Those interested in what TD Ameritrade forex-related offerings are available will not be disappointed. A major attraction of dealing forex via TD Ameritrade is that the online broker lets you use the broker’s excellent thinkorswim® trading platform which is available in desktop, web and mobile versions.
If you’ve ever considered broadening your trading horizons by adding forex trading, TD Ameritrade is a reputable broker with a great platform that includes options. The broker also gives often-neglected traders based in the U.S. and Canada an excellent opportunity to operate in the huge forex market.
In this article, Benzinga evaluates TD Ameritrade’s forex services so you can determine whether the broker is a good fit for your currency trading needs.
Can I Trade Forex With TD Ameritrade?
Yes, TD Ameritrade now lets you access forex trading through Charles Schwab Futures and Forex LLC. The forex trading entity recently changed its name from TD Ameritrade Futures & Forex LLC in September 2021 after Charles Schwab finalized its purchase of TD Ameritrade in October 2020.
You can trade currencies 24 hours a day during the six-day forex trading week via Charles Schwab Futures and Forex in as many as 70 different currency pairs and in standard lot increments of 10,000 base currency units.
In addition, you can trade currency futures and options on select currency pairs through Charles Schwab Futures and Forex. This access also includes the ability to trade micro futures contracts that are just one-tenth the size of a regular currency futures contract.
Understanding Forex Trading Services on TD Ameritrade
If you are curious about how forex trading works with TD Ameritrade but aren't sure you are read to commit to opening an account. Here are a few considerations for what their forex account offers for active trading.
TD Ameritrade does not charge any hidden fees or have a complicated pricing structure. At TD Ameritrade, forex fees or trading commissions do not get charged in the same way a stockbroker charges a commission on stock trades, for example.
Instead, you will pay away a dealing spread to do a forex transaction, as is standard practice with online forex brokers. This means you will pay the offer side to buy a currency pair and sell the pair at the bid side when making transactions in the forex market.
Charles Schwab Futures and Forex uses an electronic communication network (ECN) model. This means the broker gives you a competitive bid/offer dealing spread based on currency pair quotes obtained from four major forex market makers.
Use of Popular Trading Platforms
TD Ameritrade does not support the popular MetaTrader4 (MT4) or MetaTrader5 (MT5) trading platforms, which can present a substantial issue for those looking to use their MT4 or MT5 expert advisors with the broker.
Fortunately for other traders, though, the broker’s excellent thinkorswim trading platform has many of the same sophisticated technical analysis features found on the MetaTrader trading platforms.
The thinkorswim trading platform was developed by traders for traders. It features cutting-edge desktop, web and mobile applications. The platform is fully customizable and continuously improved based on feedback from TD Ameritrade’s community of traders.
One of the most significant advantages of trading forex has been the high leverage you can apply to your trading, although using leverage can magnify your losses as well as your gains. Leverage in trading is thus a two-edged sword that must be used with prudence.
Because of National Futures Association (NFA) rules that TD Ameritrade follows, the TD Ameritrade forex leverage for major currency pairs is 50:1, while the maximum leverage ratio for minor and exotic currency pairs is only 20:1. This means that the margin requirements for major and minor currency pairs are 2% and 5%, respectively.
Keep in mind that if your positions go against you and you cannot meet the margin requirements of your open positions, then a broker can liquidate those positions until your account returns to an adequate capital situation.
TD Ameritrade’s liquidation policy for forex trades is once daily for any account with a level of risk less than 100% when observed at 4 a.m. EST and intraday if the account falls to 25% or below, whichever comes first.
International Trading Capabilities
If you are domiciled in Canada, TD Ameritrade accepts Canadian forex trading clients through its TD Direct subsidiary. TD Ameritrade may not be available to those who are based elsewhere in the world, so to find out if you qualify to open an account, go to the broker’s account opening page. When you reach the country field, you will be notified by the website whether or not you can open an account with the broker.
Is TD Ameritrade the Right Broker for Your Forex Trading Needs?
TD Ameritrade is a well-known name in the brokerage world, with over 11 million clients and $1.3 trillion in assets under management. The platform offers a range of investment products, including stocks, options, futures, and forex trading. For forex traders, TD Ameritrade offers over 70 currency pairs, access to research and news, and a variety of trading platforms.
One of the standout features of TD Ameritrade's forex trading is the thinkorswim platform, which offers advanced charting tools, real-time data, and customizable trading strategies. Additionally, TD Ameritrade's Forex offering is fully regulated by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC), providing added security and peace of mind for traders.
However, it is important to note that TD Ameritrade's forex trading fees are higher than some of its competitors, with a per-trade commission of $0.10 per 1,000 units, and a minimum fee of $1.00. This may not be ideal for traders who are just starting out or have smaller account balances.
Other Top Options for Forex Brokers
If you live outside of the U.S. or Canada, you may not be eligible to open an account with TD Ameritrade. Benzinga has compiled several of the best forex brokers other than TD Ameritrade that might be available in your jurisdiction.
- securely through Forex.com's websiteBest For:Forex Trading in and Outside the U.S.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
- securely through IG Markets's websiteBest For:Forex Execution
For USA residents: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. Be advised that CFDs are not available in the U.S. from this provider.
Outside of the USA: CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
- securely through eToro Forex's websiteBest For:Demo Accounts
CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Frequently Asked Questions
Which forex broker is best?
Any forex broker worth their salt should have a good reputation and be duly regulated by a major regulator. The best broker for you would be the one that will accept clients in your locale and can best help you implement your forex trading strategy.
Who is the biggest forex broker in the world?
Although the broker deserving that title can vary based on which parameter you use to determine their size, Australia-based IC Markets is one of the biggest retail forex brokers in the world in terms of transaction volume. The broker recorded a monthly trading volume of over $1 trillion in November 2021.
Can I trade forex without a broker?
High-net-worth individuals can use credit lines with financial institutions to trade forex without a broker. You can also trade currency futures without a broker if you hold a seat on the CME exchange. As a smaller trader, you can take on forex risk by buying foreign assets, using an online payment service to get foreign currency or exchanging domestic money for foreign currency at an exchange kiosk or your local bank. Still, the easiest way by far to trade forex is via an online forex broker.
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