TD Ameritrade remains one of the largest online brokers and it has continued to build on its edge with beginner investors. TD Ameritrade reaches customers and prospects with on-ramps to its services constructed on a variety of social media sites, including Twitter and Facebook. Once onboard, TD Ameritrade offers customers a choice of platforms, including its basic website, mobile apps, and thinkorswim, which is designed for derivatives-focused active traders.

Although Charles Schwab announced that it was acquiring TD Ameritrade at the end of Nov. 2019, the merger of the two brokerage behemoths is expected to take several years to complete. In the meantime, TD Ameritrade is functioning as a separate entity, so we will look at how it ranks as a standalone brokerage and help you decide whether it is a good fit for your investing needs.

Key Takeaways

  • Rated our best broker for beginners and best stock trading app.
  • Education is a key component of TD Ameritrade's offerings.
  • Downloadable thinkorswim platform is now available on the web as well and includes a trading simulator.
  • Focused on improving its mobile experience and functionality in 2019.

Who TD Ameritrade Is For

TD Ameritrade is one of the larger online brokers in the U.S., so it offers multiple platforms aimed at different levels of expertise. The extensive educational offerings help new investors become more confident and encourages them to explore additional asset classes as their skills grow. For active investors and traders, the thinkorswim platform offers all the data, charting, and tools needed to find market opportunities. The sheer number of tools and research available through TD Ameritrade can be a bit overwhelming.

Pros
  • Extensive research capabilities and numerous news feeds

  • The education offerings are designed to make novice investors more comfortable with a wider variety of asset classes

  • Additional support channels have been developed using Facebook Messenger, WeChat, Twitter and others

Cons
  • Clients may have to use more than one trading system to find all the tools they want to use

  • The website is so packed with content and tools that finding a particular item is difficult

Pros Explained

  • TD Ameritrade optimized its traditional website for mobile browsers with a dashboard where clients can quickly access account details, balances, balance history, positions, news, and more. The well-designed mobile apps are intended to give customers a simple one-page experience where they can quickly check in on the markets and their accounts. 
  • The thinkorswim downloadable platform's toolset has been largely copied over to the web. That means customers can use its powerful analysis tools and real-time streaming data to trade equities, options, futures, options on futures, and forex on the web. To reflect its growing footprint in Asia, TD Ameritrade made the platform available in traditional as well as simplified Chinese. 
  • Taking advantage of the physical locations TD Ameritrade acquired when it purchased Scottrade several years ago, the broker offers in-person education at more than 280 offices as well as multiple training pathways available on its website and mobile apps. In addition, the TD Ameritrade Network offers nine hours of live programming in addition to on-demand content.
  • Streaming real-time data on thinkorswim, the website, and the mobile apps is unlimited.

Cons Explained

  • Customers may have to use multiple platforms to utilize preferred tools. Options-specific tools abound on thinkorswim, but fundamental research for equities and fixed income tools are mostly available only on the website. This is a common issue shared by large brokers with multiple platforms.
  • TD Ameritrade clients can choose from a huge array of account types, which should be an advantage. However, it can lead to confusion for new investors who are unsure of what they mean. During the setup process, there should be more help available for clients to be sure they are starting out with the correct account type.
  • Over-the-counter (penny stock) trades are subject to a commission of $6.95 per trade.
  • Clients are paid a tiny rate of interest on uninvested cash (0.01–0.05%) unless they take action to move cash into money market funds.

Usability

4.2

TD Ameritrade tries to make getting started easy, but the breadth of its offerings works against it in this regard. New customers can open and fund an account on the website or mobile apps. The tricky part, however, is choosing the correct account type as TD Ameritrade has a lot to choose from. Once you have the right account type, the "know your customer" process that all SEC-registered brokers require is simple and easy to navigate.

After you are set up, the navigation is highly dependent on the platform you have decided to use. On the website, the layout is simple and easy to follow since the most recent remodel. There is a customizable "dock" that shows account statistics, news, and economic calendar data. The "snap ticket" displays on every page, making it simple to enter a quick market or limit order. 

TD Ameritrade website account landing page
TD Ameritrade website account landing page.

