TD Ameritrade vs. Robinhood – Which is Right For You?

Posted by Frank Gogol

In recent years, there has been a rise in stock brokerages that allow customers to interact through online platforms and mobile applications. Two popular brokerages in the United States are TD Ameritrade and Robinhood. If you want to begin retail trading but are unsure about the distinction between TD Ameritrade vs Robinhood, read on.


TD Ameritrade vs. Robinhood: Overview

Both TD Ameritrade and Robinhood are part of a new wave of no-commission online brokerages. Unlike stock brokerage services in the past, these brokerages do not charge a trading fee for most transactions. Each platform is introduced below.

What is TD Ameritrade?

TD Ameritrade was founded as Ameritrade in 1971. The company specialized in electronic brokerage services. Since its founding, TD Ameritrade has grown organically and through acquisitions to become one of the leading retail stockbrokers in the United States.

What is Robinhood?

Robinhood was founded in 2015 as a no-commission online brokerage. Robinhood users make trades through the Robinhood application on their phones.

 Although the company is no stranger to controversy and regulatory scrutiny, Robinhood is a major brokerage in the United States.

What’s the Difference?

Robinhood was launched relatively recently (less than 7 years ago), specifically to serve as a no-commission, online-first brokerage for retail investors. 

This is in contrast to TD Ameritrade which has evolved from a more traditional brokerage to provide no-commission trading services for beginners in recent years. TD Ameritrade’s decades of experience in the industry allow it to provide certain products that the newer Robinhood cannot.

TD Ameritrade vs. Robinhood: Usability

Robinhood benefits from a mobile interface that is simple and easy to navigate. However, the interface does not allow for much user customization. Although the simplicity makes it easy for a beginner to navigate, Robinhood does not feature in-app educational content for beginners.

TD Ameritrade offers a more customizable interface in its desktop interfaces and mobile apps. In addition, there is educational content aimed at helping beginners understand the ins and outs of stock trading.

In terms of the cost of entry, both Robinhood and TD Ameritrade allow users to open trading accounts with no upfront cost and no minimum balance required to keep the account open. 

However, if you want to take advantage of margin trading facilities, both platforms require that you have a minimum of $2,000 deposited in your account.

TD Ameritrade vs. Robinhood: Trading Experience

One very important factor to consider is how easy it is to use the platform. This is especially true for day traders, who rely on an intuitive experience to make sure they understand the market correctly and can make trades quickly and easily. 

The trading experience on any platform could be markedly different depending on whether you use the website on a computer or a mobile app. 

Desktop Trading

The Robinhood desktop trading platform has limited options for user customization. It is not possible to stage orders or to place trades directly using the candle chart. In addition, the process for placing an order for options is not intuitive. 

TD Ameritrade offers two distinct trading platforms. TD Ameritrade’s standard platform is designed specifically for casual traders and investors, with a simple, intuitive interface. 

The flagship platform for experienced and knowledgeable traders is called think or swim (ToS). TOS is highly customizable and features extensive options for simulation and scripting using a bespoke programming language called thinkScript.

Mobile Trading

TD Ameritrade offers two different mobile phone applications: TD Ameritrade Mobile App and think-or-swim Mobile. Like their desktop counterparts, they are targeted at beginners (TDA Mobile App), and experienced traders (ToS Mobile). Both apps offer all the same variety of trading services as the desktop platforms do.

Robinhood’s mobile application does not include many of the features and services that other brokers do. However, this no-frills approach makes it a very straightforward user experience.

Overall, the desktop trading experience of Robinhood trails behind that of TD Ameritrade, whereas Robinhood’s mobile interface benefits from a simple, stripped-down approach. 

In addition, Robinhood has been under regulatory scrutiny since late 2020 due to multiple platform outages and deliberate restrictions in trading that have resulted in customers losing money. This raises the possibility of future outages or restrictions at inconvenient times when using Robinhood.

