TD Ameritrade is one of the most well-known brokers in the country, attracting a wide spectrum of investors with a comprehensive offering that allows all users, regardless of skill level, to pursue their preferred investing strategy. With no account minimums and straightforward pricing, it will be simple for new investors to get started. The educational content is also exceptional for its range and depth of coverage. Advanced traders can take advantage of TD Ameritrade’s acclaimed thinkorswim interface, which provides a potent combination of research tools, screening functions, and financial calculators. Although some capabilities, such as fractional shares, are unavailable, TD Ameritrade earned four of our “best broker” categories because the site appeals to a wide range of users.
Keep in mind that, despite Charles Schwab’s acquisition of TD Ameritrade, the broker continues to function as an independent entity.1 Next, we’ll examine TD Ameritrade in detail so you can discover everything they have to offer.
Introduction
TD Ameritrade was founded in 1975 as a budget full-service broker and has since acquired a reputation as a pioneer in trading innovation, client experience, and education. Charles Schwab announced in 2020 that it has acquired TD Ameritrade for $26 billion, with the transaction set to close in 2023.2
The platform of TD Ameritrade caters to all types of traders. New investors have access to a vast selection of instructional resources, which are accessible in a variety of formats and cover a vast array of themes. Customer service is easily accessible via several channels, giving new investors with the help and assurance they require. Beginners can confidently enter the market because there are no minimum balance requirements and prices are transparent and reasonably reasonable.
TD Ameritrade is also notable for its dynamic and user-friendly portfolio features. Regardless of expertise level or investment inclination, all types of users have access to a complete array of trading features and analysis tools that may be tailored to their own investment strategies. A well-implemented design makes it simple to identify what you’re looking for and efficiently implement your preferred investing strategy. The desktop, online, and mobile experiences are all easily navigable and have identical feature sets.
TD Ameritrade may be most known for thinkorswim, their main trading platform. This potent service combines comprehensive research tools, screening capabilities, and financial calculators with backtesting capabilities, allowing investors to evaluate their investing strategy using historical data before joining the market. New product additions, such as improved charting capabilities and a portfolio digest tool introduced in July 2022.3, continue to come out.
According to users, TD Ameritrade’s overall intuitive design, breadth of trading tools, and consistent innovation are some of the platform’s best features. However, they are lacking several key components, such as fractional share trading and direct cryptocurrency exposure. In general, however, TD Ameritrade’s wide investment selections, coupled with largely modest fees, great client support, and a comprehensive instructional library, appeal to investors of all backgrounds.
Pros & Cons
Pros
• Vast array of educational material accessible in numerous formats
• Comprehensive trading instruments and resources for any type of investor
• An intuitive smartphone application and website
• Excellent client support
Cons
• No fractional shares are available
• No direct cryptocurrency trading allowed
• There is no automatic participation in the cash sweep program.
The Pros Described
• The availability of a vast array of educational content in a variety of formats allows investors to expand their market knowledge and trading expertise. TD Ameritrade’s exceptional instructional resources can help novice investors feel more confident as they learn how to invest.
• Extensive trading tools and resources for all sorts of investors, allowing users to pursue their desired investing strategy without difficulty. Whether you require options screeners, research insights, or trading idea generators, TD Ameritrade can accommodate your every demand.
• Well-designed, user-friendly mobile app and website: Users are provided with a consistent investing experience across all platform versions. TD Ameritrade has divided the user experience at its core, directing casual users to the TD Ameritrade website and mobile app while traders and more active investors go toward the thinkorswim desktop and mobile platforms.
• Exceptional customer service: TD Ameritrade provides the best customer service in the industry, boosting investor confidence through prompt resolutions and dependable assistance.
Cons Explanation
• The absence of fractional shares is a barrier for investors seeking to add portions of expensive assets to their portfolio. Charles Schwab allows fractional share trading, however it remains to be seen whether this functionality will be moved over to TD Ameritrade after the merger between the two brokers is finalized.
