Investing your hard-earned money can be an intimidating prospect. With the rise of commission-free trading platforms like Robinhood and well-established brokers like TD Ameritrade, you now have more options than ever when it comes to choosing an online brokerage.
But how do you decide which one is right for your needs?
In this comprehensive guide, we’ll compare and contrast Robinhood and TD Ameritrade across several key factors like pricing, investment choices, platforms and tools, research capabilities, customer support, and more.
By the end, you’ll have all the information you need to determine which online broker is the best fit for your investing style and goals in 2023 and beyond.
Introduction to Online Stock Trading
Before we dive into the details, let’s quickly go over some online stock trading basics.
An online brokerage firm provides a trading platform that allows you to buy and sell stocks, ETFs, options, and other securities electronically without the need for a human broker. All you need is a computer or mobile app connected to the internet.
The rise of $0 online stock brokers like Robinhood has made investing more accessible than ever. But even full-service brokers now offer discounted pricing, robust trading platforms, and educational resources.
When choosing the right broker for your needs, here are some key factors to consider:
- Commissions and fees – What you’ll pay per trade and for services.
- Investment choices – Stocks, funds, options, etc. offered.
- Platforms and tools – Quality of website and mobile apps. Extras like research and data.
- Customer service – Availability of support when you need it.
- Account minimums – Some require minimum balances to open an account.
- Educational resources – Guides, videos, tutorials, etc. to build investing knowledge.
Keeping these elements in mind, let’s see how Robinhood and TD Ameritrade compare.
Robinhood burst onto the scene in 2013 as a disruptive force in the online brokerage industry. The company’s zero-commission trading was a game-changer that compelled even the long-established brokers to eliminate trading fees.
Here are some key facts about Robinhood:
- Type: Discount online brokerage
- Commission-free trading: Yes, on stocks, ETFs, options, and cryptocurrency
- Account minimum: $0
- Investment choices: Stocks, ETFs, options, cryptocurrency
- Platforms: Website and mobile app
- Educational resources: Articles, videos, FAQs
Robinhood’s minimalist mobile app and website aim to provide an intuitive, game-like experience for younger and novice investors. Easy access to trading complex options and cryptocurrency also appeals to its target demographic.
However, the platform’s simplicity has drawbacks in terms of available research tools, charting capabilities, and order types compared to full-service brokers. And Robinhood’s customer service has faced criticism for long response times.
Still, with rock-bottom pricing and a slick, easy-to-use interface, Robinhood remains appealing for cost-conscious investors making small trades.
TD Ameritrade Overview
A long-time leader in online brokerage services, TD Ameritrade provides more robust trading platforms tailored to both beginner and active investors.
Here are the quick facts on TD Ameritrade:
- Type: Full-service online brokerage
- Commission-free ETFs and stocks: Yes, with no account minimums or inactivity fees
- Account minimum: $0
- Investment choices: Stocks, ETFs, mutual funds, options, futures, forex
- Platforms: Website, desktop platform, mobile apps
- Educational resources: Videos, online courses, in-person events
Unlike Robinhood’s barebones experience, TD Ameritrade packs its website and apps with powerful trading tools, real-time data, charting, research, screening, and more. Customizable platforms let you tailor your experience as you gain skills.
While trading commissions are now $0, TD Ameritrade customers benefit from stellar customer service and a wealth of educational resources that Robinhood lacks. However, options and margin fees can add up for active traders.
For those seeking a feature-rich, interactive brokerage that encourages learning, TD Ameritrade is a compelling choice.
Now let’s compare the brokers’ key features side-by-side.
Robinhood vs. TD Ameritrade: Feature Comparison
Trading Commissions and Fees
- Robinhood has $0 commissions on all stock, ETF, and options trades. No per-contract fees apply for options.
- TD Ameritrade also offers $0 stock, ETF, and options commissions. Options contracts cost $0.65 each.
- Robinhood charges no account maintenance or inactivity fees.
- TD Ameritrade has no account minimums or maintenance fees either.
Winner: Robinhood offers completely commission-free trading across the board.
