Forex Trading with TD Ameritrade
Although TD Ameritrade is mostly known for its securities trading, it also offers forex services. Before running off to open an account with a forex-only broker, you’ll definitely want to take a look at everything TD Ameritrade has to offer currency traders.
TD Ameritrade Currency Pairs
TD Ameritrade offers forex trading 23 hours a day, 5 days a week. There is a one-hour break each day from 5:00 pm, EST, until 6:00 pm. The currency market is closed from Friday evening until Sunday evening.
Not wanting to be outdone by its forex rivals, TD Ameritrade has rolled out a lot of currency pairs
for trading. Currently, there are about 70 of them. Examples include both US dollar pairs and exotics
(without the US dollar):
TD Ameritrade Forex Leverage
At TD Ameritrade, the basic lot size that can be traded is 10,000 units of the base currency, which is
the currency that appears first in the notation (the Euro is the base currency in the pair EUR/HKD,
for example).
Major currencies like EUR/USD have 50:1 leverage at TD Ameritrade Forex, while minor pairs get just 20:1
leverage.
Enabling Forex Trading on TD Ameritrade
To start trading currencies at TD Ameritrade, forex trading must first be turned on. To do this, log
into the website and select the account you want to add forex trading to in the top of the site with
the drop-down account selector (in case you have more than one account). Then head to the Client
Services tab in the top menu and select My Profile.
On the new page, go to the General tab and find the Upgrade link on the forex line in the Elections & routing section. Forex trading will probably show as disabled initially.
Many account types can trade currencies, but some are ineligible. IRAs, custodial accounts, and 401k accounts, for example, cannot trade forex.
TD Ameritrade Forex Fees and Commissions
There are no commissions at TD Ameritrade on forex trades, which may sound great; however, the broker does make money off the bid-ask spread of each forex trade. Therefore, we want to look at bid-ask spreads on some currency pairs.
EUR/USD: 0.97335 - 0.97342
GBP/CAD: 1.52193 - 1.52272
USD/ILS: 3.5383 - 3.54983
ZAR/JPY: 7.9910 - 8.0650
AUD/PLN: 3.1704 - 3.1790
Notice that the most popular pair in the group, EUR/USD, has the smallest spread.
TD Ameritrade does have some liquidation policies that traders definitely want to be aware of. First, any account with a risk level under 100% at 4:00 am, EST, will have all of its positions closed out. Second, positions will also be closed out by TD Ameritrade in any account with a risk level below 25% intraday.
Open TD Ameritrade Account
Open TD Ameritrade Account
TD Ameritrade Forex Trading Platform
With an account enabled for forex trading, it’s time to start researching currencies and placing some trades. Although TD Ameritrade does have several trading platforms, only the thinkorswim platforms can be used to trade forex. The website proper cannot be used to submit forex trades, but there is a thinkorswim browser platform that can be launched from the website.
To launch the thinkorswim web platform, log into the classic website (not the next gen website) and hover over the Trade tab in the top menu. In the drop-down menu, click on the link for Trading Platforms. On the next page, you can launch the web version of thinkorswim. This will create a new tab in the browsing window.
Once launched, there are two modes: live and paperMoney. The second choice is a simulated mode where demo trades can be submitted with $200,000 of practice currency ($10,000 of which can be used for forex trading). This is highly recommended for novice currency traders.
In either live or practice mode, a list of currency pairs can be pulled up in the watchlist section. To do this, click on the watchlist title and browse to the watchlist home screen and select Browse Categories, then Public, then FX. You’ll have a long list of currency pairs. Click on any one of them to populate the rest of the platform with that currency pair.
Charting is possible with a currency pair using the same resources that stocks have. These include technical indicators and drawing tools. The order ticket for currencies has limit, market, stop, and trailing stop as standard fare plus a lot of advanced order types, such as contingent.
Then there is thinkorswim in desktop version. It also has two modes, live and simulated, although one must be selected at the login screen. It is not possible to toggle between the two modes after logging in, which is possible on the web browser.
The advantage of the desktop system is that many more graphing tools are available. There are literally hundreds of technical studies and many more plot styles.
The thinkorswim mobile app (which is different than the basic TD Ameritrade app that does not offer currency trading) delivers a similar experience as the thinkorswim desktop software. There is very advanced charting, and the same currency watchlist we have already seen makes an appearance.
Trade Example
In the integrated forex watchlist, we click on USD/SGD. The price displayed is US$1.43303, but this is just the mid-point between the bid and ask prices. The bid is $1.43164 with a million units available. The ask price is $1.43441 with half a million units at that price.
We’re bearish on the U.S. dollar, so we enter a sell order for $10,000, which is U.S. dollars. We enter a market order for quick entry, and it reduces our forex trading power by $500, which reflects 20:1 leverage on this minor currency pair.
To close the position, we go back to the pair’s profile page and click on the link to close the position. We walk away with a $0.17 loss on the trade, primarily reflecting the spread.
Forex Education
TD Ameritrade has a great deal of educational resources on its website (either in classic or next gen mode). However, the number of forex materials is rather limited. We found just 19 links for currency videos and other resources, and some of these are on cryptos, which aren’t tradable at TD Ameritrade (except in futures form).
Examples of resources we found include:
Investing Basics: Forex
What Are Currency Pairs?
What is Leverage in Forex Trading? Understanding Forex Margin
Currency pair profiles on thinkorswim don’t have much information on them at all, so off-site research will be necessary.
Open TD Ameritrade Account
Open TD Ameritrade Account
TD Ameritrade Forex Trading Summary
With TD Ameritrade, forex traders don't need a forex-only broker. The firm's clients get 24/5 customer
service, currency education, and high-quality trading platforms, all with competitive spreads.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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