Only indirect exposure to the cryptocurrency market is possible via funds, Bitcoin futures, and over-the-counter (OTC) trusts; there is no direct crypto trading. Investors who like to trade actual cryptocurrency may investigate alternate options.
• There is no automatic enrollment for the cash sweep program. Instead, users must opt-in to this function, which stores cash in an FDIC-insured account. The additional step undoubtedly causes some investors to lose interest on their idle funds.
Usability
TD Ameritrade’s commitment on the client experience has resulted in a platform that is fluid and easy to navigate, regardless of the version you prefer. Each edition provides numerous adjustable options, allowing users to tailor the trading platform to their specific needs and tastes.
The web edition of TD Ameritrade features a doc tool that enables users to fully customize and change their dashboard. 13 modules, including watchlists, account balances, RSS feeds, market news, and similar reports, are accessible to traders. Then, modules may be reconfigured as required.
The mobile application displays investor positions and balances on a single screen, facilitating the monitoring of assets. The inclusion of market news relevant to investor positions provides traders with more insight and the opportunity to make necessary position adjustments.
Active investors will appreciate how simple it is to find helpful information on virtually any security. By entering the ticker symbol, investors can easily access earnings data, analyst ratings, dividend payouts, charts, and price history, among other information.
Trade Experience
With TD Ameritrade, entering, executing, and monitoring trades on the web platform is a simple process. In the search function, users can enter the ticker symbol and place orders immediately from the website. With the exception of fixed-income products, the web platform and mobile app offer nearly identical asset classes.
TD Ameritrade also provides investors with screening tools, allowing them to filter stocks, ETFs, mutual funds, and other assets to locate assets that match their trading preferences. You can filter by industry, market capitalization, sector, and more, as well as construct your own custom screens using the given tools. This section aids both novice investors and seasoned traders in their search for fresh investment strategies.
The thinkorswim platform is designed for advanced traders, enabling portal users to add indicators, create trendlines, and conduct technical analysis. This flexibility is only the beginning, as thinkorswim may be further tailored to suit the tastes of traders. For more sophisticated investments, such as derivatives or option chains, analysis tools are available.
A trading simulator goes even farther by allowing users to create their own tools using the thinkScript® programming language.4 As a result, advanced traders will prefer thinkorswim over the other TD Ameritrade platforms because thinkorswim offers significantly more features and functionality.
Mobile Trade Experience
TD Ameritrade’s mobile experience is exceptional, earning it the title of best broker for mobile apps. TD Ameritrade’s creative approach to mobile investing is exemplified by the fact that trading on the mobile app is, at the very least, as frictionless as trading on the online platform, a rare industry achievement that demonstrates the firm’s innovative approach to mobile investing.
Users are greeted by a conspicuous green “trade” button in the upper right corner of the screen. With just a few touches, you can conduct a transaction after entering a symbol. Real-time data streams, watchlists, and market news are provided to users. Even though the mobile app does not feature chart drawing, trades can be initiated directly from these panels.
If you’re seeking for more complex charting options, such as chart customisation, try the thinkorswim mobile app, since its possibilities expand significantly. With similar features to the thinkorswim downloaded platform, the thinkorswim mobile app may be used to trade multi-leg options, perform analysis on positions, and more.
Variety of Services
Clients of TD Ameritrade can trade a vast array of assets on both the web platform and mobile apps. Included among these assets are ETFs, stocks, options, and futures. TD Ameritrade also introduces novel products that appeal to a wide range of traders, such as micro futures, which expands investor access to these contracts and reduces their cost.
TD does not sell fractional shares or international bonds, and the mobile app does not facilitate the purchase of fixed-income securities. Investors utilizing TD Ameritrade also have access to the following:
• Stocks (long and short)
• Mutual funds (more than 13,000 on offer, 3,628 of which are no-transaction-fee funds)
• Bonds (corporate, municipal, Treasury, and CDs)
• Futures/commodities
• Option contracts with a single and many legs
• Bitcoin futures
• Foreign exchange (70 currency pairs)
• OTCBB (penny stocks)
• Micro Futures6
Order Types
TD Ameritrade’s platforms support numerous order types, including market, limit, stop-limit, and trailing stop orders. Only the thinkorswim® platform enables the use of conditional orders such as order-triggers-other (OTO), one-cancels-the-other (OCO), order-triggers-two (OTT), and similar orders.