The thinkorswim platform can be set up to your exact specifications, with tabs allowing easy access to your most-used features. Customization options on the website are limited, while on thinkorswim, you can specify everything from the tools on each page to the font used to the background color. Every aspect of trading defaults can be set on thinkorswim. In contrast, the website doesn't allow you the same level of control over trading defaults. Most customization options are stored in the cloud, so once you have set them up, they follow you from one device to another.

A version of thinkorswim for the web was announced in late May, 2020. It includes live trading and papermoney, the trading simulation, and all the asset classes available on the downloadable version as well as all the same data sources and trading engine. Your watchlists and dynamic watchlist are identical. The main difference is that the web version is primarily transaction-oriented and has a simpler layout than the downloadable package. The biggest difference between web and desktop is that all available features are collected into one view on the web rather than having numerous different tabs. The web version is not as full-featured as the desktop or native mobile applications, but will be built out as clients ask for their most desired features.

Thinkorswim
thinkorswim.

TD Ameritrade has native mobile apps for iOS and Android as well as a mobile web experience that resizes the screen according to the device you're using. If you set up a watchlist on one platform, it will be accessible elsewhere. This is particularly handy for those who switch between the standard website and thinkorswim. All available asset classes can be traded on mobile devices.

Trade Experience

4.9

Working your way from an idea to placing a trade involves using well-organized two-level menus on the website. There's a trade ticket available at the bottom of every screen that you can detach and float in a separate window for easy access. Charts can also be detached and floated to set up a trading environment, but this is a more involved process compared to what is available through thinkorswim. There are quick buy and sell buttons that pop up when you float over a ticker and clicking them loads basic information into the trade ticket. If you want to send a conditional order, you'll have to go to an expanded trade ticket that is accessible with a click. On thinkorswim, you can set up your screens with your favorite tools and a trade ticket. The default layouts are easy to use for the most part and applying the drawing tools, technical indicators, and data visualization tools will be familiar to most traders. Thinkorswim allows traders to create their own analysis tools as well use a built-in programming language called thinkScript.

On the web, you can customize the order type (market, limit, etc.), order quantity, order side (buy or sell), and tax-lot methodology. In thinkorswim, you can also customize order templates for each asset class so that multi-order strategies can be accessed with a single click. You can stage orders for later entry on all platforms.

Mobile Trade Experience

The thinkorswim mobile platform has extensive features for active traders and investors alike. The workflow for options, stocks, and futures is intuitive and powerful. You'll find lots of bells and whistles that make the mobile app a complete solution for most trading purposes, including streaming real-time data and the ability to trade from charts. The regular mobile platform is almost identical in features to the website, so it's an easy transition.

thinkorswim chart
thinkorswim chart.

Range of Offerings

3.8

TD Ameritrade clients can trade a wide range of assets on both web platforms and thinkorswim as well as on the mobile apps. TD Ameritrade does not enable cryptocurrency trading but you can trade CME Bitcoin futures. Opening a position with fractional shares is not yet available. Beyond that, investors can trade: 

  • Stocks long and short (TD Ameritrade does not maintain a traditional easy-to-borrow list. TD states that, at any given time, over 3,000 securities are available for short selling vs. availability in the order management system).
  • OTCBB (Penny stocks).
  • Mutual funds (over 1,900 no-load, no transaction fee).
  • Bonds: Corporate, Municipal, Treasury, and CDs. International fixed income available via a live broker.
  • Single leg and multi-leg options.
  • Futures and futures options.
  • Forex (75 pairs).
  • Trades with up to eight legs, comprised of multiple asset classes (stocks, options, futures, and forex); can be designed on thinkorswim.
  • Robo-advisory, TD Ameritrade Essential Portfolios, integrated into website and mobile app. Additional advised portfolios available via a financial consultant.
  • A variety of international exchanges can be accessed via live broker.

Other assets that can be traded online include OTC and FLEX options, unit investment trusts and high-yield corporate bonds (junk bonds).

Order Types

5

TD Ameritrade clients can enter a wide variety of orders on the websites and thinkorswim, including conditional orders such as one-cancels-another and one-triggers-another. There are no restrictions on order types on mobile platforms. Clients can stage orders for later entry on all platforms.

