Founded in 1993, Interactive Brokers has long been a leader for active investors who are ready to jump into a platform and stick with it. Its robust proprietary trading software has excellent back-end support, albeit a steep learning curve. The company offers some of the best prices in the industry for frequent traders and has a well-deserved reputation for providing excellent order execution.
TD Ameritrade, a pioneer in the online brokerage industry since 1975, offers an intuitive platform and educational content aimed at beginner and intermediate traders and investors. Eleven million clients trust TD Ameritrade's wide selection of products, excellent customer support, and free customizable platforms.
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
- Account Minimum: $0
- Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2019. $0.65 per options contract.
On Nov. 25, 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. The transaction itself will close October 6, 2020. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
In our 2020 Best Online Broker reviews, Interactive Brokers topped TD Ameritrade in the Best for Day Trading, Best for International Trading, and Best for Low Margins categories. Meanwhile, TD Ameritrade bested Interactive Brokers in our Best for Beginners, Best Stock Trading Apps, and Best for ETF Research rankings.
Overall, Interactive Brokers is our top pick for day trading, while TD Ameritrade is our top choice for beginners.
The onboarding process for Interactive Brokers has recently gotten easier, which is a good thing. You can open an account without funding it right away. Still, you may need guidance from the company to make sure you pick the right account type (there are different options for professional and individual traders).
We found it's easier to get started with TD Ameritrade, where you can open and fund an account via the website or mobile app. Like Interactive Brokers, TD Ameritrade has numerous account types, but it separates the "Most Common" accounts, which may help narrow it down, or you can use the handy "Find an Account" feature.
Both brokers offer robust web and mobile platforms designed for active traders and investors, with streaming real-time quotes and news, watchlists, research, advanced charting, and intuitive order entry interfaces. Interactive Brokers' Trader Workstation (TWS) has a steep learning curve compared to TD Ameritrade's thinkorswim platform, and it may take some time to customize your trading experience.
Interactive Brokers' Client Portal is a good place to check on positions, place trades, and get a real-time view of your accounts. Trader Workstation offers more functionality and is designed for active traders and investors (and professionals) who trade multiple products and need flexibility. You can define hotkeys (aka Hot Buttons) for rapid order transmission and stage orders for later execution, either one at a time or in a batch. You can place, modify, and manage orders directly from the chart.
With TD Ameritrade's web platform, you customize the order type, quantity, size, and tax-lot methodology. Still, its thinkorswim interface is more intuitive, easier to navigate, and you can create your analysis tools using thinkScript (its proprietary programming language). It's easy to place buy and sell orders, stage orders, send multiple orders, and place trades directly from a chart. Streaming real-time quotes are standard across all platforms, and you also get free Level II quotes if you're a non-professional—a feature that's not standard on Interactive Brokers or many other platforms.
Interactive Brokers comes out ahead in order types supported on mobile. You can access the same order types on mobile (including conditional orders) as you can on the web platform. You'll find streaming real-time quotes, charting, and news, but data streams on only one device at a time.
TD Ameritrade supports two mobile apps: the beginner-friendly TD Ameritrade Mobile App and thinkorswim Mobile, which is designed for active traders. Both are robust and offer a great deal of functionality, including charting and watchlists. Streaming real-time data is included, and you can trade the same asset classes on mobile as on the other platforms.
Range of Offerings
Interactive Brokers and TD Ameritrade support short sales, mutual funds, bonds, futures, commodities, options, complex options, and cryptocurrency (Bitcoin futures). While both companies offer all the usual suspects you'd expect from a large broker, Interactive Brokers leads in international trading, with access to 135 exchanges in 33 countries worldwide in May 2020.
Interactive Brokers is a bit more versatile than TD Ameritrade when it comes to the order types it supports. There's a flexible array of order types on the Client Portal and mobile app, plus more than 100 order types and algorithms on Trader Workstation. TD Ameritrade offers a decent selection of order types, including all the basics, plus trailing stops and conditional orders, such as one-cancels-another. There are no restrictions on order types on the mobile platform, and you can stage orders for later entry on all platforms.
Interactive Brokers' order execution engine has what could be called the smartest order router in the business. It reroutes all or parts of your order to achieve optimal execution, attain price improvement, and maximize any potential rebates. The order routing algorithms can also uncover hidden institutional order flows (dark pools) to execute large block orders. Any payment for order flow is given back to IBKR Pro clients, but not to traders who use the Lite pricing plan.