Support for more sophisticated order types (such as OCO) is crucial since they enable traders to navigate risk, enter and exit positions rapidly, and lock in profits. Consequently, traders can spend more time assessing the market and planning their next move without having to closely monitor current trades.
Notably, all TD Ameritrade systems permit order staging for later execution. When placing orders, investors can optionally choose a certain tax lot, so optimizing tax effects.
Trading Equipment
Many investors, especially particularly aggressive traders, place a premium on order execution speed and precision. When a streamlined, exact order routing method is adhered to, it helps to assure consistent execution, as markets might fluctuate swiftly at times. The mechanism through which a broker routes trades determines the likelihood that an order will receive the best price when placed. A price improvement occurs when a trade is done at a better price than the best advertised market price at the moment.
TD Ameritrade utilizes a proprietary order routing system. However, clients also have the option of routing orders directly to particular exchanges. TD Ameritrade executes orders in an average of 0.04 seconds. Execution quality information encompasses market order sizes ranging from 1 to 1,999 shares, with 97.4% of trades obtaining price increase. The average price increase per share amounts to $0.0180.
TD Ameritrade is one of only a handful of brokers that offer backtesting, which allows a trading strategy to be tested against historical data.8 This valuable feature allows you to fine-tune your investing philosophy so that you can execute your strategy with greater market knowledge.
Costs
Like others in the sector, TD Ameritrade has decreased fees over time. In a few cases, the broker’s costs are slightly higher than those of competitors, but for the most part, they are in line with industry standards.
• TD Ameritrade does not charge commissions for equities or ETF trades executed online.
• OTCBB trades carry a $6.95/transaction commission, although most other brokers offer these trades for free.
There is no commission per leg on option trading. Per-contract commissions are $0.65. Customers with the VIP option can privately negotiate discounted commissions based on volume.
• A purchase of 50 option contracts costs $32.50.
A covered call transaction involving 500 shares and five options contracts would cost $3.25.
• Mutual fund commissions for funds that do not participate in the No Transaction Fee program range from $49.99 and $74.95
• Fixed income is sold on a “net yield” basis, which indicates that TD Ameritrade marks up the price of the bond for a purchase and marks it down for a sale. The charge is not disclosed.
• TD Ameritrade absorbs most exchange fees, which are typically fractions of a penny per share or contract, rather than passing them on to its consumers.
• As of June 2022, the margin interest rate ranges from 11.5% for a $10,000 amount to 10% for a balance greater than $100,000.10 This rate is significantly higher than certain competitors. Account holders with a high net worth can negotiate lower margin rates based on account size.
• Futures transaction fees are $2.25 per contract per side plus exchange fees.
• Currency pairs in the Forex market are traded in increments of 10,000 units with no commission. The cost of the trade is reflected in the spread, and TD Ameritrade receives volume-based compensation from its liquidity provider.
• There are no inactivity fees.
Transferring a portion of a balance is free. The cost to transfer an entire account is $75.
• Wire transfers cost $25. Sending a paper check is free, however there is a $15 cost for overnight delivery.
• The charge for voluntary corporate reorganization is $38.
• Accounts with low balances incur a $2 handling fee for paper statements. Free trade confirmations are available.
• The live broker charge for all asset classes is $25 per trade.
How This Broker Generates Income from and for You
Many investors have benefited from lower prices as a result of industry competition and the development of innovative trading platforms. However, while $0 commission may be widely promoted, there may be additional fees involved with trading that are not immediately apparent. Several of these expenses are listed below:
• Interest on cash: By default, clients of TD Ameritrade do not earn interest on cash held in their accounts. To receive interest on idle cash, clients must enroll in TD Ameritrade’s cash sweep program. Currently, the interest rate on idle funds is 0.01%. This may be regarded as a minor disadvantage, given that competitors automatically enroll customers in cash sweep programs.
