Is TradeStation Safe?
TradeStation is a brokerage firm that started off as a product/software built by Omega Research. Omega Research was started by two brothers named Bill and Ralph Cruz in 1981. In 1991, the brothers ended up creating a software that would allow traders to automate and code their own strategies, which they ended up naming TradeStation.
In 1994, Omega Research entered a deal with Dow Jones Telerate to offer the TradeStation product to institutional clients all over the world. The company was named TradeStation in 1991, and they converted to a full-service online brokerage in 2001. Monex Group in Japan acquired TradeStation in 2011.
TradeStation is known for its tools that allow customers to back test their trading strategies. It is also known for having direct-market access and great charting platform. As a company that has been around since the 1980s and has a large history among active traders, it can be said that TradeStation is a safe company.
Is TradeStation a Scam?
TradeStation offers a significant number of investment products from stocks, bonds, mutual funds, exchanged traded funds (ETFs), options, futures, and even some cryptocurrencies. TradeStation does not offer commodity trading.
The cryptocurrencies they offer customers are Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple. It is noted that they may be adding more cryptocurrencies in the future. Their cryptocurrency trading is NOT licensed with the SEC.
TradeStation has been registered with the SEC since 1996 and is also a member of Financial Industry Regulatory Authority (FINRA). They operate all over the world and have a reputation in the trading industry of being a well-run, established company, which makes it very doubtful that TradeStation would be a scam.
Is TradeStation a Legitimate Firm?
TradeStation is registered as a broker-dealer and an investment adviser. This means that they are paid for giving advice to their customers about securities and other investments that they offer, and that they clear their own trades.
TradeStation conducts 13 types of businesses, shown below.
TradeStation has an agreement with WedBush Securities which clears futures and futures options for TradeStation customers.
TradeStation is registered to do business in all 52 states in America, and TradeStation has a division called TradeStation International which allows them to do business in a handful of other countries. See the below graphic for details.
They are not suspended with any regulators, and they are registered with 11 self-regulatory organizations.
Is TradeStation FDIC/SIPC Insured?
TradeStation is not a bank, so is not FDIC insured. TradeStation is a member of SIPC (Securities Investor Protection Corporation) and therefore insures its clients up to $500,000 ($250,000 in cash) if the company went bankrupt. This is a positive sign and gives traders and investors confidence that they are a legitimate company.
TradeStation Promotion
$150 cash bonus when you transfer funds into TradeStation.
Open Tradestation Account
Is TradeStation Free?
TradeStation offers free-commission trading on stocks and options to compete with other brokers that have made the switch to commission-free trading. Although they offer commission-free trading, TradeStation charges $0.60 per options contract.
When traders have a Crypto account with TradeStation that is $100,000 or less, there is a $2 fee for selling USDC stablecoin for USD plus 30 basis points. With accounts over $100,000 and less than 1 million, there is a $1 fee for selling USDC stablecoin for USD plus 0.10%. With accounts over 1 million dollars, there is a $1 fee for selling USDC stablecoin for USD plus .05%.
For Crypto IRAs, there is a $1 transaction fee plus .5%. Crypto trading is fairly new on the platform since they implemented it in 2019.
TradeStation Complaints
TradeStation Securities is not BBB accredited.
Investopedia reviewed TradeStation and granted them 4.5 out of 5 stars. They state that it is stable and reliable and highlight its charting tools, back-testing and automated technology.
They also mention TradeStation’s TradingApp store which allows for additional add-ons for traders to choose from and that TradeStation has a 99.9999% uptime which gives investors confidence that its platform will not break down during trading hours.
Negative TradeStation reviews mention that there are no fractional shares available, a $2,000 account minimum, and account fees that include a $50 inactivity account fee if your account is not used to trade 5 times in a year, a $35 annual fee for having an IRA, a $50 fee for closing an IRA and an outgoing account transfer fee of $125.
TradeStation Allegations and Fines
There are 25 disclosures on FINRA Broker Check from 2003 to present. Some disclosures are in relation to minor errors made by TradeStation while others are more significant.
In 2005, TradeStation paid $175,000 in a court case for violations of Pennsylavia’s Unfair Trade Practices and Consumer Protection Law, for churning, and for failure to utilize fair asset allocation.
Churning is when a broker excessively buys and sells securities without the investor’s investing goals in mind in order to produce more commissions.
In 2007, TradeStation paid out $750,000 to FINRA for not reporting 23.5 million orders from on their trading platform for 5 years.
In 2008, TradeStation paid $70,000 for failing to report short interest positions to FINRA.
They paid more than one fine for not locating shares that they promised to a customer who was shorting securities.
In 2011, they paid out $200,00 for failing to supervise accounts for suspicious activity.
Is TradeStation Safe Conclusion
Considering TradeStation’s history, their registrations with the SEC, their memberships with FINRA and SIPC as well as their agreement with WedBush Securities, which is a major financial firm in the trading industry, it is safe to say that TradeStation is a safe and legitimate company.
They have had allegations in the past by FINRA and the SEC and as a result had to pay fines. We do not have sufficient information to decide whether this was wrongdoing by the company as a whole or by specific individuals at the company. Besides these 25 disclosures over the past 20 years, customers are satisfied with TradeStation and they still hold a high reputation in the financial industry.
Now that we know TradeStation is a safe and legit company let’s review their features.
