TradeStation
Online Broker Review

TradeStation is one of the big players in the world of trading. It has been around for a few decades now, has won numerous awards in both its services and platform offerings. 

They cater to active traders but their customer support is very helpful if you are just starting out and the trading platform very intuitive.

They have some of the most powerful charting tools and the execution is great. 

I would say in terms of competitors, Interactive Brokers is on the same tier as TradeStation. They offer same asset classes, ability to trade all of them from one account and large international market exposure. 

But let's dive in to see the specifics for these guys.

Asset Classes     All 

Commissions     5/5

Account Minimum*     High
Stocks or Options: $5,000/$30,000 USD
Futures: $5,000 USD
Forex: $2,000 USD

Customer Service     4/5

* The account minimum for stocks or options is $5,000 if you are not a "Pattern Day Trader" per FINRA.

If you are one (i.e. any margin customer that day trades 4 or more times in 5 business days), then you must hold $30,000 USD in the account. Keep in mind this is not JUST TradeStation but any broker regulated in the United States. Per FINRA it is $25k however TradeStation requires $30,000 for a buffer.


Commissions

Stocks 1¢/share up to 500 shares
0.6¢/share thereafter

Options $1.00/contract

Futures $0.50 - $2.40 round turn per contract
+ exchange,regulatory, overnight fees

Forex* Spreads: 1.6-2 pips (for Majors)
1.6-2.6 (most common pairs)

Bonds $14.95 + $5 per bond

Mutual Funds$14.95 per trade

* Note that TradeStation does not charge a commission on forex as it makes money through a spread it embeds in the pricing (difference between bid and ask prices). 

Commission Details

For pretty much all of its securities, Tradestation offers two structures for paying commissions. See details below. 

As a beginner trader I would recommend the per share commission structure and not flat fee as I doubt the volume of trades you do will make up for the commission charged. 

Stocks

Per Share Commission:

1¢/share up to 500 shares
0.6¢/share thereafter

Flat Fee Commission:

$9.99 / trade (1 – 9 trades/month)

$7.99 / trade (10 – 29 trades/month)

$6.99 / trade (30 – 99 trades/month)

$5.99 / trade (100 – 199 trades/month)

$4.99 / trade (200 or more trades/month)

The choice here really comes down to how you trade. You will have to take out your dusty calculator or pull up an excel spreadsheet and do some math.

Here are some rough calculations to help you decide (just in case you are currently sprawled out on your couch and too comfortable to start doing math):

Scenario 1:

You trade infrequently with small position size. Per Share fee wins:

5 Trades/Month
100 shares/Trade
Per Share Fee: $5
Flat Fee: $50

Scenario 2:

You trade infrequently with large position size. Per Share fee wins:

5 Trades/Month
1,000 shares/Trade
Per Share Fee: $40
Flat Fee: $50

Scenario 3:

You trade frequently with small position size. Per Share fee wins:

100 Trades/Month
100 shares/Trade
Per Share Fee: $100
Flat Fee: $600

Scenario 4:

You trade frequently with large position size. Flat fee wins:

100 Trades/Month
100 shares/Trade
Per Share Fee: $800
Flat Fee: $600

Conclusion: Choose the per share fee structure unless you are a scalper (frequently trading large positions to make a few cents per share).

There are some scenarios where it is not a obvious answer - for example scenario 2 if you trade large enough (1000 shares and at 10 trades a month) you are right on the fence as both cost $80. Ultimately scenario 2 Flat fee could win if you trade huge positions.  I suggest you do a rough, back of the envelope calculation based on your anticipated trading pattern.




Options

Per Contract Commission:

$1.00/contract

Flat Fee Commission:

$9.99 / trade + $0.70/ contract (1 – 9 trades/month)

$7.99 / trade + $0.50/ contract (10 – 29 trades/month)

$6.99 / trade + $0.40/ contract (30 – 99 trades/month)

$5.99 / trade + $0.30/ contract (100 – 199 trades/month)

$4.99 / trade + $0.20/ contract (200 or more trades/month)

With options, I did some calculations and I present you with the same scenarios below:  I recommend the same thing as for stocks. If you do not trade big positions, better to go with the per contract commission. Remember, when buying options and it is listed for a cost of $5.47 for instance, you will actually be paying $547 as they come in lots of 100. As a retail investor 

Scenario 1:

You trade infrequently with small position size. Per contract wins:

5 trades/month
5 contracts/trade

Per contract fee: $25
Flat Fee: $67

Scenario 2:

You trade infrequently with large position size. Per contract wins:

5 trades/month
20 contracts/trade

Per contract fee: $100
Flat Fee: $90

Scenario 3:

You trade frequently with small position size.
Per contract wins:

15 trades/month
5 contracts/trade

Per contract fee: $75
Flat Fee: $157

Scenario 4:

You trade frequently with large position size.
Flat fee wins:

15 trades/month
10 contracts/trade

Per contract fee: $150
Flat Fee: $135

Conclusion: My recommendation is go with per contract fee structure - unless you trade big positions.

