Free stock trading used to be a myth. Most major financial brokers charged over $5 per trade, even in 2019, and most of them made millions from these fees annually.
Enter: Robinhood.
Robinhood was launched in 2013 to help retail investors trade low by offering zero commission trading in stocks, ETFs and options contracts. Fast forward almost a decade and most financial firms have been forced to compete by lowering most trading fees and lowering costs for consumer investors.
Both TD Ameritrade and Robinhood make it easy to invest today, but which one is best for you?
We have reviewed features, fees, trading tools, available assets, customer service and security to help you choose the right trading platform.
Review of TD Ameritrade and Robinhood
Both TD Ameritrade and Robinhood offer free stock and ETF trading, and both offer access to intuitive mobile apps for trading on the go, as well as built-in market news feeds.
TD Ameritrade gives you access to a massive educational library with hundreds of videos, tutorials, articles and even live webinars. While Robinhood offers free options trading as well as access to several cryptocurrencies including Bitcoin and Ethereum.
| TD Ameritrade | Robin Hood | |
|---|---|---|
| Trading fees | ● None for stocks, bonds, ETFs. ● $0.65 per option contract ● $2.25 per futures contract. ● $25 broker commission ● Up to $74.95 for mutual funds |
● No commissions for trading stocks, ETFs, options or cryptocurrencies. ● Robinhood charges a “spread” fee, which is the difference between the buy and sell price of a trade. |
| Pay per account | Transfer $75 (full) | ● $75 (partial/full) ● $5 per month for Robinhood Gold. |
| Trading assets | ● Promotions ● Bonds ● Mutual funds ● ETFs ● Futures ● Options ● American Depositary Receipts (ADRs) ● 1 international market (Canada) ● Forex ● IPO (on certain accounts) |
● Promotions ● ETFs ● Options ● American Depositary Receipts (ADRs) ● IPO (for certain companies) ● Cryptocurrency |
| Account Minimum | $0 | $0 |
| Mobile app available? | Yes | Yes |
| Education | News, commentary and research from over a dozen external sources including Morningstar and Reuters. | News feed, main articles and videos |
| Customer service | ● 24/7 phone, email and chat ● In person at local US offices. |
24/7 email, social media and in-app phone call |
About Trading House Ameritrade
TD Ameritrade is a major online broker that offers free stock and ETF trading as well as an extensive library of educational content. Its wide selection of tradable assets includes stocks, bonds, ETFs, mutual funds, futures and options contracts, as well as a large selection of foreign exchange trading and access to certain IPOs.
Read more: Beginner’s Guide to Forex Trading
Experienced traders can access an extensive library of research and analysis produced by research firms such as Reuters and Morningstar, as well as weekday live coverage from TD Ameritrade Network and CNBC.
TD Ameritrade offers two trading platforms:
- The standard TD Ameritrade app offers a simplified dashboard, the ability to set price alerts, and a watchlist to keep track of your favorite investments.
- thinkorswim web and mobile apps are best-in-class advanced trading platforms with detailed charting tools, access to margin, option contracts and futures trading, as well as the ability to invest in foreign exchange (forex) and pre-IPO.
All in all, TD Ameritrade is a great platform for beginners and professional traders alike, with tailor-made platforms for every trader.
Try TD Ameritrade or read our full review.
About Robinhood
Robinhood is one of the most popular trading apps in the US, offering free access to stocks, ETFs and options contracts, as well as margin trading and crypto trading. Robin Hood took the world by storm in 2013, charging no trading fees and attracting millions of clients who wanted access to the same trading tools as the pros, but without the huge cost.
Note. While Robinhood does not charge commissions or trading fees, it does charge a “spread” fee, which is the difference between the buying and selling price of an asset. This can cost traders more, as the spread can result in the asset being charged more than its current price.
Robinhood is a mobile platform and one of the easiest investment apps to use. And while this simplicity is due to the lack of advanced trading tools and charting features, it gives new investors an easier way to start trading without a financial background.
Read more: Investing for Beginners: How to Read Stock Charts
Robinhood has built-in trading guides in their mobile app, explaining each section of the app with quick guides and explaining complex financial concepts like option trading in easy-to-understand terms. It also offers a current news section for each asset on the platform, allowing you to see what’s going on with a particular company or fund before trading.
Although Robinhood has been criticized for its lack of transparency on how it makes money, it is still a solid trading platform for beginners. Just don’t #YOLO put your money into memes as a long-term investment strategy.
Try Robinhood or read our full review.
