When using the thinkorswim trading platform, fees fall under the "Internet" category and are cheaper than the fees charged by TD Ameritrade if making a trade by phone or with a broker's assistance. While many products can be traded on thinkorswim, the commission and fee structure is fairly straightforward. When trading online the cost of a trade is a $9.99 flat fee, when trading stocks and ETFs (commission free ETFs are available and will be discussed shortly). Figure 3 shows stock related fees.
|Figure 3: TD Ameritrade Stock Trading Commissions (Feb. 2, 2012)|
Options can be traded for $9.99 plus 75 cents per contract, and futures can be traded for $3.50 per contract.
TD Ameritrade offers "commission free" ETF trading in a specific list of eligible funds. There is no fee for buying the ETF as long as the trade is held for at least 30 days. If the ETF is liquidated before the 30-day period a "short-term trading fee" is applied.
For fixed-income products, the commission is largely determined on a "net yield basis." This means that the quoted price on bonds or CDs is marked up, thus the price seen includes the fee charged by TD Ameritrade. Forex trades work in a similar fashion. The price at which traders can transact will include a markup. Therefore, there is no commission, but rather TD Ameritrade makes money by including their markup in the quoted price or by being compensated by the liquidity providing forex dealer. When trading forex in 10,000 unit increments, there are no commissions charged in addition to the forex spread markup. When trading in 1,000 unit increments there is a 10 cents commission per unit, with the minimum commission being $1.
Treasuries purchased at an auction have a $25 flat fee.
Trading accounts often include margin, which is when a trader is only required to put up a portion of the cost of the transaction. This essentially means the broker is extending credit to the trader, and interest is charged.
|Figure 4: Margin rates as of Feb. 3, 2012|
Market data, which includes real-time charting and live quotes, is free for non-professional clients (retail traders). Miscellaneous fees may be charged though for withdrawals, transfers, stock certificate delivery, etc. Therefore, it is important to read the current fee structure before trading.
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