TD Ameritrade vs. Robinhood: Offerings

As a more experienced organization, TD Ameritrade offers a wider selection of financial products for users to invest in and trade. 

Both platforms offer the following securities:

  • Stocks
  • Exchange-traded funds (ETFs)
  • Options.

In terms of unique offerings, TD Ameritrade has many services and security types that are not offered by Robinhood. These are:

  • Short selling
  • Bonds
  • Mutual funds
  • Futures and futures options
  • Robo-advisory
  • Forex trading
  • Over-the-counter bulletin board (OTCBB)
  • Penny stocks.

Despite being at a major disadvantage, Robinhood still offers a few services that TD Ameritrade does not match including crypto trading (individual cryptocurrencies) and fractional shares.

TD Ameritrade vs. Robinhood: Technology

Generally, no-commission brokerages make a profit from payment for order flow (PFOF). It is difficult to make this comparison because Robinhood does not publish PFOF on a per-share basis as is standard. 

In the third quarter of 2019 TD Ameritrade reported a PFOF income of $0.0012 per share.

TD Ameritrade vs. Robinhood: Costs

When it comes to trading fees, the competition of TD Ameritrade vs Robinhood is almost even. This is because both TD Ameritrade and Robinhood charge no commission on trades of the following kinds of securities:

  • Stocks
  • Exchange-traded funds (ETFs).

In addition, Robinhood offers no-commission trading of options and a small selection of cryptocurrencies.

On the other hand, TD Ameritrade charges a small per-contract fee for options and futures. Although it offers crypto-related products, TD Ameritrade does not allow users to trade in individual cryptocurrencies.

The table below explains in a bit more detail the trading costs on the two platforms:

TD AmeritradeRobinhood
Stocks, ETFsFreeFree
Options (puts and calls)$ 0.65 per contractFree
Futures$ 2.25 per contractn/a

TD Ameritrade vs. Robinhood: Research Tools

Research tools allow users to find the information they need to make rational trading decisions. This information includes market news, charts, testing, and simulation as well as screeners. ‘

Once again TD Ameritrade vs Robinhood ends with TD Ameritrade on top. Both versions of TD Ameritrade’s platform offer more advanced research amenities to users than Robinhood.

TD Ameritrade vs. Robinhood: Portfolio Analysis

Portfolio analysis is a way to generate a numerical overview of gains or losses from your trading or investment activities. It’s a way to quantify the real changes in the value of your holdings. 

The following analysis services are offered by both platforms:

  • Unrealized gains and losses
  • Total portfolio value
  • Buying power
  • Margin information 
  • Dividend history
  • Tax reports.

In addition to these, TD Ameritrade offers some analyses in real-time, so you can see how your portfolio is evolving on an hourly basis.TD Ameritrade users can also incorporate their external holdings to include in their portfolio analysis.

TD Ameritrade vs. Robinhood: Customer Service

Robinhood offers customer service primarily through its smartphone app and website. The company does not offer telephonic customer service and offers limited support through other channels.

TD Ameritrade offers 24-hour live chat and telephonic support for current and prospective customers. In addition, TD Ameritrade provides customer support chatbots on several social media platforms including Twitter, Apple Business Chat, Facebook Messenger, and WeChat.

TD Ameritrade vs. Robinhood: Security

TD Ameritrade offers extensive insurance for its users’ cash and securities. Every TD Ameritrade client benefits from $149.5 million of insurance for their securities and $2 million of insurance for their cash.

On the other hand, Robinhood only offers a maximum of $500,000 in insurance coverage per customer. This is likely not much of a problem for a significant portion of Robinhood’s client base, which trades at smaller volumes than professional traders.

Final Thoughts

Choosing the right brokerage is important. The right choice of TD Ameritrade vs Robinhood depends on your goals and how much you already know about stock trading. If you are a beginner, TD Ameritrade has extensive educational content. Robinhood has zero fees on every type of trade, but TD Ameritrade has a wider selection of trade-able securities. Certain specialized trades may cost less on Robinhood than TD Ameritrade.

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