Overview of TD Ameritrade and Interactive Brokers
TD Ameritrade and Interactive Brokers are two titans of the online discount brokerage industry.
While there are many similarities, there are important differences. Make sure you read the
following comparison before picking one of them.
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
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TD Ameritrade
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IB
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Cost Comparison
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Margin
Rate |
Maintenance
Fee |
Annual IRA
Fee |
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TD Ameritrade
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$0
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$49.99 ($0 to sell)
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11%
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$0
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$0
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IB
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$0
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$14.95
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3.08%
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$0
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$30
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Promotion Links
TD Ameritrade: $0 commissions + transfer fee reimbursement.
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
Category #1: Tradable Products
TD Ameritrade customers can buy and sell these investment vehicles:
- Fixed-income assets
- Stocks
- ETFs
- Closed-end funds
- Mutual funds
- Futures
- Forex
Although the stock offering includes penny and OTC securities, it does not include foreign stocks. Interactive Brokers, by contrast, does provide access to many foreign stock exchanges. In fact, it offers global trading in several asset classes.
Besides the list that TD Ameritrade has, IB also offers:
- Precious metals
- Warrants
- Contracts for difference
- Cryptocurrencies
- Structured products
Winner: Interactive Brokers
Category #2: Asset Research
After you pick the asset class you want to trade, you’ll probably want to do some research to find a specific asset to buy or sell. Both firms in this assessment have tools to do just that.
Interactive Brokers has equity screeners on both its website and desktop platform. Search criteria include price range, volume, 52-week high, social sentiment, ESG scores, and more. Besides US exchanges, foreign exchanges are included in the software.
Stock and ETF profiles at Interactive Brokers have tons of information on them (on the website, not the desktop platform). For Facebook, we found ratings (and an average price target) from no less than 51 analysts. Other data points include social sentiment figures, news articles, key ratios, and dividend details.
Over at TD Ameritrade, stocks and ETFs also have extensive profiles. For Facebook, we found pdf reports from 6 analysts. (Interactive Brokers doesn’t offer pdf reports.) The TD Ameritrade website also presents price targets and trade recommendations from additional analysts (35 for Facebook).
TD Ameritrade’s ETF and stock screeners are user-friendly with many search criteria. But they can’t look for assets on foreign exchanges, a major disadvantage compared to its rival here.
Two areas where TD Ameritrade outshines Interactive Brokers in this category are steaming financial news and mutual funds. TDA offers two video channels free of charge: CNBC and TD Ameritrade Network. Interactive Brokers provides zero. For mutual funds, TDA offers lots of research tools, which aren’t available at IB.
Winner: TD Ameritrade
Category #3: Website Trading
Once you’ve narrowed down your list, it’s time to get down to business and actually place a trade. Both brokerage firms have very good web-based software to accomplish this task.
Interactive Brokers provides what it calls a client portal. This is basically a website with a trading ticket. Charting has recently been upgraded with help from TradingView. We found lots of drawing tools, which really add value to full-screen mode.
IB’s order ticket has on-close order types and bracket orders. A price management algorithm also makes an appearance.
Stock and ETF profiles have option chains, but we only found calls and puts during our snooping. There are no integrated spreads, and it’s not possible to create a multi-leg trade.
Moving to TD Ameritrade’s website, we find decent charting tools, although they’re not quite up to par with TradingView. A graph can be expanded the full width of the computer screen, and there are several charting tools.
The broker’s website has a trade bar at the bottom of the screen, something that IB’s client portal doesn’t have. The widget can quickly send orders for equities and ETFs. If you don’t care for the trade bar, you can always use the regular order ticket. It offers several advanced order types.
Winner: Toss up
Category #4: Desktop Software
If you don’t care for the web-based platforms, you could always upgrade to desktop systems. Both companies offer desktop software for free with no account minimums.
Interactive Brokers clients get to use Trader Workstation. It has a demo mode if you want to practice it first. You don’t even need an IB account. Numerous features are on this platform. iBot is an artificial intelligence that can answer some questions, although it’s still a work in progress.
Advanced charting with right-click trading is another highlight. We counted well over 20 order types. There are many option tools, with a discrete window devoted to options trading. We counted 11 spreads with another to create your own.
thinkorswim has more technical indicators than IB’s platform (400 versus 120). thinkorswim also boasts streaming video news, a great service that is missing on Trader Workstation.
thinkorswim’s trade ticket has 16 order types with some very unusual ones like Blast All. And with right-click trading, it’s easy to populate an order ticket on the fly.
