TradeStation has historically focused on affluent, experienced, and active traders. The company's goal going forward is to broaden its appeal and reach with pricing changes and new services. TradeStation had a busy 2019, acquiring and relaunching a firm dedicated to education and community called YouCanTrade as well as launching a cryptocurrency brokerage called TradeStation Crypto Inc. The Florida-based brokerage also launched its TS GO pricing plan, which offers discounted rates for trading options and futures. We'll look at how these changes have affected TradeStation's ranking in a more competitive online brokerage industry, and whether they are enough to make TradeStation the right choice for your investment needs.
- Technical analysis and statistical modeling of trading strategies is a key strength of the platform
- TS GO, TradeStation's free trade offering, is best for customers who primarily use the mobile platform. TS GO customers can use the downloadable TradeStation 10, but pay a fee for placing a trade
- TradeStation's desktop platform includes a number of powerful tools, the ability to backtest trading strategies, and the ability to use add-on products found in the TradingApp store, supplied by third parties as well as TradeStation developers
Who TradeStation Is For
TradeStation's commitment to superior customer service and its focus on high-quality market data and trade executions makes them a good choice for the active trader or an intermediate level trader who wants to improve their skills. Its systems are stable and remain available during surges in trading volume. Overall, TradeStation has put a great deal of effort into making themselves more attractive to the mainstream investor, but the platform is more geared toward the active, technically-minded trader.
Stable platform that has very little downtime
Excellent charting and technical analysis tools
Portfolio Maestro analyzes performance in a variety of ways
Steep learning curve to be navigated to develop your own trading system
Multiple pricing choices that can be confusing
Fixed income transactions must be made with a broker
- The platform is extremely stable; TradeStation reports uptime of 99.999% over the last year, operating perfectly even during periods of high volatility.
- TradeStation 10 has just about every bell or whistle a technical trader could dream of. It enjoys a well-earned reputation for excellent charting and technical analysis tools. The charting application, in particular, stands out among all the online brokers we reviewed.
- Portfolio Maestro, TradeStation's portfolio analysis feature, offers advanced analytics to optimize your trading strategies. Find out what is working and keep it up, or find out what's not working and fix it.
- Learning to use the TradeStation platform well enough to develop your own trading system will take some time. Though they call the development language EasyLanguage, it isn't particularly easy to learn.
- You have to navigate to a separate website to access TradeStation's education offerings supplied by its new subsidiary, YouCanTrade. Similarly, the AI-powered help app, TSbot, is not yet very helpful, frequently answering, "Oops, I may not have been trained on that yet. Can you please rephrase and try once again?"
- Fixed income transactions must be placed with a live broker, and there is no international trading available. Futures, futures options and cryptocurrency trading are not integrated into the main platform.
TradeStation's usability has been improving over time. During 2019, TradeStation refreshed its account opening process and streamlined it as much as is legally possible—six steps—with your progress clearly illustrated. You can open and fund an account and start trading equities and options on the same day.
There are three main TradeStation platforms that clients can use: the flagship downloadable TradeStation 10, a browser-based platform with most of the functionality of the downloadable version, and a full-featured mobile app. Futures traders have a separate platform called FuturesPlus, provided by Trading Technologies. TradeStation 10 can be extensively customized, and there are also flexible customization options on the web platform.
There are approximately 85 third-party applications that can connect to TradeStation's trading engine via API, including TradingView, Yahoo Finance, and VectorVest. If you have a favorite analytical platform, you can easily check to see that it can be linked to TradeStation.
All asset classes that a client is eligible to trade can also be accessed on the mobile app. Watchlists are integrated between the web and mobile apps, but watchlists developed on TradeStation 10 are stored on your local device.
The first screen you'll see after logging into either the downloadable platform or the web platform is TradeStation Today, which includes featured videos, links to workspaces, the broker's Twitter feed, and an economic calendar. The web platform has most of the downloadable platform's toolset, but it is a little easier to use due to its tabbed layout simplifying some of the menu-based navigation. All data streams in real-time across TradeStation. You can place, modify, and cancel trades from charts or by using keyboard shortcuts. TradeStation's trade ticket is called Matrix, and it adapts to the asset class you're trading. Hovering your mouse over a bid or ask price opens a trade ticket, which you can then modify prior to sending the order.
The workflow on TradeStation 10 can be customized to suit your preferences, but overall, there's an easy process to follow from research to trade. Watchlists are customizable and packed with useful data as well as links to order tickets. All platforms allow conditional orders and bracket orders, while the desktop platform offers additional advanced order types, including trading algorithms that seek out liquidity for equities and options. TradeStation offers connectivity to about 40 equities, options, and futures market centers, though some data requires an additional subscription fee.