TradeStation Promotion
$150 cash bonus when you transfer funds into TradeStation.
Open Tradestation Account
Costs
TradeStation offers free commissions on stock and options trading and charges $.6 per options contract.
If a trader’s crypto account is less than $100,000, they charge a $2 fee for selling USDC stablecoin for USD plus 30 basis points. For crypto accounts larger than $100,000 and less than $1 million there is a $1 fee for selling USDC stablecoin for USD plus 0.10%. With accounts over 1 million dollars, there is a $1 fee for selling USDC stablecoin for USD plus .05%.
For Crypto IRAs, there is a $1 transaction fee plus .5%. Crypto trading is fairly new on the platform since they implemented it in 2019.
TradeStation’s free-commission trading and low crypto fees are competitive to the market and is appealing to both traders and investors.
Routes
TradeStation offers a variety of different routes for traders to use to route their trades to different exchanges. This is helpful for advanced traders who are looking for more liquidity in the markets. They also have a proprietary Intelligent route that allows for direct-access to exchanges, which will pick the best exchange for you based on your order details.
Although other direct-access brokerages have more routes, TradeStation’s selections of routes will surely be enough for a professional trader to succeed in the markets.
Margin
The minimum account requirement for opening a margin account is $2,000 which is the same as TD Ameritrade’s margin requirement.
TradeStation offers 4:1 leverage for day trading and 2:1 leverage for overnight. This is appealing to trader’s that want to use margin to leverage their trades. It is the industry standard for direct access brokers.
TradeStation offers interest rates are:
|
Debit Balance
|
Margin Rate
|
|
under $25,000
|
11.50%
|
|
$25,000 - $49,999.99
|
11.50%
|
|
$50,000 - $499,999.99
|
10.50%
|
|
$500,000+
|
call 800-770-4049
|
Short-Selling
TradeStation does offer short-selling of securities and has a short-locate tool for traders to use to locate shares to short. Their short locate inventory is not as large as other direct-access brokers but is great for beginner traders to get acquainted with short selling.
Their tool is on another website. Traders would enter the stock symbol that they are looking to short and the amount of shares that they would like to locate. This request is sent and traders will have to wait for the status to update.
This may take a long time as the company needs to check if they have the shares. Since their short inventory may not be as big as other direct-access brokers, the request could be denied. If the tool says that TradeStation has them, then traders are able to short that security.
TradeStation Promotion
$150 cash bonus when you transfer funds into TradeStation.
Open Tradestation Account
Trading Interface & Other Tools
TradeStation has a mobile app, web trading and a desktop application. The mobile app is very use friendly and simple. It allows for executing orders and looking at charts. Traders can also easily view their portfolio and stock watchlists from the mobile app.
TradeStation’s web trading platform is almost identical to their desktop application and can be accessed through a computer browser. Traders can view charts, execute trades, and use their charting tools for technical analysis. Their web trading also includes news and watchlists.
TradeStation’s desktop application is advanced and includes all the tools of their web trading application.
Traders can use TradeStation’s programming language called Easy Language to code their strategies into their application. This is appealing to many traders that use an automated strategy or would like to incorporate automation into their strategy in the future.
TradeStation’s charting platforms are customizable, allowing traders to view multiple charts with different studies. Their charting tools are simple to use and are very user-friendly.
Ease of Access to Funds
TradeStation offers ACH transfers, wire transfers, check deposits, and electronic transfers from another brokerage in order to fund accounts. Transfers could take a couple of days to settle.
Customer Service
TradeStation’s customer service is available 8am EST to 5pm EST, Monday through Friday. They have client services and technical support numbers as well as a trade desk number if traders would like to execute trades over the phone.
They have a separate number for international accounts.
TradeStation has a “call me” option on their website, so traders do not have to wait on the phone if they are having a technical issue. It is possible to have a long wait time when calling customer service.
When searching for customer service reviews for TradeStation, there are many negative reviews stating long wait times and rude customer service. Many international customers stated they do not get a response from TradeStation for days.
TradeStation Pros
- Advanced charting
- Ability to automate strategies
- Free-commission trading
- Back-testing capabilities
- Ability to locate short inventory
- Simple, but advanced trading interfaces
- Access to 4:1 margin
- Many routing options
TradeStation Cons
- Could take a couple of days for funds to settle in account
- Customer service is sometimes hard to reach
- Small short inventory when compared to other direct-access brokerages
TradeStation Review Conclusion
TradeStation has been around for a long time and is solidified as a major brokerage in the financial industry. It was originally created for traders, but the company has recently made it more appealing to the novice investor.
There are negative reviews about TradeStation online which mostly mention poor customer service (call wait times and accessibility) as well as long wait times for transferring funds and for cashiering requests.
Short-sellers would be able to short some securities at TradeStation, but they do not offer the highest quality short-locate tool in the industry.
As a company that changed the way traders trade by providing charting and automation strategies in the 1980s-1990s and that is still advancing their features and products today, TradeStation could be a great choice for both beginner and advanced traders.
Open TradeStation Account
$150 cash bonus when you transfer funds into TradeStation.
Open Tradestation Account
Updated on 7/21/2022.
Daniel Colantonio is a writer and entrepreneur from Long Island, New York. He has an IT and real estate background and he enjoys traveling, exercising and spending time with his family in his free time.
|