TD Ameritrade
Broker Review

TD Ameritrade is owned by a Canadian bank - Toronto Dominion. I love TD but I typically dislike all brokerages that are part of large popular banks. Why? Because their commissions/fees are high but they offer similar if not worse services/platforms than independently owned brokers. 

However, I am very impressed with TD Ameritrade's platform which is why I have included it in this site for review. I think they offer one of the best platforms in the industry and its use is FREE! 

...which is offset by their relatively high commissions...(they have to make money somehow)

Nevertheless, they offer the tools and help you need to get started if you are a beginner, but also have very advanced capabilities for those traders that are much more seasoned.

Overall I found that their competitive advantage is options. Compared to other brokers, they offer fantastic features for analyzing option trades. 

Let's dive into the details...

Asset Classes     All 

Commissions     1 / 5

Account Minimum      None
Option/Margin Privileges: $2,000

Customer Service     4 / 5


Commissions

Stocks

Options*

Futures **

Forex***

Bonds

ETFs

Mutual Funds

$9.99/trade

$9.99 + $0.75/contract

$2.25/contract + exch./reg. fees

Varies

Net yield basis

Free/$9.99

Free / No-load: $49.99

* Option exercises and assignments cost $19.99
** From my experience exchange/regulatory fees were roughly $3 round trip for popular contracts such as the ES (a.k.a S&P 500 emini)
*** Some pairs there are no fees (i.e. the charge would be hidden in the bid/ask spread) other pairs there are commissions charged. For ones with commission they charge based on counter currency. Two examples: a 1,000 lot EUR/USD trade is $0.10 per 1000 units or minimum of $1; USD/JPY trade of 5,000 units would be ¥90 JPY.
† Will add a markup for buys and a markdown for sells which will be captured in the price and yield quoted to you. Treasuries cost $25 flat fee.
‡ There are a little over 100 ETFs that are commission free - check the list here. You have to hold the ETF for at least 30 days, otherwise the trading fee will apply. Also for ETFs not on that list, if you execute multiple trade orders in one day you will only be charged a single commission. If one order is partially executed over multiple days, then you will be charged separately for each trading day. 


Market Data

Like most brokerages that are part of a big bank, there is no charge for data feeds. They make it up by charging higher commissions.

For example TD Ameritrade charges $9.99 per trade, while Interactive Brokers ("IB") only charges $1.

So yes, the data is free but keep this in mind: typically at these other brokers like IB, you only need to spend about $20/month on data. This is not that expensive. If you make just TWO trades with TD Ameritrade that is the equivalent of a whole month of real time data at Interactive Brokers. Something to think about... 

One rare thing that they offer is Level 2 data for NASDAQ stocks for free. Pretty much if you want level 2 data at any other broker it costs about $15-20/month. Not bad!

Trader Tip: Wondering what Level II is? Check out the glossary for details. Essentially it shows market depth for stocks. It's only really useful if you plan to day trade - i.e. are executing trades within seconds/minutes and maybe max hold positions a few days. If you have long term views and plan on holding the stock for several weeks/months then I wouldn't be hung up on this feature. Not worth it.


Advantages

  • Free Platform

  • Platform features - Very robust platform with all the indicators you will ever need and various order types.

    Can replay market data in real time. Allows you to practice trading and/or your strategies after hours. Can use it to also determine how market movements affect profits of your option strategies.

  • Great charting - So much variety and one click order entry capability.

    Have market profile charts! This is huge! Not many platforms offer this type of chart which is very commonly used for (but not limited to) futures trading. MarketDelta, one of the leading players that offer these charts, charges over $100/month for this type of charting.   

  • Free real-time data including Level II quotes
  • No inactivity fees

  • Option analysis - The tools they have to analyze option trades are fantastic. 

  • Great training videos - teach you how to trade various securities and also how to utilize the platform to its full potential. 

  • Autotrade feature: You can subscribe to advisers that have specific strategies. They will then execute trades in your account on your behalf based on the limits you set up with them for their particular strategy. The commission on these trades is the regular TD Ameritrade commission. 

Disadvantages

  • Commissions - based on all the research, the majority of traders including myself conclude that the commission rates are quite high. Do not use them if you trade big volumes or if you frequently trade.

    It is ironic as the platform has fantastic features for day trading, however if you actually want to day trade, it will cost you an arm and a leg. 

  • Learning curve - because of all the features and options it may seem overwhelming for beginners starting to trade. 

Trader Tip: Because of the high commissions yet superb platform, some traders actually open an account just for the platform. The charting and analysis is great so they use that on the side but for all executions they use a low cost broker such as Interactive Brokers. 

Think about it - if you actively trade, let's say you just make 10 trades a day. That's $10 at Interactive Brokers but $100 at TD Ameritrade. You could be giving away thousands of dollars in a year, so platform is not really "FREE." I'm sure they make up all the money and more with people that don't realize this. 


Final Thoughts on TD Ameritrade

If you want to experience a day trading platform without paying anything for it this is a great place to start. They have Level II, Time and Sales, option analytic tools, etc. The platform TD Ameritrade offers (Think or Swim) is awesome with some of the best charting and analytics in the industry.

HOWEVER, if you are planning to use the platform for day trading...I advise against it as it will just soak up so much money in commissions. There are a lot of other brokers at there that charge a fraction of the price in commissions.

Like I mentioned maybe use them just for the platform, but execute trades at a cheaper broker. If anything you might want to execute long term trades that you plan on holding for a while with TD Ameritrade so you don't spend much money on transaction costs. 


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