Mobile Trade Experience
Watchlists are prominently featured as the first screen you'll see after logging into the TradeStation's mobile app. Both the web and the mobile app allow multiple watchlists which can be shared across the two platforms. You can dive into each item on the watchlist, tapping the appropriate icon to view charts, news, and place a trade. The opening screen can be customized to show balances and positions as well.
Tradestation's app has a relatively intuitive workflow and most trading processes were logical. Trading options is quite easy on the mobile app; reversing or rolling an options strategy can be done with a couple of taps.
There is a separate TradeStation Crypto app for that asset class, which allows users to place trades as well as check on their balances.
Range of Offerings
TradeStation offers a large range of assets, including some less traditional ones like cryptocurrencies. TradeStation offers equity, options, futures, and futures options trading online. Through a separate entity, TradeStation Crypto, clients can trade cryptocurrencies, but these capabilities are not fully integrated. TradeStation Crypto links to the ErisX cryptocurrency spot market. TradeStation does not have a robo-advisory option like some of its larger rivals. The broker also lacks forex trading and fractional share trading. Beyond that, however, investors can trade the following:
- Stocks long and short (nearly 3,000 on the easy-to-borrow list for short sales)
- OTCBB (Penny stocks)
- Mutual funds can be traded with broker assistance
- Bonds (Corporate, Municipal, Treasury, and CDs) can be traded with broker assistance
- Futures and futures options
- Simple and multi-leg options (up to four legs)
- Cryptocurrency trading on TradeStation Crypto (not integrated). Currencies enabled: Bitcoin, Bitcoin Cash, Ethereum, Litecoin, USDC, and XRP. Clients can transfer cryptocurrencies into and out of their own personal wallets
All TradeStation platforms allow conditional orders and bracket orders, while the TradeStation 10 platform offers additional advanced order types and algorithms. Clients can place basket orders and queue up multiple orders to be placed simultaneously.
You can change the default tax lot relief method assigned to your account for each asset type traded (stocks, options, etc.) through the Gain/Loss Tax Management feature within the Client Center in advance of the trade. After a trade is placed, but prior to settlement, you can adjust the tax method through the Gain/Loss Tax Management feature. Other adjustments require that you speak to a live broker.
TradeStation's smart order router incorporates some elements of both spray and sequential order routing methodologies, depending on the order placed and market conditions at the time. These methodologies are fundamentally based on an assumption that what is displayed in the market depth (price and size) is what is actually available, though there is much more liquidity thanks to hidden orders and dark pools, and therefore, there is opportunity for price improvement and better execution quality. Based on this, TradeStation employs logic intended to seek out and capture as much price improvement and hidden size as reasonably possible within a reasonable period of time.
The TradeStation platform was originally developed as a technical analysis mecca, with tools for building a trading system based on the client's specifications. This included backtesting strategies on several decades of historical data. Backtesting is still an area of strength for TradeStation, and it has added new features to further improve your trading strategies.
TradeStation, with its history of catering to very frequent traders, has quite a few pricing plans from which to choose. The most recent plans offer some free trades, while the legacy plans offer discounts to extremely frequent traders. During the price-cutting flurry of fall 2019, Tradestation introduced two new pricing plans that both feature commission-free equity trades and options transactions with no per-leg fee. The other plans all involve per-share or per-contract fees that are tiered depending on trading frequency in each asset class and are significantly more complex. You can find the full details on TradeStation's pricing page. We'll look at the costs in the new pricing plans.
- TradeStation charges no commissions for online equity, ETF, or OTCBB (penny stock) trades for the first 10,000 shares in the order. Shares over 10,000 incur a $0.005 per share fee.
- There is no per-leg commission on options trades. Per-contract commissions are $0.60 ($0.50 for TS GO).
- An order for 50 options contracts is $30.00 ($25 for TS GO).
- Covered call trade of 500 shares plus five contracts would cost $3.00 ($2.50 for TS GO).
- Mutual fund commission for funds outside the No Transaction Fee program is $14.95.
- Fixed income trades, placed with a live broker, are $14.95 plus $5 per bond. This is higher than most brokers that enable fixed income transactions.
- Margin interest ranges from 9.5% for $10,000 balance to 8.75% for over $100,000 as of Jan. 2020. This is about average overall, though it's high for brokers that cater to frequent traders. Customers with over $2 million in margin debt pay 3.5% interest.
- Futures transaction fees are $1.50 per contract per side plus exchange fees ($0.85 for TS GO). Note that this is a separate account from the equities and options brokerage.
- Cryptocurrency fees depend on the customer's account balance, ranging from 0.50% of the transaction value for clients with under $100,000 to 0.125% for clients with more than $1 million. Trades that add liquidity are free for clients with over $100,000 in their accounts. Note that this is a separate account from the equities and options brokerage.
