Commission-free trading has made investing accessible to more people, especially as account minimums disappear. If you’re looking to engage in commission-free trading, you can choose either Robinhood or TradeStation. Besides the cost-savings benefit, these online brokers allow investors to trade on the go through their mobile applications.
Despite the similarities, how do these brokers compare with fees, commissions and research offers? Benzinga has compared both online brokers to help you better understand your investing options.
Who is TradeStation for?
TradeStation began as a software company for traders, and although it has grown over the years, it has stuck to its initial trading principles. If you’re looking for high-speed trade execution and professional data on an expert-level platform, TradeStation would be a great option.
New customers earn a 0.40% interest upon funding their equities account with at least $1 million. Existing customers earn 0.40% interest on deposits exceeding $500,000.
Who can invest using TradeStation?
- Expert traders: TradeStation is a great trading platform for seasoned investors who would like to combine their vast trading knowledge with high-speed trade executions. Besides, this online platform is uniquely identified with the ability to allow advanced traders to back-test strategies in their current trades.
- Beginners: While TradeStation’s customizable trading platform may discourage less experienced traders, it offers beginners an option to execute trades with a more straightforward platform.
- Active traders: TradeStation is also a great option for active investors. Since pricing is determined by volumes, this scheme fits well in any active trader’s portfolio. Higher trading volumes result in lower costs as well as software charges waivers.
- Institutional investors: The company promises great services to institutional investors by offering tailor-made trading solutions. TradeStation affirms great exposure to serving institutional investors in the United States, Europe, Latin America and other international markets. Investors can also enjoy electronic execution services across various asset classes.
Who is Robinhood for?
Although Robinhood doesn’t have a diverse playground of trading options, you will like the broker for its simplicity in trading stocks as well as a zero account minimum. Robinhood may be used by:
- New investors and traders: Robinhood largely succeeds in accommodating new traders. The app has helpful, clearly presented research resources that are easy to understand. Although the resources aren’t as comprehensive, you will quickly learn the basics.
- Those who like freebies: Robinhood is a great trading option if you love free things. The company offers free access to its platform and doesn’t charge commissions on trades executed. However, there are some minimum balances and account charges lurking on the platform if you perform account transfers or opt into its $10 per month Gold premium service.
- Mobile traders: If you like executing trades on the go, Robinhood would be a great broker. Its mobile app allows investors to trade stocks, securities and exchange-traded funds (ETFs) with a swipe.
TradeStation Fees and Commissions
Like most other brokerages in early-2020, TradeStation offers commission-free trading for stocks, ETFs, options and futures. For TS Select, investors need to fund the account with a minimum of $2,000. For TS Go, the mobile-only option, you do not need to meet a minimum funding requirement.
Commissions for Different Asset Classes
|Stocks||$0 per trade|
|ETFs||$0 per trade|
|Options||$0.50 to $0.60 per contract + $0 per trade|
|Futures||$0.85 to $1.50 per contract per side + $0 per trade|
|Mutual Funds||$14.95 per trade|
|Bonds||$14.95 per trade|
With TradeStation, you will incur a potential inactivity fee of $50 if you do not maintain $2,000 in your account or make at least 5 trades per month. An inactivity fee is also charged after 1 year. With the per-trade fee structure, you incur an inactivity fee of $50 per year if your average month-end balance is below $2,000 and/or you have executed less than 5 trades in the 12 months following your funding date or the anniversary of that date every year.
Robinhood Fees and Commissions
Although Robinhood doesn’t charge commissions for any trades you execute, there are some costs you need to take into account when using this broker, especially if you want to trade frequently. If you are a day trader and don’t have a minimum account balance of $25,000, then you can only perform 3 intraday trades within a 5-day period otherwise your account will be suspended.
Dividend traders also incur huge taxes since the company doesn’t currently provide the option to reinvest all payouts back.
The company also has a premium service, Robinhood Gold, which allows investors with a minimum $2,000 account balance to register for a margin account. This premium service also allows traders to immediately transfer $1,000 into their brokerage account, surpassing the 4 to 5-day verification period required on deposits. Robinhood also charges $10 for transactions made via a phone call.
TradeStation Research Offerings
TradeStation offers advanced research tools with excellent charting capabilities. The company also has complex infrastructure that helps in researching and back-testing trading strategies through the vast historical data it offers.
The company’s charting features are properly structured; you can use more than 170 technical indicators with add-ons like chart saving. This feature is dedicated to advanced users who can easily master its functions.
For improved research capabilities, TradeStation has a newsfeed made of news snippets that are imported from various news sites. The company also offers a watchlist system that provides endless customization, with over 300 data points. Traders can also receive educational content on various topics. Users can access live webinars on trading topics, pre-market commentary as well as chart analysis from market experts and professional traders on each trading day.
Robinhood Research Offerings
You won’t have it all when you’re enjoying fee-free trades, and it shows with the limited research and educational materials offered at Robinhood. While this isn’t a killer for the experienced investor, it may put off new investors who need more direction.
In the Gold premium service, Robinhood offers ratings from Morningstar and provides newsfeed and analysis from popular websites for every stock. The app also offers basic charting functionalities.
TradeStation vs Robinhood Bottomline
TradeStation should rank among your top brokerage options if you’re an active and professional investor. It features most of the traits you will need — a robust trading platform, low commissions, various tradable securities and useful technical and research tools.
Robinhood’s biggest draw is the free trading of ETFs, stocks and options. This is a great choice for beginners since there’s a quick return on their initial investment. Although the company allows trade execution through its highly usable app, it lacks the research and educational material that novice investors might need.