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Online Brokerage Review: Ameritrade / TD Waterhouse

When Ameritrade acquired TD Waterhouse, it became the ten-ton gorilla of the online trade business. The new brokerage will soon be known as TD Ameritrade, with old TD Waterhouse customers likely moved over to the Ameritrade interface and fee schedule, which we review here. How does TD Ameritrade compare to Etrade, Schwab, and Scottrade? Let’s just say the biggest isn’t necessarily the best.

Interface

TD Ameritrade’s interface is hands down the best on the web. Years ago that title belonged to Datek before they were acquired by Ameritrade. Thankfully Ameritrade management got the message from Datek customers and stole the best features from their design.

One especially helpful feature is Ameritrade’s quote page that has near real-time news and press releases in addition to real time quotes. Sure it may not be a Bloomberg terminal but it’s as close as you’re going to get for $0 per month.

Best of all is the Streamer application, also stolen from Datek. This is an external application that gives you real time quotes for any number of stocks you wish even when you’re away from Ameritrade’s website.

RATING: 5/5

Order Execution

Order execution is the one area where Ameritrade lags behind its competitors. I have found their execution to be especially sloppy on NYSE issues and options. Not terrible, but by far the worst of the major brokers.

RATING: 2/5

Equity Trade Pricing

Ameritrade charges a $10.99 flat fee to traders for limit or market orders. This is 50% more than Scottrade’s bottom basement $7 charges but less than the average trade cost on Etrade and Schwab.

RATING: 3/5

Short Inventory

Ameritrade’s short inventory is very good, only rarely have I not been able to short an issue. All but the most heavily shorted stocks and extremely low float shares are available for short selling.

RATING: 4/5

Options

If you’re trading huge numbers of contracts then Ameritrade will save you a few dollars on commissions because they charge $.75 per contract instead of the usual $1.25 in addition to the $10.99 trade fee. On the other hand, if you trade huge numbers of contracts then you’ll probably want order execution that isn’t a complete joke. Stay away options traders.

RATING: 2/5

Service

I have found email service to be a bit slow, but I am told that their dialup service is passable for a low cost broker. They get the job done.

RATING: 3/5

Account Minimums

Ameritrade requires $1000 to open an IRA and $2000 to open an equity account. Inactivity fees apply if your balance drops below $2000 so invest wisely if you only have $2000 to your name. Overall their minimums are about average for a discount broker.

RATING: 3/5

Summary

Ameritrade isn’t a terrible online brokerage but I have a hard time recommending them. On the low end they are trumped by Scottrade’s far cheaper commissions and lower account minimums. On the high end they cannot compete with the service and options trading of Schwab. I maintain an Ameritrade account for one reason only, and that is to use their excellent Streamer application.

OVERALL RATING: 3/5

Article by Ninjak







 

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