a trusted reputation amongst traders. Its products are used by clients in countries all over the world, though it is not available to investors in the US or Canada.
Plus500 specialises in CFDs and offers a range of ETF CFDs for you to invest in, but you won't be able to purchase shares in ETFs directly. It has a great reputation for its mobile trading platform, account opening process, and customer support, making it easy for investors to start trading. However, its product range is a bit limited and its research tools fall behind those of its competitors, so it might not be the best bet for advanced traders or investors looking for a comprehensive trading platform.
72% of retail CFD accounts lose money.
Founded in 1971, TD Ameritrade is headquartered in Omaha, Nebraska, and is one of the largest US-based stockbrokers. The company is regulated by a number of top-tier financial authorities like the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). It is currently home to over 12 million customers and manages over $1.2 trillion in client assets, making it a trusted provider in its space.
Like many other ETF trading platforms on this list, TD Ameritrade offers a wide range of ETFs. It doesn’t have minimum deposit requirements and there are no commissions on ETFs, making it a great choice for both new and advanced traders. However, the platform only allows users to trade on US markets and accounts are generally limited to US residents, so it's not the best ETF trading platform for UK residents. To gauge how TD Ameritrade is compared to other brokers available, you can see a more clear comparison in our Fidelity vs TD Ameritrade review.
TD Ameritrade fees
Fees are an important consideration when choosing the best ETF trading platform for you. We’ve summarized some of the fees charged by the top ETF brokers.
ETFs are a popular investment vehicle for many traders and long-term investors. There are dozens of ways to get involved along with all sorts of strategies that vary according to risk, investment goals, available capital, and more. In order to help you better understand ETF trading and what it has to offer, we’ll cover some important topics in the ETF trading guide below.
An Exchange-traded fund -- ETF for short, is a portfolio of assets that is traded on stock exchanges. These investment funds consist of multiple securities like stocks, bonds, commodities and more, and can track various assets, indices, sectors, and strategies. Often referred to as a “basket” of assets, ETF trading allows investors to purchase shares of this collection of securities without actually purchasing the underlying assets. This way, they can diversify their portfolio and invest in a wide range of assets, markets, and sectors without having to purchase individual stocks.
There are dozens of ETF issuers around the world, but the five largest account for the majority of total ETF assets under management (AUM). These five companies are iShares, Vanguard, State Street SPDR, Invesco, and Charles Schwab. Here’s how these top ETF providers compare:
ETF trading has become increasingly popular in recent years, as it offers a number of benefits to investors. Whether you are looking for a long-term investment or a way to generate short-term returns, there are many reasons why you might want to trade ETFs.
ETF trading is done on stock exchanges, making ETFs easy to buy and sell without help from a broker or investment advisor. And since they are funds made up of collections of assets, they offer investors easy entry into various markets, sectors, indices, and more since investors don't need to buy each underlying asset individually.
Rather than using stock trading and other securities to diversify your investment portfolio, you can simply purchase shares of an ETF. Unlike stocks, where the market price is attached to a single company, ETFs are diversified by nature, as they are made up of a selection of various assets and securities. So even if the value of one security falls, there are many others in the fund that can help limit downside risk.
Instead of purchasing individual stocks, bonds, and other securities in pursuit of an investment goal, investors can simply purchase shares of an ETF that hold a selection of their preferred assets. For example, if you believed that the agricultural industry was going to do well, you could research and purchase a selection of agricultural stocks and commodities, but that is both time-consuming and expensive. In this situation, an ETF would allow you to purchase shares of an already-diversified fund that tracks the agricultural sector.
Mutual funds are another popular investment fund product that work similar to ETFs, but they are professionally managed and therefore more difficult to buy and sell. ETFs, on the other hand, are openly traded on stock exchanges, making them extremely easy to buy and sell since you don’t need to go through a fund manager or investment advisor. This makes them a far more liquid investment vehicle.
If you did decide to go the route of buying individual stocks and securities, you would probably need to pay a commission on each trade you complete. So if you wanted to buy up all of the assets that make up an ETF, you’d be on the hook for significant fees that could limit your return on investment. By purchasing shares of an ETF, you’ll only be responsible for the commission on that one trade. And with a growing number of commission-free ETF trading platforms out there, you might not pay any fees at all.
ETF prices are generally much lower than the sum of all of the assets they include, making them much more affordable to invest in markets, sectors, and indices. For example, SPDR's S&P 500 ETF Trust is currently trading for around $400 per share, but it holds stocks like Amazon and Alphabet (Google's parent company), which are currently trading at around $3,100 and $2,100 respectively. So instead of purchasing a fractional share of one of those companies, you could just purchase shares of the ETF, which would serve a similar purpose.
