TD Ameritrade vs Interactive Brokers: Which Brokerage Should You Choose?
If you are choosing to trade with either TD Ameritrade or Interactive Brokers but are unsure which firm to go with, we've compared relevant details such as costs for trading, fees associated and platform features to help you decide on the best online trading platform for you.
TD Ameritrade and Interactive Brokers are two reputable online trading platforms. While TD Ameritrade is a cheaper option for those who intend to invest solely in US stocks, Interactive Brokers is a better platform for investors who want to have a larger market access or more innovative tools.
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TD Ameritrade vs Interactive Brokers: Overview
Both TD Ameritrade and Interactive Brokers boast low fees and comprehensive platforms. While either trading platform could be good for you depending on your investment needs, there are a couple of differences that you should consider prior to choosing a broker.
One of the most important differences between the two brokerages is that TD Ameritrade only allows you to trade in the US. This service is thus inadvisable for people who want to diversify their portfolio by investing in other international stocks. That being said, if you wish to invest only in the US, then TD Ameritrade offers the lowest fees of any platform available.
For those who want to trade in more than one market, Interactive Brokers might be preferable as it allows its customers to invest in 26 global markets. Moreover, you can trade stocks, ETFs, securities, futures, options, fixed income securities, mutual funds, indices, and warrants, among others, with Interactive Brokers. This compares well to TD Ameritrade, which offers a more limited trading portfolio of stocks, ETFs, options and futures. Therefore, Interactive Brokers is advantageous for those who want to trade a variety or products in more than one market.
TD Ameritrade vs Interactive Brokers: Pricing
The total cost of trading is one of the largest determining factors on which brokerage you will procure. While many advertise low fees, additional costs such as platform fees could ramp up the overall price. For example, Interactive Brokers charges a minimum monthly active fee of S$10 or less, depending on the commission charges you pay. The tables below highlight the most important fees to be wary of prior to deciding which trader to use.
|Commission Fee- SG||Min. Trade Charge- SG||Commission Fee- US||Min. Trade Charge- US|
|TD Ameritrade||N/A||N/A||USD $0||USD $0|
|Interactive Brokers||0.08%||S$2.50||USD $0.0035||USD $0.35|
The following tables illustrate the extra fees you can expect to pay with either account.
|TD Ameritrade Fees||Amount|
|Administrative Fees||USD $0|
|Commission Fee||USD $0|
|Minimum Fee||USD $0|
|Interactive Brokers Fees||Product||Amount|
|Commission Fee (Min. Fee)||Stocks||$0.0035 ($0.35)|
|Commission (Min. Fee)||Options||$0.15-0.65 per contract ($1.00)|
TD Ameritrade vs Interactive Brokers: Platform Features
While both TD Ameritrade and Interactive Brokers allow their customers to test out their strategies and access up-to-date market information, there are nuances between the two that might sway you from one brokerage to another. For example, TD Ameritrade stands out because they offer customers two different systems: the TD Ameritrade and Thinkorswim platform. The former is easy-to-navigate and recommended for beginners, while the latter has more advanced features to assist experienced traders. Investors who want options to try both, or are generally more inexperienced, might find TD Ameritrade a preferable broker.
That being said, experienced traders might find Interactive Brokers' highly customizable tools more enticing than Thinkorswim's platform. For example, Interactive Brokers' risk navigator tool allows customers to anticipate more lucrative trades and come up with an action plan. It is important to know that some tools are available only for Interactive Broker's Pro account-holders, showing yet another way the brokerage is better-suited for expert traders.
TD Ameritrade vs Interactive Brokers: Eligibility
To be eligible for either account, you must be at least 18 years of age and provide at least your identification, proof of address and your employer details. While the application should take around 15-20 minutes, you will receive a decision for both within 1-3 working days.
TD Ameritrade has one standard account, while Interactive Brokers offers an IBKR Lite and IBKR Pro account. The Lite version charges less fees and is encouraged for newer traders, since it does not include some highly-technical web trading features and offers more easy-to-understand market research reports. To find out more about Interactive Brokers' accounts, check out our dedicated review.
How to Choose
Depending on your criteria, one brokerage might be better for you than another. For example, those looking to trade stocks in the US will find TD Ameritrade to be a better option based on its lower fees. On the other hand, if you prioritize having a large access to markets or are unsure if you want to pigeon-hole yourself into one international market, Interactive Brokers will be a better option. That being said, it is still not the cheapest option on the market.
Another determining factor might be your personal trading habits. Both trading platforms give customers a wide range of tools to use for online trading, including up-to-date market data, educating tools to help track your trading decisions, and the ability to test your strategies. Unlike TD Ameritrade, however, Interactive Brokers offers clients a free, 20-day trial period to encourage inexperienced investors to become familiar with their tools.
Furthermore, if you are a more experienced trader, Interactive Brokers has a more comprehensive platform available than TD Ameritrade. For instance, their clients can trade margins, which are typically higher risk as you could lose more than your initial investment. Moreover, Interactive Brokers has some of the lowest fees on the market for trading on the foreign exchange market.
Choosing the best brokerage to you will ultimately come down to your priorities. Whether you focus on the cost associated, the extent of what you can trade and where, or the features each platform offers, our guide will help you compare these factors to ensure a seamless, interesting trading experience.