- Transferring an account costs $125. Transferring an IRA adds a $35 custodial fee and $50 IRA termination fee.
- Sending a wire is $25 domestic, $35 international. No charge to send a paper check.
- Voluntary reorganization fee for corporate actions is $50.
- Paper statements incur a $1 fee per page. Trade confirmations are also $1 per page.
- Live broker fee is $50 per trade across asset classes.
- TS SELECT and TS GO accounts carry an annual inactivity fee of $50 that is waived if the client maintains an average end of month balance of greater than $2,000 or has placed at least five trades in the previous 12 months.
How This Broker Makes Money From You and for You
The pressure of zero fees has changed the business model for most online brokers. In lieu of fees, the way brokers make money from you is less obvious—as are some of the subtle ways they make money for you.
- Interest on cash: Like most brokers, TradeStation generates interest income from the difference between what you are paid on your idle cash and what they can earn on customer cash balances. TradeStation clients do not earn interest on idle cash, so this is all profit for TradeStation. You can call the trade desk to move cash into or out of a money market fund. TradeStation Crypto clients accumulate interest on cryptocurrency balances in the supported coins (Bitcoin, Bitcoin Cash, Ethereum, Litecoin, USDC, and XRP). Interest on cryptocurrency accumulates daily and is paid monthly.
- 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. TradeStation accepts an average of $0.0018 per share in PFOF on equity trades and $0.41 or less per contract for options trades. These rates are below average for the online brokerage space.
- Price improvement: TradeStation's order router seeks out liquidity and price improvement while executing your order in a reasonable amount of time. On average, TradeStation equity orders receive $0.005 per share in price improvement and approximately $4 per contract on options orders. The latter is very high and a benefit to options traders using the platform.
- 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. TradeStation has a Fully Paid Stock Lending program that clients can opt in to, and they share 30% of the revenue with the client holding the stock. You must have a minimum account of $25,000 to take advantage of this.
- Portfolio margining: TradeStation does not offer portfolio margining, which can lower the amount of margin needed based on the overall risk calculated. Given the terrific risk management tools built into the platforms, it's surprising that portfolio margining is not available. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.
- TradeStation does not offer portfolio margining
- TradeStation has a Fully Paid Stock Lending program that clients can opt in to, and they share 30% of the revenue with the client holding the stock
- There is no interest paid on uninvested cash. Cryptocurrency assets earn between 0.5% and 2% interest depending on the coin
- Clients must telephone the trade desk to move cash into or out of a money market fund
- Clients cannot enroll in dividend reinvestment programs
Given TradeStation's legacy as a technical analysis platform, it offers some excellent research capabilities. Most of the tools emphasize technical triggers using charting functions.
Stock and ETF Screeners
RadarScreen and Hot Lists allow very specific screening capabilities. You can screen on technical or fundamental data. There are dozens of screeners already programmed into the TradeStation 10 platform, or you can customize your own. RadarScreen lets you build a list of up to 2,000 stocks that you can continuously monitor in real-time, based on more than 180 technical and fundamental criteria. It's one of the best stock and ETF screeners offered by any online brokerage.
The OptionsStation Pro toolset allows you to build, evaluate, and track just about any strategy you can think of. It includes visual representations of options chains that let you see your strategy's break-even probability across a series of expiration dates. You can use Hot Lists to find options opportunities as well.
Mutual Fund Screener
TradeStation offers a proprietary scanner that can scan the entire mutual fund universe. This isn't a fund-focused broker, though, so the scanner could best be described as rudimentary—especially in comparison to the stock, ETF, and options screeners.
Fixed Income Screener
You'll find a fairly basic fixed income screener on TradeStation, but you will have to call a broker to place a trade. Investors who are primarily focused on fixed income and require more detailed screening criteria should look elsewhere.
Tools and Calculators
TradeStation doesn't offer the typical calculators, such as those devoted to retirement planning, that you might find on other sites. Its tools are all geared to active traders, such as time and sales, market depth, and snapshots that show how your positions are performing.
Trading Idea Generator
Hot Lists are available on all platforms, including mobile. TradeStation's RadarScreen offers endless sorting and screening possibilities. You can open a hotlist inside RadarScreen to further filter and screen. The Trader Concierge feature generates trading idea alerts.
The TradeStation 10 platform has a News tab on the right-hand side of the screen that can be set up to show a headline only or a headline and an accompanying graphic. You can symbol link positions and watchlists to stream news or filter the news by a topic such as energy or cannabis. The general market news displays on the TradeStation Today page. TradeStation's in-house market commentary, called TradeStation Market Insights, is available on the desktop platform and is updated five to ten times during the trading day.
There is limited third-party research built into the TradeStation platforms, but you can subscribe to tools and research through the Trading App Store. Most of these add-ons incur some additional cost, however. There are also no analyst reports available.
