TD Ameritrade Review – Are Increased Commissions Worth It?

TD Ameritrade
  • Commissions
  • Mobile Platform
  • Desktop Platform
  • Executions
  • Research
  • Short Lists
3.7

Overview

Day traders at TD Ameritrade have a long list of brokerage tools. The company provides robust trading technology, a wide range of securities, and competent customer service, all at an affordable price. Let’s check out the broker-dealer and see what it delivers in important categories.

History of TD Ameritrade

TD Ameritrade started as First Omaha Securities in 1975. The company became Ameritrade Clearing in 1983, and in 2006 the company purchased TD Waterhouse, becoming TD Ameritrade. Today, the broker is one of the largest on-line discount firms in the United States. It also provides services that normally are offered only by direct-access brokers. We’ll take a look at these shortly.

Cost of Trading

TD Ameritrade customers pay $6.95 for stock and ETF trades. The brokerage house does not offer a per-share commission schedule (which TradeStation and a few other brokers do provide). Option contracts cost an extra 75¢ each, and assignments and exercises are a rather steep $19.99.

Although these charges are a little pricey compared to TD Ameritrade’s rivals, there are no software fees at TD Ameritrade. This policy makes the broker’s trading tools some of the best values in the industry.

An account can be opened at TD Ameritrade with zero deposit. Several of the company’s rivals, including Fidelity, Schwab, and E*Trade require a minimum level of funding. In addition to the company’s generous opening policy, a TD Ameritrade account comes with no on-going fees, such as annual, low-balance, or inactivity charges.

Trading Platforms

Despite being free, TD Ameritrade’s technology is very good. First up is the website, which is able to place orders for all securities in quick fashion. In particular, SnapTicket is a trade bar that sits at the bottom of the browsing window. Here, it is possible to buy and sell options, stocks, and ETF’s. Vital trade information, such as volume and options data, is presented.

A small chart is displayed on SnapTicket for an entered ticker symbol. Order types include stop and trailing stop. An order can be set as conditional, although selecting this choice generates a web page where the order must be entered. Option chains can be accessed from the tool, although they pop open into a separate window.

Besides SnapTicket, TD Ameritrade also offers Trade Architect, a simple browser-based platform. Despite its minimalism, it offers charting with drawing tools and technical indicators. Also available is a stock screener, free streaming of CNBC, watchlists, indices, an options screener, and a market calendar.

Trade Architect

For traders who demand the highest level of sophistication, there is thinkorswim. This is a desktop program that professional traders will enjoy. It incorporates more technical studies than Trade Architect (400 in total) and provides many drawing tools. These include Fibonacci retracements and regression channels.

There are many advanced order types in thinkorswim, such as blast all and order cancels other. An economic calendar displays upcoming dividends and conference calls, while a scanner can look for options and stocks based on a wide variety of criteria. Futures and forex can also be traded on the platform, and CNBC is available at no cost. While thinkorswim isn’t easy to learn, it is customizable with three color schemes and multiple font sizes. There is also a simulated trading environment where users can practice with a virtual currency.

Thinkorswim Chart

Last, but certainly not least, is the broker’s mobile app. There are actually three of them. One of the apps is a thinkorswim version. Amazingly, it incorporates many of the desktop cousin’s advanced features, including drawing tools and technical indicators. The other apps have abilities that the thinkorswim platform doesn’t offer, such as mobile check deposit. TD Ameritrade’s app for Apple Watch functions with the iPhone platform.

Mobile Platform

Customer Service

A TD Ameritrade representative can be reached 24 hours a day, 7 days a week. Besides phone service, the brokerage firm also offers internal messaging and several brick-and-mortar locations throughout the United States. Unfortunately, the TD Ameritrade website usually doesn’t offer on-line chat, although the service has been spotted occasionally.

Thinkorswim has an integrated live support feature. Agents are available from Sunday at 4:00 pm, CST, until Friday at 5:00 pm. There are also phone representatives who specialize in the software.

Executions and Routes

Direct routing is available to TD Ameritrade clients. The service can be enabled by going to ‘Client Services’ on the website and choosing ‘My Profile.’ Here, click on the ‘General’ tab. Under ‘Elections & routing’ you will find an edit link next to ‘Direct routing.’ Simply click on the link and make your selection.

SnapTicket and thinkorswim offer several routing choices for options without applying for direct routing. Smart routing is the default and automatic choice. Other avenues include NYSE, BATS, and CBOE.

Shorting Stocks

Short selling is permissible in a margin account at TD Ameritrade. The broker currently charges 9.75% for debits under $10,000. This rate decreases for larger loans, reaching 7% at $1,000,000. At least $2,000 must be deposited before shorting is allowed, and the brokerage firm has a 30% maintenance margin requirement.

Stocks with light volume may be classified as hard-to-borrow at TD Ameritrade, and the broker imposes an additional 1.5% on its margin interest rate for these stocks. A few OTC and penny stocks are available for shorting, but many are not.

Shorting Stocks

Type of Trader TD Ameritrade is Best For

Equity and option traders who need effective trading technology and don’t want to pay for it will do well at TD Ameritrade. Although the broker’s commissions are a little steeper than some of its rivals, infrequent traders won’t notice much of a difference.

Thinkorswim Forex

Pros…

  • Well-designed website with lots of self-help features.
  • Some of the best trading tools in the industry, and they are all free.
  • Trading in futures and forex is available, a service that most securities brokers don’t provide.
  • TD Ameritrade offers checks and a Visa debit card at no cost.
  • Lots of learning materials on the website for traders who need some extra guidance.

…and Cons

  • Commission schedule is pricier than several competitors.
  • The website usually doesn’t have on-line chat.

Final Thoughts

TD Ameritrade offers day traders and other equity investors a lot at a reasonable price. High-volume traders might do better at TradeStation due to the latter broker’s per-share commission schedule, which TD Ameritrade doesn’t offer.

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