Investment Product Choices
- Robinhood offers stocks, ETFs, options, and cryptocurrencies.
- TD Ameritrade offers stocks, ETFs, mutual funds, bonds, CDs, options, futures, forex, and more.
Winner: TD Ameritrade has exposure to more asset classes.
Trading Platforms and Technology
- Robinhood’s app and website provide simple market data, charts, and order tickets. Watch lists available.
- TD Ameritrade’s thinkorswim dominates for active traders with Level II quotes, real-time analytics, customization, charting tools, screeners, virtual trading, and more.
Winner: TD Ameritrade has far more robust platforms and tools.
Research and Tools
- Robinhood offers minimal research beyond basic price charts and analyst ratings summaries. No screeners.
- TD Ameritrade provides hundreds of proprietary reports, third-party analysis, screeners, risk management tools, profit/loss calculators, and more.
Winner: TD Ameritrade. Vastly superior trading tools and institutional-grade research.
- Robinhood’s mobile experience is fully-featured but limited in functionality and research compared to its competitors.
- TD Ameritrade offers powerful mobile apps tightly integrated with its online platforms, enabling seamless transition from desktop to mobile.
Winner: TD Ameritrade. More sophisticated, yet still easy-to-use mobile experience.
New Investor Resources
- Robinhood provides limited educational content via FAQs, blog articles, and videos.
- TD Ameritrade offers extensive education for all skill levels. From in-depth courses to seminars to personal coaching and more.
Winner: TD Ameritrade has vastly superior education for new investors.
- Robinhood relies on email support, with long wait times reported by users seeking assistance.
- TD Ameritrade provides 24/7 phone support as well as chat, email, and branch locations for in-person help.
Winner: TD Ameritrade. Human customer service around the clock.
Security and Protection
- Robinhood provides basic $250K SIPC insurance on cash and securities.
- TD Ameritrade offers more robust $250K SIPC coverage plus additional asset protection above that.
Winner: TD Ameritrade for higher asset protection coverage.
- Robinhood has no commissions, no account minimums, and no inactivity fees. Margin interest and Gold subscription fees apply.
- TD Ameritrade has no commissions or account minimums either. Charges options contract fees and margin interest.
Winner: Robinhood edges this out with zero options contract fees.
Robinhood vs. TD Ameritrade: Which is Better for You?
Now that you see how Robinhood and TD Ameritrade stack up across these key categories, how do you choose the right broker for your needs?
Here are a few things to consider as you assess which platform fits your investing approach best:
Robinhood If You…
- Are a beginner investor or have a smaller account size
- Want simple, commission-free stock and ETF trading
- Are cost-focused and not in need of robust tools and research
- Prefer trading on a mobile app interface
- Are comfortable without much customer service support
TD Ameritrade If You…
- Have a larger account balance and make frequent trades
- Seek an extensive suite of platforms, tools, research, and data
- Want exposure to more asset classes than just stocks and funds
- Value high-quality educational resources and customer support
- Appreciate state-of-the-art trading platforms like thinkorswim
The Bottom Line
While both brokers now offer $0 stock and ETF trades, TD Ameritrade is the clear winner if you want serious trading capabilities backed by superior customer service. Robinhood shines strictly on cost alone, but comes up short everywhere else.
As an informed investor, the price wars shouldn’t guide your decision alone. Consider your overall needs, preferences, and investing goals.
For a majority of individual investors today, TD Ameritrade arguably provides the best blend of low costs, robust trading platforms, and helpful service. Open an account easily online in minutes with no minimums.
Frequently Asked Questions
Still unsure which online broker is right for your needs? Below we answer some of the most common questions investors have when weighing Robinhood versus TD Ameritrade.
Is Robinhood actually free?
Robinhood pioneered $0 stock and ETF trades starting in 2013. They do not charge any commissions, account fees, or require minimum balances. So in that sense, yes the core trading functionality is free.
However, you may incur fees for margin trading, live market data access, and other premium services. So understand how you intend to trade and what features you need to determine any costs.