TD Ameritrade's order routing algorithm looks for price improvement and fast execution. The company publishes price improvement statistics that show most marketable orders get slightly more than 1½ cents per share ($0.015) in price improvement, on average. TD Ameritrade receives some payment for order flow but claims its order execution engine does not prioritize it. The company received, on average, $0.0012 per share in payment for order flow in the third quarter of 2019.
Both companies offer backtesting capabilities, a feature that's essential if you want to develop trading systems or test out ideas before you trade it live.
While considered a low-cost broker, Interactive Brokers' pricing scheme is complicated. It includes fixed per-share pricing ($0.005 per share traded a $1 minimum), tiered per-share pricing based on monthly order activity, and the IBKR Lite program, which offers free trades for U.S.-listed equities and ETFs (via the Client Portal and IBKR Mobile only).
TD Ameritrade offers $0 commissions for online equity, options, and ETF trades for U.S.-based customers (there's a $0.65 per contract option fee). Broker-assisted and mutual fund trades are steep: $25.00 and $49.99, respectively in May 2020.
Both Interactive Brokers and TD Ameritrade generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. Interactive Brokers has a stock loan program in which you can share the revenue it generates from lending the stocks held in your account to other traders or hedge funds (usually for short sales). TD Ameritrade does not share its revenues.
Interactive Brokers and TD Ameritrade offer robust stock, ETF, mutual fund, fixed-income, and options screeners to help you find your next trade. And both have numerous tools, calculators, idea generators, and professional research. Interactive Brokers comes out ahead in terms of news offerings, with dozens of real-time news sources available on all platforms.
Interactive Brokers and TD Ameritrade clients have access to real-time buying power and margin information, plus real-time unrealized and realized gains and losses. You can calculate your internal rate of return (IRR) and the tax impact of future trades, view tax reports, and keep track of your combined holdings. Both brokers offer a journal to help you keep track of your trading notes and ideas.
Interactive Brokers has enhanced its portfolio analysis tools to appeal to more casual investors and traders (instead of just the professionals). A feature called Portfolio Checkup lets you evaluate your portfolio's health by measuring its performance against 230 industry benchmarks.
Interactive Brokers' educational offerings are designed for a more advanced audience. Its Traders Academy is a structured, rigorous curriculum—complete with quizzes and tests—intended for students, investors, and financial professionals. There are videos, a trader's glossary, and daily webinars that cover a variety of topics, all hosted by Interactive Brokers and various industry experts.
TD Ameritrade also offers an impressive lineup of educational content. In addition to articles, videos, and webinars, it averages 500-plus webinars a month and offers more than 1,500 live events each year. There's a range of immersive courses aimed at beginners that covers basic investing and trading ideas, plus a few advanced topics.
Interactive Brokers has 24-hour weekday phone support with callback service, a secure message center, 24-hour weekday online chat, and IBot, an AI engine that can answer your questions. TD Ameritrade customer service is more versatile, with 24/7 phone support, as well as chatbots on Twitter, Facebook Messenger, Apple Business Chat, and WeChat (in Asia). Live chat is supported on its app, and a virtual client service agent, Ask Ted, provides automated support online.
Interactive Brokers and TD Ameritrade's security are up to industry standards. You can log into any app using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity. Interactive Brokers offers an extra layer of security with its optional Secure Login System security device.
Both brokers carry excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers. Interactive Brokers' excess SIPC insurance provides each client with $30 million worth of protection (including $900,000 for cash), up to an aggregate limit of $150 million. TD Ameritrade's excess SIPC insurance provides each client with $149.5 million worth of protection for securities and $2 million of protection for cash.
Through calendar 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
Interactive Brokers and TD Ameritrade are well-respected powerhouses in the industry. Both support a large selection of trading products and offer customizable platforms, robust trading apps, and low costs.
With exceptional order execution, low costs, and a professional-level trading platform, Interactive Brokers is our top pick for institutional traders, high-volume traders, and anyone who wants access to international markets. Due to its easy-to-use and intuitive platforms, comprehensive educational offerings, live events, and in-person help at branch offices, TD Ameritrade is our top choice for beginners.
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In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
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