Interactive Brokers vs. TD Ameritrade: find out which one is best for you

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Interactive Brokers and TD Ameritrade are two well-known investment intermediaries with special advantages and disadvantages. There is no doubt that TD Ameritrade is a better choice for novice investors. Experienced investors may prefer Interactive Brokers, especially those who trade internationally and day traders.

Let’s take a look at both and compare so you can decide which one is better for your investment needs. Here is our comparison of Interactive Brokers and TD Ameritrade.

Review of Interactive Brokers v. TD Ameritrade

Interactive intermediaries in TD Ameritrade are two of the pioneers of the world of online brokerage. These platforms contain more similarities than differences, but these differences can determine which one is best for an individual trader. Here is the basic comparison:

Function Interactive intermediaries TD Ameritrade
Pre-sale and extended working hours Yes Yes
Demo account Yes Yes
Minimum deposit $ 0 $ 0
Daily trading Yes Yes
Margin rates 0.75% to 2.58% 7.5% to 9.5%
provision $ 0.0005 – $ 0.0035 for shares and ETFs; $ 0.15 – $ 0.65 for option contracts; $ 0.25 – $ 0.85 for futures contracts $ 0 for shares and ETFs; $ 0.65 for option contracts; $ 2.25 for futures contracts
methods of payment Wire, checking, ACH Transfer, check, ACH, transfers from another company, transfer of stock exchange certificate
Security features Yes Yes
Minimum and maximum trade no no
Regulator SEC SEC

How each service works

Interactive intermediaries

Interactive Brokers was founded in 1993 and has long been the best choice for advanced traders. Its IBKR Pro platform was designed for these clients, but in 2019 it added IBKR Lite for retail investors, including individuals, joint owners, custodian accounts and retirement accounts.

The minimum deposit amount with Interactive Brokers is $ 100. However, the company recommends a minimum deposit of $ 25,000 for those who intend to invest in a number of portfolios or in portfolios that trade heavily. This minimum of $ 25,000 may prevent the locking of an account under the Securities and Exchange Commission (SEC) sample daily trading rules.

Unique features of Interactive Brokers

Few brokers offer as many products, including access to nearly 26,000 mutual funds. Clients can do business in more esoteric categories, including:

  • Tasks
  • Combinations
  • Structured products
  • Physical metals
  • Inter-spread spreads

You can also trade cryptocurrencies on the platform. Commissions for major coins such as Bitcoin start at 0.12%, which is one of the lowest commissions in the industry.

In addition, Interactive Brokers ’Traders Academy offers free and rigorous online courses, along with tests. This way, you can increase your knowledge of investing, no matter how experienced an investor you are.

TD Ameritrade

TD Ameritrade was established in 1975, shortly after SEC abolished fixed brokerage fees. The company was bought by Charles Schwab in 2019, but so far TD Ameritrade remains a separate product.

In addition to investment opportunities, TD Ameritrade also offers cash management services, including online bill payment and debit and credit cards.

Unique features of TD Ameritrade

TD Ameritrade offers first-class educational materials for new investors. While Interactive Brokers also offers educational opportunities, they are aimed at experienced traders rather than beginners.

TD Ameritrade’s fully in-depth curriculum is free and easy to understand. Investors can learn in their spare time and take advantage of courses related to relevant online broadcasts, as well as the help of an educational coach.

You cannot currently trade cryptocurrencies on the platform, but you can invest in cryptocurrencies.

How are they the same?

In general, the set of offers on these platforms is similar. Both offer robotic advisors, advanced trading platforms and the ability to trade stocks, stock exchanges (ETFs), options and futures. Both also have cryptocurrency trading options, although TD Ameritrade only allows you to invest in futures contracts for cryptocurrencies.

How do they differ?

Interactive Brokers offers many more no-fee and no-commission mutual funds than TD Ameritrade, with access to more than 40,000 funds. In 2020, Interactive Brokers introduced the Impact Dashboard, which allows customers to identify and invest in companies that share their values.

In general, getting started with TD Ameritrade is easier than with Interactive Brokers. The learning curve for proprietary trading software for the latter is much steeper than for the former.

Another difference is the price. It is slightly cheaper to trade stocks and ETFs on TD Ameritrade, as Interactive Brokers charges a flat rate and TD Ameritrade does not. However, TD Ameritrade charges more for futures trading, at $ 2.25 per contract compared to $ 0.25 – $ 0.85 at Interactive Brokers. However, Interactive Brokers charge up to $ 5 for futures contracts for cryptocurrencies.

Prices and plans of interactive intermediaries

Interactive Brokers offers three different plans and pricing structures that can be a bit confusing to understand.

Its pricing includes a low brokerage commission that decreases in size, along with associated exchange, regulatory and clearing fees. If the exchange provides a rebate, part of that money is returned to the customer. In the U.S., the minimum order value is $ 0.35 and the maximum is 1% of the trade value.

