Robinhood has revolutionized the online brokerage industry since 2013 offering commission-free stock, ETF, and options trading to a rapidly growing millennial customer base. In 2018, they added commission-free cryptocurrency trading on four digital coins. Crypto trading on Robinhood is available in 17 U.S. states, marking the first phase of a program that will expand nationwide in the coming months. And rumor has it they’ll soon offer online banking, taking the next step in competing with traditional full-service brokerages.

A Quick Look

 Products & Fees

  • Interest collected on money not invested
  • Account minimum: None
  • Stock trade fees: $6.95
  • Account minimum: $0

 Fast Facts

  • Availability of cryptocurrency
  • Currently only for mobile, desktop features to come
  • Real-time market data
  • Large investment selection
  • Three trading platforms
  • Free research and data

 User Experience

  • Easy to navigate and use
  • Streamlined & intuitive
  • Trades are free
  • Enough functionality to be productive
  • Feature-rich thinkorswim platform 
  • Comprehensive options chains and in-depth charting functionality
  • Timely data and technical analysis
  • Two mobile apps for both investors and active traders

 Education

  • Few educational resources
  • Broad range of educational information
  • Social Signals portal that scans Twitter

 Research & Insights

  • Robinhood offers no headline news, research tools, or educational resources
  • MarketEdge provides up-to-date commentary
  • Stocks Overview tallies the day’s price action

 Customer Support

  • No telephone support
  • Email is the main option for help
  • Excellent support with multiple options to get help

 

TD Ameritrade is the product of mergers and acquisitions of former rivals that include National Discount Brokers, Datek Online Holdings, Mydiscountbroker.com, TD Waterhouse, Scottrade, and Thinkorswim. They now boast more than 11 million customers and one trillion dollars in client assets focused on “fast-finger trading” (a term for traders who make many trades per month) slow-paced investment, and traditional wealth management.

TD Ameritrade charges $6.95 for a stock order, $6.95 + 75-cents per contract for an options trade, and $2.25 per futures contract. Account holders can also trade more than 70 currency pairs with margins that range between 50 and 20: 1, with trades costing 10-cents per 1,000 units, with a minimum $1.00 charge. For slower-paced investors, they offer a wide variety of commission-free ETFs and mutual funds.

Banking

Bloomberg reports that Robinhood is talking with regulators about adding banking services to its growing product line. The initiative will allow deposits and withdrawals through Robinhood’s mobile app but not the web-based interface. TD Ameritrade isn’t a licensed bank but offers banking services through third-party agreements. These services include free checking, a debit card with Apple Pay, free online bill pay, and third-party ATM fee reimbursement. Cash balances pay sliding scale interest through an overnight sweep into money market funds, with 0.04% up to $4,999 and 0.35% at and above $1,000,000. These rates were effective as of July 2018.

Trading Platforms

Robinhood’s popular mobile app is simple and easy to use but lacks features found in competing apps. It handles typical account maintenance functions that include bank transfers but traders will find few bells and whistles, with basic charting that includes historical price data that can’t be customized. The fine print indicates that streaming quotes may be delayed, rather than real-time data that is now an industry standard. There are no back-testing tools and the system throttles day traders, limiting trading activity to three trades per rolling 5-day period.

Robinhood customers had to trade on the mobile app until the November 2017 release of Robinhood for The Web, their PC, and tablet trading interface. The browser-based platform provides more comprehensive features than the mobile app, with investment and research tools that include hot lists, analyst ratings, and a social trading tab with average share price paid by other account holders. It also scrolls the latest headlines, earnings information, and a personalized newsfeed.

TD Ameritrade got control of a state-of-the-art trading platform with the 2009 thinkorswim acquisition. This feature-rich standalone software offers advanced support for active traders speculating on futures and currencies as well as stocks, ETFs, and options. Back-testing, conditional orders, paper trading, and Level II quotes round out trading tools that include comprehensive options chains and in-depth charting functionality.

Account holders can also choose between two mobile apps, TD Ameritrade Mobile for investors and Mobile Trader for active traders. These slimmed down interfaces include alerts, research, and real-time market commentary as well as streaming CNBC financial TV. Account holders can place conditional orders and access Level II quotes, but there’s no back-testing function, and the apps don’t handle mutual funds or fixed income products.   

Margin Accounts

Robinhood customers were limited to cash accounts when the company opened shop in 2013, generating a delay in funding that could last a week or longer. New account holders now open a generic no-fee margin account that doesn’t accept trades with a greater value than the account size, effectively cutting off margin use. This original approach ended the funding delay because customers can now trade with borrowed money until incoming funds clear the bank.

The Robinhood Gold margin account requires a standard $2,000 account minimum and charges a monthly fee rather than overnight lending rate, generating buying power up to $50,000. A 5% annual interest rate is charged in excess of that margin. Buying power refers to leverage, based on the current cash balance. For example, a $30,000 account with $30,000 in buying power can hold up to $60,000 in stocks, ETFs, options, and cryptocurrencies. However, the service isn’t cheap, with a $200 monthly fee at $50,000 buying power, dropping to $120 at $25,000. 

Research and Education

Robinhood’s bare-bones website offers no headline news, research tools, or educational resources. The mobile app contains a limited feature set that includes fundamental stats and a volatility tool. The desktop app adds a broad variety of useful research features but doesn’t provide educational materials or other guidance for novices or experienced traders. Of course, this follows the broker’s no-frills reputation.

TD Ameritrade’s MarketEdge feature provides in-depth and up-to-date commentary as well as timely market data and technical analysis. Account holders benefit from the ETF Market Center, allowing them to flip through hundreds of commission-free ETFs to find the best candidates. An impressive Social Signals portal scans Twitter, seeking actionable community insight and sentiment, while Stocks Overview tallies the day’s price action and sizes up new opportunities.

Customer Support

TD Ameritrade account holders can call a 24/7 phone contact number, send an e-mail inquiry or visit a local branch. Customers can chat with representatives through iPhone messaging but there’s no similar Android app. General inquiries can also be posted through text messaging, Facebook Messenger and live chat on Thinkorswim and Mobile Trader.

Robinhood provides a help menu but no telephone support, telling customers to use e-mail for contact. There’s no live chat interface for potential or active customers, unlike the majority of modern brokers. Answers to questions can be difficult to find, with the Help menu fronting a limited FAQ and text-based ticket system with no hours of operation or other useful information. It isn’t surprising that customer service complaints can be found all across social media.

The Bottom Line

You get what you pay for and it’s no exception when choosing a broker. Robinhood’s no-frills and commission-free approach work best with small account holders who need little or no hand holding. On the other hand, you’ll pay relatively high commissions to use TD Ameritrade’s excellent trading platform, which offers access to futures and currencies, unlike its rival. Robinhood’s leadership in cryptocurrencies and its rapid growth curve are likely to narrow the differences between these top-notch brokers in coming years.

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