Online brokerage Firstrade opens floodgates to fractional shares

Digital investment platform’s new service unlocks low-cost fractional trading on thousands of individual stocks and ETFs.

Firstrade, a brokerage offering commission-free online trading, is opening doors for more Main Street investors as it introduces a fractional share trading service that offers DIY investors the ability to trade fractional shares in thousands of individual stocks and ETFs for a minimal cost.

The firm’s new service lowers the entry barrier for investing, particularly in high-priced stocks with eye-watering valuations, thus expanding the stock market’s appeal to a more diverse investor base.

“The launch of Fractional Share Trading is more than just an expansion of our services,” said Firstrade president Don Montanaro. “It’s a testament to our dedication to breaking down barriers in the investment world, making it easier and more affordable for individuals to participate in the financial markets.”

The service builds on Firstrade’s mission to enhance market accessibility and investment flexibility, which it’s already highlighted with a commitment to zero commission fees.

The online brokerage’s latest offering also includes several notable features aimed at enriching the trading experience.

Investors can engage in flexible trading options, with the ability to start trading fractional shares of US stocks and ETFs from five dollars, without a maximum order limit. Additionally, the platform offers a broad range of investment opportunities across more than 4,000 US stocks and ETFs, enabling customers to diversify their investment portfolios extensively.

The service also provides a dividend reinvestment plan, allowing the dividend payouts from fractional shares to be automatically reinvested, which could help investors accelerate their portfolios growth by accumulating additional whole and fractional shares of companies over time.

Firstrade has integrated its fractional share trading service across both its web and mobile platforms, ensuring a seamless and intuitive trading experience for all its clients.

The digital investment platform is unveiling its new service at a critical time for the online brokerage industry. In its 2024 U.S. Self-Directed Investor Satisfaction Study, JD Power found satisfaction levels among DIY investors have stalled, making it more crucial for players in the space to show their value to users.

The study found that on average, self-directed investors were only marginally happier with online brokerage platforms – registering a score of 708 out of 1,000 points – despite the strong performance of the stock market last year.