Robinhood has revolutionized the online brokerage industry since 2013, offering commission-free stock, ETF and options trading to a rapidly growing millennial customer base. Cryptocurrency trading is available in 35 U.S. states, as part of a rollout that was originally scheduled for nationwide completion at the end of 2018. They now tell clients that cash management is "coming soon" after being forced in December 2018 to discontinue a program launch due to regulatory violations.
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. They now boast more than 11 million customers and one trillion dollars in client assets focused on short-term trading, slow-paced investing and traditional wealth management.
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.
In our 2019 Best Online Brokers Awards, Robinhood received an award for Best for Low Costs.
TD Ameritrade received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Options Trading, Best for Roth IRAs, Best for IRAs, Best for Day Trading and Best Web Trading Platforms.
- Account Minimum: $0
- Fees: $0
- Best for: Low Costs and a sleek app
- 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.
Robinhood offers mobile and web trading in four venues: stocks, ETFs, options and cryptocurrencies, and doesn't allow short selling. The fine print indicates that streaming quotes may be delayed, rather than industry-standard real-time data. There are no back-testing tools and the system throttles day traders, limiting activity to three trades per rolling 5-day period. TD Ameritrade's feature-rich thinkorswim platform provides advanced support for clients speculating on futures and currencies as well as stocks, ETFs and options. Back-testing, conditional orders, paper trading, and Level II quotes round out trading tools that include comprehensive options chains and in-depth charting functionality.
- Commission-free trading
- Convenient for new investors
- No short selling
- Advanced thinkorswim platform
- Comprehensive options chains and strategies
- No volume discounts
Mobile and Emerging Tech
Robinhood’s popular mobile app is easy to use but lacks features found in competing apps. It handles typical account maintenance functions that include bank transfers but traders will find few bells and whistles, with basic charting that provides only 5 years of historical data. TD Ameritrade offers a full-featured investor app while a separate trader app that connects with the thinkorswim platform. Technical Innovation extends into the Essential Portfolios robo-advisor, which automatically builds diversified exposure tracking modern portfolio theory A $5,000 minimum investment is required while incurring a 0.30% of held assets annual fee
- Easy-to-use mobile app
- News links to watchlist tickers
- Web platform needs better documentation
- Access thinkorswim through a mobile app
- Low fee robo-advisor
News and Research
Robinhood’s bare-bones website contains no headline news or research tools while the mobile app features a limited toolkit with filtered news, fundamental research, and a volatility tool. The web platform adds a variety of research features that are poorly documented. Ameritrade’s MarketEdge provides in-depth commentary as well as timely market data and technical analysis. Clients also benefit from the ETF Market Center, allowing them to compare hundreds of commission-free ETFs. A Social Signals portal scans Twitter, seeking community insight and sentiment, while Stocks Overview tallies the day’s price action and sizes up new opportunities. TD Ameritrade is has a branded video channel streaming six hours, daily.
- Limited research and analysis
- Filtered news
- Volatility tool and some fundamental research
- Feature-rich technical analysis reports
- Extensive webinar schedule
- Streaming news, and a new branded video platform
Education and Security
Robinhood drops the ball when it comes to trader and investor education, providing few resources. TD Ameritrade has done an excellent job assembling tutorials under a well-organized Education menu. Clients can sort and filter content by topic, media type, and skill level while tracking the progress that opens new materials based on growing interests and current knowledge.
Both companies are regulated by FINRA and SIPC but only TD Ameritrade carries additional third-party insurance coverage.
- Few educational resources
- Two-factor authentication
- FINRA and SIPC account protection
- Beginner, intermediate and advanced materials
- Comprehensive course syllabus
- Additional third party insurance coverage
Robinhood offers commission-free trading, making money through payment for order flow with third parties, delayed quotes and interest on the uninvested portion of client funds. Robinhood Gold charges a monthly fee rather than an overnight lending rate for increased buying power up to $50,000. It isn't a cheap service, costing $200 per month for the highest tier.
Previously the most expensive of the major online brokers, TD Ameritrade eliminated base trading commissions on equities, ETFs, and options for U.S.-based customers. Though they have cut trading commissions, their margin interest rates remain on the high end of the scale. Unfortunately, margin rates are high.
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