If you've been buying into a particular stock over time, you can select the tax lot when closing part of the position or set an account-wide default for the tax lot choice (such as average cost, last-in-first-out, etc.). You can also set an account-wide default for dividend reinvestment.

Trading Technology

2.1

The way a broker routes your order determines whether you are likely to receive the best possible price at the time your trade is placed. This is called price improvement, which is, in essence, a sale above the bid price or a buy below the offer. 

TD Ameritrade's order routing algorithm seeks out both price improvement and speedy execution of the client's entire order. Price improvement statistics that the firm publishes show that most marketable equity orders receive, on average, a little more than 1½ cents per share ($0.015) in price improvement. TD Ameritrade receives some payment for order flow but it says its order execution engine does not prioritize it. It received, on average, $0.0012 per share in payment for order flow in the third quarter of 2019. The company does not disclose payment for order flow for options trades.

Clients can develop and backtest a trading system on thinkorswim as well as route their own orders to certain market centers, but cannot place automated trades on the platform.

Costs

2.6

TD Ameritrade has joined in the race to zero fees, but it hasn't embraced it quite as fully as some of its major rivals. For the most part, however, the broker is in line with the industry.

  • TD Ameritrade charges no commissions for online equity or ETF trades.
  • OTCBB trades incur a commission of $6.95/transaction—most other brokers have made these trades free.
  • There is no per-leg commission on options trades. Per-contract commissions are $0.65. Fees are waived for contracts priced at $0.05 or less. VIP option customers are able to privately negotiate discounted commissions based on volume.
  • An order for 50 options contracts is $32.50.
  • Covered call trade of 500 shares plus five contracts would cost $3.25.
  • Mutual fund commission for funds outside the No Transaction Fee program is $49.99. 
  • Fixed income is sold on a "net yield" basis, which means TD Ameritrade is marking the price of the bond up for a purchase or down for a sale. The fee you'll pay is not transparent.
  • Most orders incur exchange fees, which are typically fractions of a penny per share or contract, which TD Ameritrade absorbs rather than passing them through to its customers.
  • Margin interest ranges from 9.5% for $10,000 balance to 7.75% for over $100,000 as of May. 2020. This is about 1–1.25% higher than its primary competitors. High-net-worth account holders are able to negotiate lower margin rates based on account size.
  • Futures transaction fees are $2.25 per contract per side plus exchange fees.
  • Forex currency pairs are traded in increments of 10,000 units and there is no commission. The cost of the trade is reflected in the spread and TD Ameritrade is compensated by its liquidity provider based on the volume.
  • No fees for inactivity.
  • Transferring part of an account incurs no charge. Transferring an entire account is $75.
  • Sending a wire is $25. Sending a paper check is free, though there is a $15 overnight mail fee if the client requests it.
  • Voluntary reorganization fee for corporate actions is $38.
  • Paper statements incur a $2 handling fee for accounts with low balances. Trade confirmations are free.
  • Live broker fee is $25 per trade across asset classes. 

How This Broker Makes Money From You and for You

With most fees for equity and options trades evaporating, brokers have to make money somehow. The fees and commissions listed above are visible to customers, but there are other hidden revenue streams—some of which actually can benefit you.

  • Interest on cash: Like most brokers, TD Ameritrade generates interest income from the difference between what you are paid on your idle cash and what it can earn on customer cash balances. TDA clients earn a paltry 0.01% on their uninvested cash unless they move money manually into money market funds, but they have to take action rather than having cash swept automatically into higher-interest funds.
  • Payment for order flow: Quite a few brokers generate income by accepting payment from market makers for directing its customer's equity and options orders to those trading venues. This is called payment for order flow. TD Ameritrade says it does not explicitly route for PFOF, but it accepts, on average, $0.0015 per share on equity orders and $0.51 per contract for options orders. That means it is making $1.16 per contract on options orders when you factor in the commission paid.
  • Stock loan programs: These programs generate revenue for brokers when the stock held in your account is loaned to another trader or hedge fund, usually for the purposes of selling that stock short. TD Ameritrade does not share this revenue with the clients who hold the stock.
  • Price improvement: TD Ameritrade reports that the net price improvement per share is $0.0159 for market orders sized between 1–1,999 shares. Total net price improvement by order will vary with order size. TD Ameritrade does not disclose price improvement for options orders.
  • Portfolio Margin: TD Ameritrade clients who qualify can apply for portfolio margining, which can lower the amount of margin needed based on the overall risk calculated. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.  