Is TD Ameritrade better for beginners?
With its extensive educational content and responsive customer support, TD Ameritrade generally provides a better learning experience for investing newcomers compared to Robinhood’s simplistic interface.
TD Ameritrade offers in-depth courses, videos, virtual trading tools, and even in-person events to help build skills over time. And with multi-platform access, you can begin on the website and transition seamlessly to the mobile app as you gain confidence.
So investors who are just starting out may appreciate TD Ameritrade’s learning-focused approach.
Can I trade penny stocks on Robinhood?
Yes, you can absolutely trade shares of penny stocks priced under $5 on Robinhood, provided they meet listing requirements and minimum liquidity standards.
Robinhood’s commission-free structure makes frequent penny stock trading more feasible compared to brokers that charge per trade. Just be aware of the higher risks that come with penny stocks’ large price swings.
Does TD Ameritrade have higher limit orders?
TD Ameritrade provides relatively high options trading limits up to 200 contracts per order, depending on your account and experience level.
For stock trades, you can place market orders up to $10 million in value online. For over $10 million stock orders, a broker assisted call is required.
So TD Ameritrade can accommodate large order sizes for active traders. Compare their limits to your needs if you trade in size.
How quickly can you trade again on Robinhood?
Robinhood will allow you to immediately place another trade as soon as the previous trade is executed, with no wait time in between. This differs from full-service brokers that may impose temporary trading delays.
If you plan on actively trading in and out of positions quickly, Robinhood’s instant trading capabilities give you an advantage. But ensure you understand the day trading rules and risks.
Is Robinhood Gold worth it?
Robinhood Gold provides up to 2x margin trading power, larger instant deposits, professional research from Morningstar, and Level II NASDAQ market data for $5/month.
For extremely active traders, the Level II quotes and margin leverage may be worthwhile. But other investors are likely better off saving the $5 monthly fee and using free Level I data. Compare the features to your needs.
How long do ACH transfers take on TD Ameritrade?
TD Ameritrade offers multiple funding options including wire transfers, checks, and free ACH transfers.
ACH transfers take approximately 3-4 business days to fully process into your account. Wire transfers will be effective in one business day.
Keep transfer times in mind when moving money between accounts and preparing to place trades.
Can I automate trades on TD Ameritrade?
Yes. TD Ameritrade offers trading automation through its thinkorswim platform and TD Ameritrade Network paperMoney tool.
You can code your own trading strategy and backrest it using thinkorswim’s backtesting engine and extensive historical data. Once confident in your algorithm, enable automated live paper trading or real money trading.
For a simpler approach, create trading rules and parameters for buy and sell orders in paperMoney’s Automated Trading interface. Adjust as needed.
So whether you know how to code or prefer a GUI, TD Ameritrade provides automation capabilities that Robinhood lacks.
Is Robinhood safer than TD Ameritrade?
Both brokers are considered highly secure and reputable. They are regulated by FINRA and the SEC and offer standard protections like SIPC insurance and two-factor authentication.
Overall, TD Ameritrade likely has a slight edge for safety given their decades of experience, large balance sheet, and more robust customer support infrastructure. But Robinhood still meets all regulatory requirements as a US brokerage firm.
Ultimately, it is most important that you enable available security features like two-factor authentication regardless of which broker you choose. Practice safe password habits and you can feel confident your assets are protected.
Key Takeaways: Choosing Between Robinhood and TD Ameritrade
Deciding between Robinhood and TD Ameritrade comes down to your priorities as an investor.
- $0 commissions on all stock, ETF, and options trades
- Intuitive mobile app perfect for casual trading
- No account minimums, inactivity fees, or maintenance fees
TD Ameritrade pros:
- Powerful trading platforms like thinkorswim for active investors
- Wide range of tradable securities beyond just stocks and funds
- Fantastic educational resources for beginners
- 24/7 customer support via phone, chat, email, and in-branch
Robinhood is ideal if you want fully free, barebones trading on your phone. TD Ameritrade offers a much more robust package for investors who value trading tools, research, education, and quality service.
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