Similar to stocks, ETFs can also pay dividends. So if you are looking for passive income or you just prefer dividend stocks, you might want to consider investing in dividend-paying ETFs. These ETFs payout distributions in two ways, depending on the preference of the fund manager:
It’s important to keep in mind that dividend yield and timing are at the discretion of the fund manager, so your experience may vary depending on which dividend-paying ETFs you invest in.
Just like other types of investments, there are a number of ways you can trade ETFs. Here are a few of the many position ETF trading strategies.
Just like stocks and other popular securities, ETFs are great for long-term investing. If you speculate that an index, market, asset class, or sector is going to do well, you can purchase shares of an ETF and sell them once you're ready. If you're right about the pricing movement and the price goes higher than your purchase price, you can sell them for a profit.
On the other hand, if you believe that prices of a market, index, or sector are going to fall, you can take out a short position or use an inverse ETF. In this situation, your investment will increase in value as the market price falls, or decrease in value if the market price rises. If you sell your shares when the market price is below your purchase price, you’ll make a profit.
Alternating between both of the above strategies, you can also use ETFs to hedge against your existing positions. For example, if your portfolio is full of oil stocks that appreciate in value as prices rise, you could short an oil ETF to protect your downside in the event that oil stocks fall. On the other hand, if you are currently shorting a number of tech stocks (which would appreciate in value as market prices fall), you could buy a tech ETF to reduce your risk in case market prices went up.
Many experienced investors use swing trading (also called day trading) to capitalize on price movements within a short time frame. While this is most commonly done with stocks, it is also possible with ETFs. The main goal of swing trading is to take out a position and sell it as soon as you've made a profit, and this can be done with both short and long positions.
Finally, another popular ETF trading strategy is called sector rotation. This strategy involves buying and selling ETFs based on various stages of the economic cycle. For example, when the economy emerges from a recession, many investors tend to gravitate towards the financial sector, which involves banks, insurance companies, etc. As consumer confidence returns and people begin to start spending again, investors tend to invest in consumer markets such as vehicles, travel, electronics, and so on.
eToro is one of the best ETF trading platforms; it has an easy-to-use interface, low fees, and a wide selection of ETFs available. Here’s how to get started with the best ETF broker:
Start by visiting the eToro website and clicking “Join Now”
Enter your personal information and any other necessary details.
Verify your identity by uploading a picture of your verification documents.
Fund your account. There are many payment methods available.
Go to your dashboard and click “Trade Markets”
Search for ETFs to find options that suit your investment strategy.
ETF trading has become extremely popular among investors, as it provides an easy way to access both domestic and international markets. Whether you are looking for long-term investments, portfolio diversification, or other investment goals, ETF trading offers a number of benefits.
But like any investment, the ETF trading platform you choose will have a significant impact on your investment strategy, options, and fees, so it’s important to pick one that's right for you. We recommend eToro, one of the best ETF brokers available right now, as it offers extremely low-cost fees, a wide range of investment options, and an assortment of additional features to help you reach your investment goals. Its user-friendly interface makes it a great choice for new investors, but its no-commission trades are a huge selling point for experienced traders.
67% of retail investors lose money trading CFDs at this site
ETF trading works similarly to stock trading, as both of these products are openly traded on stock exchanges. But unlike stock trading where you buy and sell shares of a single company, ETF trading involves the purchase and sale of investment funds made up of a selection of underlying assets.
Every investor has different goals, risk tolerance, and other preferences, so it's difficult to pick a single best ETF for day trading. That said, many day traders like ETFs such as the Vanguard Total Stock Market ETF, SPDR S&P 500 ETF Trust, Schwab US Broad Market ETF, and iShares 20+ Year Treasury Bond ETF. With that in mind, it's best to do your own research to find out which ETF is best for your day trading strategy.
Yes. Many ETF trading platforms (like eToro) allow you to trade ETFs with leverage. Before signing up, check with the platform to find out whether that option is available or not.
Yes. Similar to stocks and other securities, there are a number of websites and resources that publish ETF trading signals and recommendations.
ETFs, like the vast majority of investment products, are subject to capital gains tax. Generally speaking, any capital gains that are realized when an ETF is sold are taxed, and the same goes for any distributions of dividends. However, the exact tax laws for trading ETFs vary depending on your country of residence, the country the ETFs are listed in, and more, so it’s important to consult an accountant or tax advisor for advice tailored to your situation.
Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Kane has also written for websites such as MoneyCheck, InsideBitcoins, Blockonomi, Learnbonds, Buysharesand the Malta Association of Compliance Officers.
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