• Payment for order flow: It’s usual for brokers to receive income by steering trade orders to various market makers. Some competitor brokers, including Vanguard and Fidelity, do not accept compensation for equity order flow. On average, TD accepts $0.001 per share for equity investments and $0.50 per contract for options. This is average among PFOF-accepting brokers.
• Stock lending programs: Although TD Ameritrade clients can engage in a stock loan program, they cannot pick which stocks can be loaned. Stock lending programs create income for brokers, who often provide the loaned shares to shorting traders and hedge funds.
• Price improvement: TD Ameritrade states that their average net price improvement per share for orders between 1 and 1,999 shares is $0.0180. TD Ameritrade does not reveal net price improvement on options orders.
• Portfolio Margin: Qualified investors with a portfolio worth of at least $125,000 are eligible for portfolio margining, which can dramatically improve their purchasing power compared to ordinary margin accounts. The objective of portfolio margining is to establish margin needs that reflect net risk, allowing customers to benefit from lower margin requirements and more efficient capital utilization.
Account and Analysis Capabilities
Expected of a significant internet broker, TD Ameritrade provides all the research and analytical capabilities. You have access to a broad selection of screeners, calculators, charts, and analysis tools, to mention a few. TD Ameritrade offers additional unique tools, including the Social Sentiment tool that tracks social media trends.11
Stock Monitors
Clients can select from 25 established stock screeners or create their own using parameters like fundamental metrics, sector, valuation, performance, and technical indicators. The thinkorswim desktop platform has a more sophisticated screening capability than the website, as it is designed for traders with experience using a wide range of technical and fundamental filters.
Mutual Fund and ETF Screeners
TD Ameritrade’s ETF and mutual fund screeners are comparable to the stock screeners in terms of the breadth of accessible alternatives. You can save the five most recent customized screens for future usage, as well as create a personalized watchlist from them.
The Morningstar category alone provides clients with access to approximately 100 fund categories, ranging from huge growth funds to alternative investment funds like real estate. There are also funds for investors seeking exposure to particular locations or investment techniques.
Options Filters
TD Ameritrade provides a screener for options and a strategy builder. Clients can utilize tools such as Spread Hacker and Options Hacker, which enable screens ranging from simple to complicated and thorough. Iron condors, iron butterflies, double diagonals, covered calls, and other screening options are available. Certain characteristics, including as volatility, time to expiration, spread price, profit likelihood, and others, are supported by real-time data streams.
Fixed Income Filtering
Bond Wizard, a fixed income screening tool, is accessible to traders.12 The application enables traders to filter individual bonds, CDs, and construct a bond ladder. Additionally, pre-picked bond ladders can be selected from the menu.
Equipment and Calculators
TD Ameritrade customers have access to a multitude of financial calculators and tools. For instance, an Income Estimator assists investors in determining the amount of income that may be generated from a portfolio over a given time period. The Portfolio Planner, Retirement Calculator, Required Minimum Distribution (RMD) Calculator, and IRA selection tool are other popular resources. These are only a handful of the alternatives that TD Ameritrade offers to assist investors maintain their financial health.
Charting
Charting is another area in which TD Ameritrade excels, notably on the thinkorswim platform. Charting options that can be customized for color, size, strategy, and other parameters are available to both novice and experienced traders. TD Ameritrade enables the saving and sharing of charts, enhancing the utility of this feature.
The website offers the ability to add indicators and trendlines, but these capabilities are not as simple to configure and use as charts in the thinkorswim edition. As is the case with the majority of mobile charts, spatial limits diminish the effectiveness and utility of these features in comparison to desktop or downloading counterparts. Instead, the thinkorswim experience is preferable when it comes to maximizing the use of charts.
Trading Concept Generation
Investors have access to a wealth of market news, data, and analyst reports that facilitate the process of trading ideation. Available for usage are industry-recognized studies from organizations such as Dow Jones, Credit Suisse, and other significant resources. A vast library including significant research and insights on industries, funds, and other topics helps users generate new trade ideas and make informed trading decisions.