A fixed rate plan charges a low fee with a fixed rate, either per share or for a predetermined percentage of the value of the transaction. When trading U.S. stocks, ETFs, and warrants, these commissions are transferred to all stock sales. The minimum commission per order is $ 1 and the maximum is 1% of the trade value.

Forex and bond trading is available at tiered prices. For IBKR Lite, all other types of transactions, with the exception of shares on the U.S. stock exchange without commission, and ETFs are included in the fixed price. IBKR professional traders can choose between fixed or tiered prices.

There is no commission for the redemption of the portfolio. Inaction fees of $ 1 per month are charged to IBKR Pro merchants with minimum bills below $ 1,000. Mutual fund fees outside of funds without transaction fees amount to 3% of the value of the transaction or $ 14.95 per transaction, whichever is less.

Prices and plans of TD Ameritrade

There are no platform or data fees and no minimum trading prices. While online stock orders simple, customers who use an interactive telephone system to conduct business are charged $ 5, and those who choose to help a broker pay $ 25.

Merchants pay a commission of $ 6.95 for windowless online stores (OTC) shares that are not listed on US stock exchanges. TD Ameritrade charges up to $ 74.95 for mutual funds outside of its offers with no transaction fees. It does not charge inactivity fees.

Comparison of paper trading

Beginner traders should have access to the simulator so that they can “paper shop”And learn to develop trading strategies before using their own funds. The Interactive Brokers paper trading account allows clients to use the full range of trading capabilities in a simulated environment, but is only available to those whose regular trading accounts are approved and funded. Demos are available on the website so potential customers can get an overview of the system’s functionality.

TD Ameritrade offers its virtual stock market simulator paperMoney. Designed for those learning new strategies – such as options trading or futures Forex markets – paperMoney is available on the thinkorswim trading platform. In addition to paper trading, those using the simulator can explore stocks outside their knowledge base and experiment with different asset classes.

Comparison of mobile applications

TD Ameritrade has two mobile applications. With its intuitive design, the TD Ameritrade app makes it easy to trade stocks, ETFs and options. This app offers the ability to set price alerts, receive real-time bids, access watch lists, and search for integrated indicator charts. Users can also access third-party research and analytical reports.

Active retailers may appreciate the Thinkorswim TD Ameritrade mobile app. This app contains all the standard features of the app, along with the ability to trade multi-level options and forex on separate sub-accounts. Its chart and analysis allow customers to build their own order execution. Users have access to thinkScript, a proprietary programming language, for testing algorithms for very specific results.

The IBKR Interactive Brokers mobile app gives customers access to more than 135 global markets. Clients can trade stocks, futures, options, future options and forex while on the go, while receiving the same institution quality survey and more than 50 data columns available on their desktop trading platform.

Comparison of foreign investments

When it comes to international trading, Interactive Brokers is a clear winner, as TD Ameritrade only allows trading in US markets. It offers access to 135 exchange offices in 33 countries and 23 currencies.

Interactive Brokers Customer Service

Interactive Brokers provides 24-hour operation customer service on working days. Online chat services are available to current customers.

TD Ameritrade Customer Service

Customers can reach Ameritrade’s TD customer service by phone 24 hours a day 7 days a week for live chat, which is a rarity in the world of online mediation. Technical support is available Monday through Friday, 7 a.m. to 6 p.m. ET.

How safe are they?

As members of Securities Investor Protection Corporation (SIPC), Interactive Broker and TD Ameritrade’s client assets are hedged up to $ 500,000, which includes $ 250,000 in cash awaiting reinvestment. In the event that a SIPC member fails and loses the ability to meet the obligations of securities clients, SIPC also provides protection for these companies against losses.

In the event of insolvency through TD Ameritrade, it also provides each client with $ 149.5 million in securities protection and $ 2 million in cash protection through additional coverage through London insurance companies.

In terms of security features, TD Ameritrade offers a guarantee to protect assets if money or securities are lost due to unauthorized trading. It offers a number of security downloads to protect customer accounts, including TrendMicroTM HouseCall and Symantec Security Review.

Security Interactive Brokers includes a secure login system, an extra layer of security, free for customers. This system requires the use of a free physical security device or digital security app for smartphones. The secure login system requires an additional step in logging into the account by entering a randomly generated security code.

Who are they best for?

Active traders and investors looking for access to global markets are likely to prefer Interactive Brokers. Their low margin rates make daily trading cheaper in the long run.

For beginner and intermediate investors, TD Ameritrade may be a better choice. The platform offers additional educational resources, as well as ordinary branches in which those just starting out can get advice in person.

Conclusion: Which is the best?

Which platform is best depends on the experience and goals of the investor. Beginner investors are likely to appreciate TD Ameritrade’s easy-to-use platform and research tools. Investors with more experience may prefer Interactive Brokers because of their multitude of assets and more trading options than the option to buy international shares. However, it has a complex fee structure that could confuse some users.

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