Account Amenities

2.1
  • TD Ameritrade clients who qualify can apply for portfolio margining.
  • TD Ameritrade does not share revenue from its stock loan program with the clients who hold the stock.
  • TDA clients earn 0.01% on their uninvested cash. They can move money manually into money market funds.
  • There is no sweep program for moving idle cash into a money market fund. Clients must take action on their own to earn higher interest.
  • Clients can enroll dividend-paying stocks in a dividend reinvestment program at any time on the website.

Research Amenities

4.4

Stock Screeners

The 85 predefined web-based screeners are fully customizable. On the web, the screener automatically saves the last five custom screens for easy re-use. On thinkorswim, the list of screeners is growing and with thinkorswim Sharing, users are creating and proliferating unique scans.

ETF Screeners

Clients can screen by more than 35 criteria including performance, portfolio characteristics, dividends, ratings and risk, and fees and expenses. The Morningstar category criteria on tdameritrade.com lets clients find targeted funds that fall under one or more of the nearly 100 Morningstar categories. Categories range from bear market to Japan stock to target date funds. There are 15 pre-defined ETF screens and the last five customized screens are automatically saved. Clients can choose to name and save any of their custom screens for future use. Screener results can be saved as a watchlist.

Options Screeners

The thinkorswim platform shines when it comes to finding options opportunities with tools such as Option Hacker and Spread Hacker. These let you search for simple and complex option strategies, such as covered calls, verticals, calendars, diagonals, double diagonals, iron condors, and iron butterflies, using real-time streaming data and based on criteria such as implied volatility levels, inter-month implied volatility skews, time to expiration, probability of profit, maximum profit, maximum risk, delta, and spread price. TD web has Capital IQ Options Screener to screen for covered calls and calendar spreads. Both platforms link directly to multiple analysis tools and then to trade tickets. 

Mutual Fund Screeners

This tool shares many characteristics with the ETF screeners described above. This screener also ties into other TD Ameritrade tools. Clients can save mutual fund screen results as watchlists. Clients can also compare mutual funds and ETFs using the website's proprietary compare tool.

Fixed Income Screeners

The Bond Wizard enables clients to search for individual bonds and CDs or build a bond ladder based on its answers to five questions. Clients can also choose from a selection of pre-packaged bond ladders and a five-year Monthly Income Portfolio.

Tools and Calculators

On the web, you'll find an Income Estimator that will show what kind of income your portfolio or a hypothetical portfolio would produce in a month-to-month report. The website also has a social sentiment tool. Within the stock profile section of the website, clients can use the Peer Comparison tool to compare a stock to its four closest peers against a variety of fundamental and proprietary social data points. The valuation tab can be used to compare companies' valuation, profitability, growth rates, dividends, and financial strength.

Trading Idea Generators

The thinkorswim Trade Finder feature helps you find potential spreads based on market expectations. On the web, you'll find CFRA stock research with its Stock Appreciation Research rankings as well as a MarketEdge idea generator and a TradeWise options idea generator. These each spawn a new window though, so it creates a cluttered desktop.

News

A variety or sources are available including real-time streaming, scannable news provided by affiliate TD Ameritrade, Dow Jones, Benzinga, Midnight Trader, MarketWatch, numerous press release wires, TradersAudio live pit audio, CNBC Video, Benzinga Audio Squawk, Econoday calendar data, and Wall Street Horizons.

Third-Party Research

Vickers Inside Trading, MarketEdge, Thomson Reuters, CFRA, Dow Jones, and Credit Suisse. Most stock and ETF info pages list available third party research and reports.

Charting

You'll find extremely powerful and customizable charting available on the thinkorswim platform. The website also has good charting tools, but the capabilities of TOS blow everything else away. Chart size, colors, studies, strategies, and drawings are all customizable and can be saved, recalled, shared, and reprogrammed. There is also a way to easily create custom candles.