News
Investors receive complimentary access to the TD Ameritrade Network, Dow Jones, Benzinga, Midnight Trader, MarketWatch, many press release wires, TradersAudio live pit audio, CNBC Video, Benzinga Audio Squawk, Econoday calendar data, and Wall Street Horizons. Additionally, access to Yahoo Finance, Barrons, and The Wall Street Journal is included. CNBC segments are integrated into the TD Ameritrade website among other real-time market data and additional streams.
Independent Research
Even virtually all TD Ameritrade platforms include free charts, the broker also provides daily market reports and analysis for a charge. In addition to the free Market Edge reports, clients have the option of subscribing to one of two premium Market Edge subscription packages. The first premium tier provides reports and discussion in real time. At $19.99 per month, the second tier grants complete access to Market Edge’s platform, research, screeners, comments, and tools.
Money Management
Although TD Ameritrade does not automatically sweep customer assets into a money market fund, clients can voluntarily enroll in the cash sweep program to earn a better rate of interest (currently 0.01%).
Plan for Fractional Dividend Reinvestment (DRIP)
TD Ameritrade offers a dividend reinvestment program (DRIP) to clients who possess assets that produce dividends. The DRIP does not utilize fractional shares, therefore any surplus funds that cannot be used to purchase a full share will be returned to your account’s cash balance.
SRI/ESG Research Infrastructure
There are screening tools on TD Ameritrade platforms, but none are particular to environmental, social, and governance (ESG) or socially responsible investment (SRI) issues. This may be viewed as a disadvantage by investors seeking both financial and social gains.
Portfolio Analysis
Portfolio analysis is accessible via TD Ameritrade online, thinkorswim, and the TD Ameritrade Portfolios App for Personalized, Selective, and Essential Portfolios. Using Personalized Portfolios, the broker offers the opportunity to aggregate holdings from outside accounts for reporting and analysis purposes. Portfolio analysis is also customisable. Real-time reports include both realized and unrealized gains/losses, as well as net deposits and withdrawals. Additionally, margin, purchasing power, and account balance data are provided in real time. In addition, clients can attach trade notes prior to and following order execution and maintain a trading log within the platform.
Although investors are unable to calculate the tax consequences of future trades, monthly capital gains reporting is published on the internet and can be accessed directly. TD Ameritrade now offers the enterprise integration of GainsKeeper, a third-party tax reporting solution that assists in determining the tax implications of trades. GainsKeeper is directly incorporated into their platform at no cost for all clients, independent of activity or asset level.
Education
TD Ameritrade is the greatest broker when it comes to the breadth and depth of its educational offerings, earning it the title of best broker for education. Users have access to a number of learning channels and formats across desktop, mobile, and web platforms. The education center’s wide library of content is easily accessible based on the user’s objectives, investment expertise, and area of interest. In addition to tutorials, podcasts, videos, and webinars, investment coaching is also provided.
The Immersive Curriculum is one of the most comprehensive and free educational client portals in the industry.13 Trading ideas and investing methods are broken down into individual modules, allowing customers to learn at their own pace and expand their expertise. Included are fundamental analysis for equities, income investing, trading options, and other comparable topics.
TD Ameritrade successfully combines education and technology to enhance your learning experience. The educational resources recommended to you are customized based on your interests, account history, and investors in comparable financial situations. As your knowledge of investing expands over time, the site modifies the content it recommends to match your interests and needs.
paperMoney® is a powerful demo account tool for new investors seeking a hands-on learning experience.14 This feature allows users to experience the flagship platform, thinkorswim, as an investment simulator, allowing you to increase your market expertise without investing real money. This instructional material is accessible on the device of your choice, making it convenient to have it on hand.
Customer Support
• TD Ameritrade’s telephone support line is available around-the-clock.
• Customers can receive trade and account help via phone, email, website, the trading platform itself, Twitter, and Meta.
• TD Ameritrade also offers chat assistance via thinkorswim mobile, where clients can interact with a support representative in real-time without leaving the app.
