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
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.
* 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).
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.
Per Share Commission:
1¢/share up to 500 shares
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):
You trade infrequently with small position size. Per Share fee wins:
Per Share Fee: $5
Flat Fee: $50
You trade infrequently with large position size. Per Share fee wins:
Per Share Fee: $40
Flat Fee: $50
You trade frequently with small position size. Per Share fee wins:
Per Share Fee: $100
Flat Fee: $600
You trade frequently with large position size. Flat fee wins:
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.
Per Contract Commission:
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
You trade infrequently with small position size. Per contract wins:
Per contract fee: $25
Flat Fee: $67
You trade infrequently with large position size. Per contract wins:
Per contract fee: $100
Flat Fee: $90
You trade frequently with small position size.
Per contract wins:
Per contract fee: $75
Flat Fee: $157
You trade frequently with large position size.
Flat fee wins:
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.
Per Contract Commission:
- $2.40 round turn per contract
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.
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.
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.
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.