Keep in mind, when you buy an option contract for $2.50 for instance, you actually pay $250 since they are in lots of 100. Applying that price to a position of 20 contracts, such as in scenario 2 above, would be a $5,000 trade...  and if those expire worthless....bye bye $5k.




Futures

Per Contract Commission:

$0.50 - $2.40 round turn per contract
+ exchange, regulatory, overnight fees 

Volume Discounts (Round Turn/Contract):

$2.40  <=300 Contracts/month

$2.00 301-1,000 Contracts/month

$1.30 1,001-10,000 Contracts/month

$0.90 10,001-20,000 Contracts/month

$0.50 >20,000 Contracts/month

Here there is no choice with flat fee structure but a discount if you end up trading a lot. Useful to know these rates if you increase your volume. 

NOTE: These commissions are to open AND close one position (i.e. "round turn" or technically two trades). Keep an eye if commissions say round turn or half turn (i.e. half turn is just one trade - either opening the position or closing the position).

Also, if you don't want to go with Tradestation, from the above chart you now have some sort of benchmark to negotiate commissions with other brokers such as Global Futures. 


Market Data Costs

For all those who want a broker that caters to more active traders, such a broker will most likely have separate data fees you must pay. It is something that you should consider as overall can still be much cheaper than going with a big name that just charges you ridiculous commissions per trade. 

I will give a breakdown & analysis below of what I find the most common subscriptions would be for beginner traders and whether it is worth it for you.

Stocks
$3/month 
AMEX, NASDAQ, NYSE Level 1 Realtime

Futures
$20/month
CME, CBOT, NYMEX, COMEX Real-time

+
$5/month
per exchange for e-mini Market Depth

Forex
Free

Making Sense of Data Bundles

If you are just trading stocks, the data fees are very good. $1/month for any type of American exchange you want to trade. If you want Level 2 data, for instance NASDAQ TotalView, it will be another $16/month but this is pretty standard across brokers. 

In my belief, the futures data costs are ridiculous. When getting data from actual futures brokers, depending on the broker they might not even charge you any data feeds (Global Futures used to be like this but now they charge $15/month).

In addition, when they do charge you they give you DOM* data. If you want this with TradeStation, get ready to pay $40/month if you trade the S&P 500 e-mini contract (the most commonly traded contract when starting out)!

*DOM - Depth-of-Market shows how many traders are willing to buy or sell a certain contract at least 5 ticks from the current price. I.e. if you want to buy at $1,879.00 you can see how many traders above you are selling at 1,880.25 or how many are buying below at $1,878.00. 

Advantages

  • Rich selection of investment products

  • Fantastic charting tools - Easy to use charts and order entry

  • Active trader community - Offers large trader community forums discussing numerous topics on investment strategies and getting the most of the TradeStation platform

  • Multi-tasking - TradeStation able to handle a large number of real-time screens of different stocks, futures, indices without slowing down the computer (of course this can depend on how awesome your specs are for you comp)

  • Fully Customizable - You can create custom indicators, write programs, back test your strategies, automate, monitor and optimize trades. They make it simpler than learning a whole programming language (have their own "EasyLanguage." Check out the platform review for more info. 

  • TradeStation University/Labs - Provide free e-books, articles, video tutorials that teach you about various investment products and how to use the platform. The labs deal with application of what you learn about analysis/strategy.

Disadvantages

  • Platform Cost - if you don't trade at least 5,000 shares or 10 round trips in futures or 50 option contracts you will pay $100/month if you are their client. Huge costs if you are not a super active nor a large position trader. 

  • Execution/Data Feed - I have encountered numerous sources stating data feed is unreliable at times and execution is slow. Execution for aggressive day traders can be very poor with matrix freezing, slippage, etc.* Some have said if your computer is down and you need out of a trade, that could be an issue. 

    *Some do their 10 round trips a month to waive the $100/month platform fee and then use another broker for execution (get benefit of the great platform and better execution somewhere else). 

  • Data Fees - Monthly market data fees are quite high if you want to trade futures

Final Thoughts on TradeStation

My general thoughts are that if you are or want to be a highly active trader or have a large portfolio ($100,000+) then this can be a great broker. If you are a small investor with low volumes there are better options out there. 

That being said, the securities offered are very diverse and the platform is fantastic. The cost is high but it can be worth using for its customizable features. You can just do 10 round trip trades with futures to waive the fee (easiest criterion to meet to waive the fee). Problem is you will have to remember to do this MONTHLY, otherwise you will get slapped in the face staring at your bill with a wake up call to pay a large fee.

I would check out the features of the platform if you are considering TradeStation as a broker. 


› Tradestation

› Tradestation

› Tradestation

› Tradestation