Portfolio Analysis

4

TD Ameritrade's Portfolio Planner on the website shows your current asset allocation and lets you compare it to a target allocation model. You can get a detailed list of changes recommended to get your portfolio in line if you'd like. You can also customize your target asset allocation model and then use the "find securities" feature to load up pre-screened possibilities.

All balance, margin, and buying power figures are shown in real-time. Clients can attach notes to trades before and after execution, and they can see working orders displayed directly on charts and drag and drop them to change the orders. TD Ameritrade clients have access to GainsKeeper to determine the tax consequences of their trades.

TD Ameritrade portfolio planner
TD Ameritrade portfolio planner.

Education

5

TD Ameritrade sets a high bar for trading and investing education. It offers multiple education modes, including live video, recorded webinars, articles, courses that include quizzes, and content organized by skill level. Much of the content is also available in Mandarin and Spanish. Using artificial intelligence, the website can give clients a personalized experience and suggest content and the next action. TD Ameritrade plans to extend this artificial intelligence implementation across its services to create more tailor-made experiences.

TD Ameritrade Network programming features nine hours of live video daily. The network originally targeted advanced traders, but it has expanded to offer new traders ways to make their first move. You can view TDAN content on native apps for iOS, Android, Amazon Fire, and Roku.

Videos and articles packaged for various levels of investor knowledge can be found on the TD Ameritrade Education page or on the Education tab in the thinkorswim platform. Content organized into courses, such as "Simple Steps for a Retirement Portfolio" or "Options for Volatility," allow you to dive into the topic, understand new concepts and strategies, and apply them using TD Ameritrade's tools.

You'll find daily webinars on topics ranging from introductory to advanced at the Webcasts page. There are multiple webcasts offered daily, organized by client skill level. There are articles organized by topic in the Investment Articles section of the website, plus clients can subscribe to a print magazine, thinkMoney, founded by the thinkorswim group. Articles are well-organized, written simply without being condescending, and cover a wide variety of topics from introductions to advanced strategies. Visit a branch to check out the live event schedule; TD Ameritrade has about 1,500 of these scheduled annually.

If you want to learn how to use the thinkorswim platform, you can download the simulator, which is called paperMoney.

TD Ameritrade education
TD Ameritrade education.

Customer Service

4.7
  • 24/7 phone line.
  • Chatbots deployed on Twitter, Facebook Messenger, Apple Business Chat, and WeChat (in Asia).
  • Live chat support on the TD Ameritrade Mobile trader app.
  • Excellent trading-related guides for thinkorswim users.
  • TD Ameritrade support associates have the ability to shadow your trading platform and demonstrate its features to you. 
  • The virtual client service agent, Ask Ted, provides automated support by answering client's questions and directing them to content within the site.

Security

5

TD Ameritrade's security is up to industry standards:

  • Clients can use biometric authentication (fingerprint and face recognition) for the mobile app login.
  • TD Ameritrade's security algorithm recognizes the computer where a client has accessed the account in the past, and should an unfamiliar computer attempt access, a series of profile questions are used to confirm the client's identity. 
  • TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurers.  
  • There were no significant breaches at any TD Ameritrade location reported through Nov. 2019 by the Identity Theft Resource Center.

Our Verdict

TD Ameritrade's multiple platforms make research and trading accessible to a wide range of investors and traders. Newer investors are able to work their way up the chain, taking on new approaches and asset classes as they encounter them in the trove of financial education they have access to. Traders and active investors will enjoy the capabilities of the thinkorswim platform, including the ability to create custom indicators and share asset screens in a wider community. 

Of course, the announced acquisition of TD Ameritrade by Charles Schwab generates some uncertainty. Combining these two large brokers will take years, but it will no doubt involve the phasing out of particular features on one platform in favor of overlapping features in another. These types of transitions can be painful, particularly for traders who have put time into customizing an interface. Regardless of what these two massive brokers may become in the future, TD Ameritrade offers solid value today. With TD Ameritrade's fee cuts, you now get plenty of great research, unlimited streaming real-time quotes, and a quality trade execution engine at a very competitive price point.

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Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.

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.

Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.