TradeStation offers top-end charting capabilities on all of its platforms. TradeStation 10 offers incredible charting capability based on tick data. Automated technical analysis is built into the charting package, displaying technical patterns on the charts as they form. The web charting has been greatly enhanced and includes all streaming real-time data with the ability to add overlays and all kinds of indicators. Web charting capabilities more closely match TradeStation 10, including a new toolbar with access to adjust timeframes, drawing tools, sessions, and styles. Web charting also features background dragging and on-chart controls to zoom in/out, scroll left/right, move to the most recent bar and reset the chart range. You can trade directly from a chart, including previewing a closing bracket order on a chart. The order ticket can be modified by dragging and dropping closing price targets onto the chart. This is one of the best charting applications available from any broker, and it is especially notable for how well it is integrated with TradeStation's order management system.
The Portfolio Maestro includes analytics, optimization, and performance reporting to give traders a realistic perspective of their portfolio. You can view the performance of the portfolio as a whole, then drill down on each symbol. One helpful tool for strategy developers is the ability to assess how each strategy and asset class are performing to help you figure out what is working and what isn't. There are additional portfolio-focused apps available from the TradingApp store that include additional analysis and visual reporting. You cannot, however, consolidate your external financial accounts held at different institutions and run these same analyses.
All balance, position, and margin data is presented in real-time. The Gain/Loss Tax Management feature calculates cost basis for your closed positions, but you can't run an analysis on a potential trade.
You can use the charting features to create a trading journal. A visual representation of each trade can appear on a chart of the financial instrument (stock future, etc.) being traded, and customers can add notes to those charts.
TradeStation says it does not directly provide education services anymore now that it has acquired YouCanTrade.com. It's Learn page directs you to investment and trading educational presentations and materials on YouCanTrade's website. Courses that focus on how to use the TradeStation platforms are offered free of charge as are two channels that launched in June 2020: "Crypto Untapped" is dedicated to cryptocurrency trading and "Traddictiv" is led by a team of trading coaches. In addition, "The Trend" is a daily show that goes over current market events and trading ideas. Other topics require a subscription.
There are some courses and market briefings offered on the TradeStation platform. TradeStation's Knowledge Center appears to be undergoing a remodel. The articles are not as easy to find as they were a few months ago. TradeStation's frequently-asked questions page leads with TSbot, which is the TradeStation chatbot. As mentioned, TSbot is not yet very helpful, frequently answering, "Oops, I may not have been trained on that yet. Can you please rephrase and try once again?"
One incredibly valuable tool for traders looking to learn is TradeStation's trading simulator, which has all the tools you'll find on TradeStation 10. This includes the large historical database for backtesting strategies, though the simulator itself uses delayed data.
- Phone support 8 a.m.–8 p.m. ET (trading desk hours differ by asset)
- Online chat with a human agent
- Chatbot on the website
- During market hours, a live broker is available to answer questions; orders placed with a live broker incur a $50 surcharge
TradeStation security is up to industry standards:
- Two-factor authentication is available via the Auth0 Guardian mobile app, Google Authenticator mobile app, or SMS text messaging.
- Biometric (face or fingerprint) login for mobile devices.
- In 2019, the firm implemented technology designed to detect attempted fraudulent account openings, and it added enhancements to safeguard against fraudulent cash transfers out of client accounts.
- TradeStation carries excess Securities Investor Protection Corporation (SIPC) insurance provided by Lloyd's of London with an aggregate limit of $300 million to pay amounts in addition to those returned in a SIPC liquidation. The maximum for any single customer is $24.5 million with a cash limit of $900,000 per customer.
- Through Nov. 2019, there were no significant data breaches at any TradeStation location reported by the Identity Theft Research Center.
TradeStation has put a great deal of effort into making themselves more attractive to the mainstream investor, but the platform is still best suited for the active, technically-minded trader. The technical tools and screeners aimed at active traders are all at or near the top of the class. One thing we'd like to see is the futures and cryptocurrency trading platforms integrated into the equity/options platforms to provide a single interface experience. Despite this minor annoyance, the focus on technical research and quality trade executions make TradeStation a great choice for active traders. Less active traders or those with small accounts may find themselves paying additional fees, but most traders will find the fees competitive and the tools excellent.
In contrast, the tools aimed at regular investors, including the mutual fund and fixed income screeners, are a noticeable step down. TradeStation is clearly taking steps towards being more friendly to retail investors, but it has a long way to go in this regard. This isn't the place for an investor who wants to "set it and forget it" or needs educational resources to get started. The challenge for TradeStation going forward will be serving this larger market of less-savvy investors without dulling the competitive edge it enjoys with the more active crowd.
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