• TD Ameritrade clients may speak with a live broker for a charge. Many of the representatives manning TD’s trading desk and responding to customer inquiries were either former professional floor traders and market makers or were trained by such individuals.
• Clients can communicate with TD Ameritrade financial advisors.
• Apple Business Chat, Meta Messenger, Twitter Direct Messages, and WeChat in Asia feature chatbox functionality.
Safety and Dependability
• Two-factor authentication, as well as a biometric fingerprint scanner and facial recognition, are available for all client platforms.
• TD Ameritrade provides each client with a total of $149.5 million in coverage for securities and $2 million in coverage for cash through extra coverage offered by London insurers.
• TD Ameritrade will refund clients who lose cash or securities from their account as a result of unlawful activity.
In the past four years, TD Ameritrade has not announced any big data breaches.
• Due to record quantities of activity, TD Ameritrade had login problems across numerous TD Ameritrade platforms in 2020, which hampered the ability of some clients to log in.
• On January 27, 2021, TD Ameritrade and several other brokerage firms experienced sporadic downtime, making it difficult for consumers to log in, review their portfolios, or execute trades. It is possible that the interruption coincided with a market dislocation that caused Gamestop shares ($GME) to rise.
Transparency
The fees and pricing structure of TD Ameritrade are generally simple and open. There is a section of the website dedicated to fee disclosures, pricing, and other connected expenses. Some prices, such as the setting of margin rates, may be modified more regularly than others, such as transfer out fees, which are more static.
Which Account Type Should I Open with TD Ameritrade?
TD Ameritrade has a vast array of account types that are ideal for a variety of financial objectives and investing strategies.15 The following accounts can be opened:
Individual Securities Trading Accounts
• Joint Investment Accounts
• Conservatorship or Guardianship Accounts
• IRA Traditional
• Roth 401k
• Rollover IRA
• SEP IRA
• Solo 401 (k)
• Traditional IRA
• Profit or Pension
• Trust
• Limited Liability Partnership
• Partnership
• Investment Club
Limitation of Liability
• Single-Ownership
• Corporate
• Non-Incorporated
• Small Business Plans
• Charitable
• Margin
Final Verdict
TD Ameritrade is a robust brokerage platform with a multitude of appealing features. A robust selection of assets, trading tools, and educational content empowers novice and expert users alike to implement their preferred investment strategy. A design that is intuitive makes it simple to find what you’re searching for, with navigation that is consistent across web, mobile, and desktop editions. TD Ameritade’s reputation as a user-centric product is bolstered by its excellent client assistance options.
The leading investment platform, thinkorswim, provides extensive and practically unmatched screening capabilities, research tools, and analysis capabilities. The continuous integration between TD Ameritrade and Charles Scwhab will enhance this already comprehensive service. If they want to trade cryptocurrencies directly or use fractional shares, however, some investors may have to find alternative options. With TD Ameritrade’s comprehensive trading platform, however, a diverse range of investors may completely implement their trading plan.
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Methodology
Investopedia is committed to provide investors with objective, in-depth ratings and reviews of online brokers. This year, we redesigned the evaluation procedure by conducting a comprehensive survey of clients who are eager to begin trading and investing with an online broker. Then, we coupled this priceless data with our subject matter experience to establish the framework for a quantitative ratings methodology, which formed the basis of how we compiled our list of the top online broker and trading platform businesses.
This model evaluates the significance of important elements such as trading technology, range of products, usability of mobile apps, research amenities, educational content, portfolio analysis features, customer support, costs, account amenities, and overall trading experience. Our team of researchers collected 2,425 data points and weighted 66 factors based on evidence gained during in-depth investigation for each of the 25 organizations we evaluated.
Many of the brokers we evaluated also provided us with live demonstrations of their platforms and services, either at their offices in New York City or via video conferencing. Our team of specialist writers and editors also obtained live brokerage accounts for the majority of the platforms we evaluated in order to do hands-on testing and provide their qualitative perspective.