Comparison of TD Ameritrade and Robinhood performance with investments
Both Robinhood and TD Ameritrade offer free trading access to thousands of stocks and ETFs, but how do these investments work? While Robinhood doesn’t have standard portfolios to measure performance, TD Ameritrade does. (Please note that the performance of any individual investment portfolio will vary by client as all investors are different.)
TD Ameritrade Essential Portfolios is a robotic advisory service that helps you auto-invest by building a diversified portfolio of low-cost ETFs for long-term investment goals. The performance of these portfolios is listed on the TD Ameritrade website with different portfolio options depending on your risk tolerance.
Here is a summary of investment performance for TD Ameritrade’s major portfolios as of May 2022:
| 1 year | 3 years | 5 year old | |
|---|---|---|---|
| Conservative | -2.10% | 4.26% | 3.98% |
| Moderate | -0.53% | 6.14% | 5.50% |
| Moderate growth | 0.72% | 7.62% | 6.67% |
| Growth | 2.62% | 10.35% | 8.81% |
| aggressive | 4.23% | 12.06% | 10.21% |
Pros and cons of TD Ameritrade
pros
- Educational library with videos and trainings.
- Advanced trading platform for active traders.
- A very large selection of Forex trading (over 70 currencies).
Minuses
- Cryptocurrency trading is not available.
- Mutual funds can be expensive (up to $74.95).
- No fractional share investment.
Pros and Cons of Robin Hood
pros
- Trade stocks, ETFs, options and cryptocurrencies without commission.
- Margin access for non-accredited investors.
- Fractional investing in stocks (only $1).
Minuses
- Lack of transparency of the commission for the spread.
- No bonds, mutual funds, futures or forex trading.
- No trading simulator (no “paper trading”).
Why choose TD Ameritrade
Educational preparation
TD Ameritrade offers hundreds of educational resources including educational videos, tutorials and articles to help you learn basic personal finance topics as well as advanced trading strategies. These resources are available both online and on mobile platforms.
Advanced trading platform
The thinkorswim platform offers some of the best trading tools in the industry, including hundreds of charting tools and indicators, advanced options trading strategies, built-in market research features, and a full-featured mobile app for active traders.
Read more: TD Ameritrade vs thinkorswim: One company, very different platforms
Research and analysis
TD Ameritrade uses research from over a dozen third-party partners such as Morningstar and Reuters, and broadcasts live financial market commentary on TD Ameritrade’s own network. The thinkorswim platform also offers advanced stock validation, backtesting, and even the ability to trade counterfeit money on paper.
Try TD Ameritrade.
Why Choose Robinhood
Investing without commission
Robinhood is the original zero-fee investment app offering no fees or commissions on every asset it contains, including single stocks, ETFs, option contracts and American depositary receipts (ADRs) for international investment. Just keep an eye on the spread, which can lead to overpayment for investments.
Access to crypto
Robinhood is one of the few stock trading apps that allows you to directly invest in cryptocurrencies, offering access to Bitcoin (BTC), Ethereum (ETH) and several other cryptocurrencies options. It will also launch a cryptocurrency wallet in 2022, allowing you to directly store your cryptocurrency.
Read more: How to Invest in Cryptocurrency: A Beginner’s Guide
Investments in fractional shares
Robinhood allows you to invest for as little as $1, offering fractional shares of stocks and ETFs. This includes the most popular US stocks, which are typically worth hundreds of dollars, such as Tesla (from $600 per share), Microsoft (from $200 per share) and Apple (from $100 per share).
Try Robin Hood.
Summary
Both Robinhood and TD Ameritrade offer free stock and ETF trading, as well as access to options trading and international markets. Both also help beginners trade with intuitive mobile apps and user education.
But while Robinhood boasts no commissions on stocks, ETFs, options, and cryptocurrencies, TD Ameritrade offers a lot more investment opportunities for beginners and professional traders alike. This includes a completely separate power user platform offering hundreds of trading and charting tools, third party market analysis and live commentary through its own broadcast network.
Overall, Robinhood offers a simple platform for beginners to access free stock and crypto trading, while TD Ameritrade is a full-service financial firm offering a much broader investment choice as well as a more transparent pricing model.
Featured image: Gorodenkoff/Shutterstock.com
Advertiser Disclosure – This advertisement contains information and materials provided by Robinhood Financial LLC and its affiliates (“Robinhood”) and MoneyUnder30, a third party not affiliated with Robinhood. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Securities offered through Robinhood Financial LLC and Robinhood Securities LLC, which are members of FINRA and SIPC. MoneyUnder30 is not a member of FINRA or SIPC.”