TD Ameritrade Review – 5 Reasons to Choose TD Ameritrade
It’s hard not to think about online brokers without thinking about TD Ameritrade. Created in 1983 they were one of the pioneers of online broking. They were one of the first brokers to offer trading online and launched the first internet only broker (eBroker) in 1996.
Fast forward to today and TD Ameritrade has become one of the biggest discount brokers in the world, managing over 8 million accounts with over $250 billion of assets between them.
But size isn’t everything; large brokers don’t usually have that personal touch of some of the smaller boutique brokers. And since they already have a large selection of traders they don’t have to scrap it out for new customers and compete on price.
Fees & Commissions
I suppose we should start with commissions, TD Ameritrade offer a flat fee of $9.99 for all online equity trades without limits. This is extremely expensive and more than twice the price of OptionsHouse, who do have a share limit, but its 50,000 shares so it’s not likely to trouble most private investors.
Options will set you back $9.99 plus $0.75 per contract, which once again is considerably more than most other discount brokers. One final point if you ever need a broker assisted trade you’re going to have to fork out a massive $44.95.
So at first glance they’re not the cheapest, but that doesn’t tell the whole story. For certain types of traders TD Ameritrade make the perfect choice and could actually work out cheaper.
5 Reasons to Choose TD Ameritrade
1. No Stock Surcharges
Far too many brokers try to show artificially low prices only to bump them back up again with stock surcharges. These include extra charges for after hours trading, penny stocks, large orders and even platform inactivity penalties.
TD Ameritrade doesn’t charge for any of these things, they have one flat fee which covers all eventualities. Does that make them cheaper overall? That would depend if you carry out a lot of large orders after hours, but it’s something to think about.
2. Peace of Mind
TD Ameritrade is one of the better known discount brokers. They’re a publicly traded company with over $2.5 billion in revenues and over 130 branches based throughout the U.S. This is not an internet only operation, if you wish to speak with someone in person you can just pop into your local branch.
On top of that, with all the upheaval in the financial system at the moment, there’s a lot to be said for knowing a companies current financial state. This is not so easy when your broker is privately held and based offshore in a tax haven.
3. Excellent Trading Platform
TD Ameritrade has one of the most comprehensive trading platforms available from any broker. Trade Architect it’s most comprehensive platform takes the best technical tools from the award winning quasi professional thinkorswim platform and merges them with the excellent research tools which TD Ameritrade are renowned for.
The resulting platform offers everything from built in live CNBC news feeds to customizable trading screens and heat maps. You even get the chance to validate your trades using the built in Profit and Loss graphs. When you add in the extra third party research tools you end up with a platform as near perfect as it could be.
4. Independent Investment Research
One of the great things about TD Ameritrade is that they give you access to third party investment research tools. Most of these tools are provided free of charge which saves you money on subscriptions. Whether that saves you money overall will depend on the amount you trade, but for me the inclusion of reports from Morningstar®, Market Edge® and S&P Capital IQ is worth the price of admission.
5. Special Accounts for Active Investors
Are you an active investor with over $100,000 to invest? If that’s you then TD Ameritrade Apex is just what you need. With this unique program you’ll get preferential treatment from the specially trained Apex team.
No more hanging around waiting for your emails to be responded to, you’ll get direct access to your Apex team via email and telephone. Hows that for personalized service.
And finally you’ll get complimentary S&P Research reports which should help you keep you abreast of all the latest financial news as it happens.
So what’s stopping you?
Well there ain’t no getting away from it, TD Ameritrade are expensive than Optionshouse and Tradeking. That trading fee is hard to swallow especially when you know other brokers will provide you with a similar level of service for up to 50% less.
Yes it includes many things that other brokers charge extra for, but that’s only beneficial to you if you’re going to make full use of level II data and the excellent news feeds.
Are they worth it?
The answer to that will depend on your personal circumstances. They’re certainly not right for everyone. If you’re a novice and just getting started you’re much better off choosing a broker like Tradeking who’s platform and training is better tailored towards rookies. Also when you’re starting out the included research data will be wasted on you until you learn how to properly implement it.
If however you’re an intermediate trader and already subscribe to Morningstar and have a requirement for level II data, then there’s a possibility you could save money by joining TD Ameritrade. The inclusion of level II data could save you several hundred dollars a year compared to other brokers. Of course this is dependent on the amount of trades you make, but for me it’s more than worth it.
TD Ameritrade are without a doubt a quality broker, the peace of mind of dealing with a major public company along with the inclusion of some premium data feeds more than makes up for the expensive transaction costs. If you’re a beginner I wouldn’t recommend them to you, but for the more experienced traders amongst you I’d suggest checking them out.