Both platforms offer multiple watchlists and the ability to create alerts. Futures and forex can also be traded on both systems.
Like Trader Workstation, thinkorswim has a demo login if you need to practice the software. Because both programs are rather complicated, this is very likely.
Winner: Too close to call
Category #5: Margin Borrowing
If you want to trade with borrowed funds, both TD Ameritrade and Interactive Brokers offer margin
accounts. TD Ameritrade consistently has higher rates. Its highest rate is 11%.
Interactive Brokers charges no more than 3.08% on any balance.
In addition to its great rates, Interactive Brokers also provides margin details for any entered ticker symbol on Trader Workstation. To find this great resource, just type in a security’s ticker symbol on the trade ticket and then click on the advanced tab. In the drop-down menu that appears, click on the Check Margin button. You’ll see information on initial and maintenance margin requirements. thinkorswim doesn’t have this really nice feature.
Winner: Interactive Brokers
Category #6: Forex Trading
Rarely do we have two brokerage firms in the same survey to both offer forex trading. We have that here, and there are some important differences between these two.
The first is that Interactive Brokers charges commissions on forex trades, while TD Ameritrade does not. But Interactive Brokers does seem to have smaller spreads. For example, on the day we did our research IB had a 6.9 to 7.0 spread on EUR/USD, while TD Ameritrade had a 7.0 to 8.4 spread on the same pair.
Interactive Brokers charges a percentage of trade value on every forex trade, with a minimum commission of $1 to $2.
Both desktop platforms offer currency dealing boxes. During our investigation, we thought thinkorswim had a more user-friendly interface. There are also more display options for each dealing box.
TD Ameritrade clients have access to more than 70 currency pairs. IB offers 23.
Winner: TD Ameritrade
Category #7: Day Trading
Shorting. While it is possible to take short positions at either firm, only Interactive Brokers shows on its desktop platform whether a security is actually shortable or not. Furthermore, Trader Workstation’s check margin tool shows the margin requirements for shorting a particular security. thinkorswim doesn’t display this essential information.
Level II quotes. These are available at both firms, but only TD Ameritrade offers them for free. Even professionals get them for free.
Direct-access routing. Although it’s possible to directly route orders at either broker, Trader Workstation offers many more venues.
Routing fees and rebates. Only IB offers maker-taker fees.
Winner: Interactive Brokers
Category #8: Other Services
IRAs: Both brokers offer Individual Retirement Accounts. TD Ameritrade has more account types.
Automatic mutual fund investing: Available at TD Ameritrade, but not at Interactive Brokers.
Fractional-share trading: Available at Interactive Brokers, but not at TD Ameritrade.
IPO availability: TD Ameritrade customers with enough trades or assets can subscribe to upcoming IPOs. Interactive Brokers doesn’t offer IPO participation to its U.S. customers. If you have a Hong Kong account, you might be able to access IPOs on the local exchange there.
Extended hours: Both pre-market trading and after-hours trading are available at the two firms in this survey. Interactive Brokers provides longer hours.
Dividend reinvestment program: Available at both firms.
Winner: TD Ameritrade
Now, Our Recommendations
Mutual funds: TD Ameritrade has much better search tools and mutual fund profiles. Easy choice.
Stock/ETF trading: This one is very close. We do think IB’s fractional-share trading service gives it a slight edge.
Beginners: Interactive Brokers is designed for experienced traders, so we have to endorse TD Ameritrade here.
Small accounts: Both brokerage firms now have zero minimums and no fees (IB clients should choose the IBKR Lite schedule).
Retirement savers and long-term investors: Only TD Ameritrade offers an individual 401(k) plan, Minor and SIMPLE IRAs, profit-sharing plans, money purchase pension plans, and investment-advisory services.
Promotions
TD Ameritrade: $0 commissions + transfer fee reimbursement.
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
TD Ameritrade vs IBKR Recap
These two brokers are overall very close. And with the IBKR Lite pricing schedule, Interactive Brokers
is also competitive in terms of value. Where TD Ameritrade falls short is in global trading and
whole-dollar investing, and where it rises above Interactive Brokers is in the realms of mutual funds
and investment advice.
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