Founded in 2013, Robinhood is relatively new to the online brokerage space. It helped revolutionize the industry with a simple fee structure: commission-free trades in stocks, ETFs, options, and cryptocurrencies. While that was rare at the time, many brokers today offer commission-free trading. Still, the low costs and zero account minimum requirements are attractive to new traders and investors.
- Account Minimum: $0
- Fees: $0
- Account Minimum: $0
- Fees: Free stock, ETF, and per-leg options trading commissions. $0.65 per options contract.
TD Ameritrade is the product of mergers and acquisitions of former rivals that include National Discount Brokers, Datek Online Holdings, Mydiscountbroker.com, TD Waterhouse, Scottrade, and thinkorswim. Founded in 1975, it's one of the industry giants today, with 11 million client accounts that total more than $1 trillion in assets.
In our 2020 Best Online Brokers reviews, Robinhood earned higher scores than TD Ameritrade in our Best for Options and Best for Low Cost categories. Meanwhile, TD Ameritrade scored better than Robinhood in every other category, including Best Overall, Best for Beginners, Best Stock Trading Apps, Best for Day Trading, Best for International Trading, Best for IRA Accounts, and Best for ETFs.
Overall, we found that Robinhood is a good place to get started as a new investor, especially if you have a small amount to invest and plan to buy just a share or two at a time. TD Ameritrade is a much more versatile broker. It's a great option for all levels of self-directed investors and traders who want a full suite of tools and a customizable trading platform.
On November 25, 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
Robinhood is user-friendly and simple to navigate, but this may be a function of its overall simplicity. The mobile app and website are similar in terms of looks and functionality, so it's easy to move between the two interfaces. Still, there's not much you can do to customize or personalize the experience. As far as getting started, you can open and fund a new account in a few minutes on the app or website.
TD Ameritrade supports four platforms: a web version, thinkorswim (its advanced platform for active traders), and two mobile apps—TD Ameritrade Mobile Trader and thinkorswim Mobile. Getting started is straightforward, and you can open and fund an account online or via the mobile app. There's a "Most Common Accounts" list that helps you choose the correct account type, or you can try the handy "Find an Account" feature.
Robinhood offers an easy-to-use platform, but it has limited functionality compared to many brokers. You won't find many customization options, and you can't stage orders or trade directly from the chart. The trade ticket for stocks is intuitive, but trading options is a bit more complicated. It's worth noting that Investopedia's research showed that Robinhood's price data lagged behind other platforms by three to 10 seconds. Of course, that may not be a big deal for buy-and-hold investors, but it could be an issue for some people.
With TD Ameritrade's web platform, you can customize the order type, quantity, size, and tax-lot methodology. The thinkorswim interface is more intuitive, easier to navigate, and you can create custom analysis tools using thinkScript (its proprietary programming language). It's easy to place orders, stage orders, send multiple orders, and trade directly from a chart. Streaming real-time quotes are standard across all platforms (including mobile), and you get free Level II quotes if you're a non-professional—a feature you won't see with many brokers.
Robinhood has one mobile app. TD Ameritrade offers two: the beginner-friendly TD Ameritrade Mobile App and thinkorswim Mobile—designed for active traders. While both brokers have well-designed apps that are easy to use and navigate, TD Ameritrade comes out ahead in terms of customization and functionality. Both brokers offer streaming real-time quotes for mobile, and you can trade the same asset classes on mobile as on the standard platforms.
Range of Offerings
Robinhood supports a limited range of asset classes—you can trade stocks (no shorts), ETFs, options, and cryptocurrencies. Its crypto offerings include Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), and Litecoin (LTC). Data is available for ten other coins. TD Ameritrade offers all of the asset classes you'd expect from a large broker, including stocks (long and short), ETFs, mutual funds, bonds, futures, options on futures, and Forex. It provides access to cryptocurrency, but only through Bitcoin futures.
|Cryptocurrency||Yes||Yes (Bitcoin futures)|
|No-Load, No-Fee Mutual Funds||0||1,955|
|OTCBB and Penny Stocks||No||Yes|
With Robinhood, you can place market, limit, stop limit, trailing stop, and trailing stop limit orders on the website and mobile platforms. It doesn't support conditional orders on either platform. The default cost basis is first-in-first-out (FIFO), but you can request to change that.
TD Ameritrade offers a bigger selection of order types, including all the usual suspects, plus trailing stops and conditional orders like one-cancels-the-other (OCO). There are no restrictions on order types on the mobile platform, and you can stage orders for later entry on all platforms. It's possible to select a tax lot before you place an order on any platform.
Robinhood doesn't publish its trading statistics, so it's hard to rank its payment for order flow (PFOF) numbers. While the industry standard is to report PFOF on a per-share basis, Robinhood uses a per-dollar basis. The company doesn't disclose its price improvement statistics either. Nevertheless, its target customers tend to trade small quantities, so price improvement may not be a big concern.
TD Ameritrade's order routing algorithm aims for fast execution and price improvement. It 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 PFOF but claims its order execution engine doesn't prioritize it. In the third quarter of 2019, the company received an average of $0.0012 per share in PFOF.
Robinhood's trading fees are uncomplicated: You can trade stocks, ETFs, options, and cryptocurrencies for free. 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). It charges $44.99 for broker-assisted trades and $49.99 for mutual funds outside the no-fee list (Robinhood doesn't offer broker-assisted trades or mutual funds).
Robinhood and TD Ameritrade both generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. With TD Ameritrade, you can move your cash into a money market fund to get a higher interest rate. Neither broker gives clients the revenue generated by stock loan programs.
Robinhood's research offerings are limited. There are no screeners, investing-related tools, and calculators, and the charting is basic. Still, news is available from several outlets, and you can access Morningstar research if you're a Robinhood Gold client ($5/month subscription).
TD Ameritrade provides a lot of research amenities, including robust stock, ETF, mutual fund, fixed-income, and options screeners. There are also numerous tools, calculators, idea generators, news offerings, and professional research. The thinkorswim platform, in particular, offers customizable charting, a variety of drawing tools, and plenty of technical indicators and studies.
Robinhood's portfolio analysis tools are somewhat limited, but you can view your unrealized gains and losses, total portfolio value, buying power, margin information, dividend history, and tax reports. TD Ameritrade clients have access to real-time buying power and margin information, internal rate of return, and unrealized and realized gains. Monthly tax reports are accessible directly from the website, and you can combine holdings from outside your account to get an overall view.
Robinhood's educational articles are easy to understand. Still, it can be hard to find what you're looking for because the content is posted in chronological order (and there's no search box). There are no videos or webinars, but the daily Robinhood Snacks 3-minute podcast offers some interesting commentary. TD Ameritrade provides a robust library of educational content, including articles, glossaries, videos, and webinars. It averages 500+ webinars a month and hosts more than 1,500 live events each year.
Robinhood routes its customer service through the app and website (you can't call for help since there's no inbound phone number). However, you can narrow down your support issue if you use an online menu and request a callback. TD Ameritrade has 24/7 phone support and chatbots on Twitter, Facebook Messenger, Apple Business Chat, and WeChat (in Asia). Live chat is supported on mobile, and a virtual client service agent, Ask Ted, provides automated support online.
TD Ameritrade's security is up to industry standards. You can log into the app with biometric (face or fingerprint) recognition, and you're protected against account losses due to unauthorized or fraudulent activity. TD Ameritrade carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers, which gives each client $149.5 million worth of protection for securities and $2 million of protection for cash. Robinhood's technical security is up to standards, but it's lacking the excess SIPC insurance. However, your cash and securities are protected by standard SIPC insurance, up to $500,000 (including $250,000 for cash claims).
Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
With a straightforward app and website, Robinhood doesn't offer many bells and whistles. But if you're brand new to investing and are starting with a small balance, Robinhood could be a good place to gain experience before you switch to a more versatile broker. Due to its comprehensive educational offerings, live events, and intuitive platforms, TD Ameritrade is our top choice for beginners. Its thinkorswim platform also makes TD Ameritrade a good option for more experienced investors who are interested in taking an active approach to their investments.
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In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
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TD Ameritrade. "2018 Annual Report." Accessed April 23, 2020.