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My Review of TD Ameritrade Online Brokerage Account and Free ETF

Updated on October 22, 2011
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TD Ameritrade is one of online financial brokerage service provider with an abundant online stock trading platform for its investors as well as traders. TD Ameritrade is part of TD Bank Financial Group, a Canadian Financial Bank company .It offers an opportunity to trade stock, option and mutual fund online whether buy or sell for $9.99 per trade. TD Ameritrade also offers TD Ameritrade Apex software platform that gives traders powerful trading tools including Trade Triggers, QuoteScope, SnapTicket, Market Motion Detector, and StrategyDesk. TD Ameritrade also offers its customers additional financial services accounts such as Money Market accounts, CD’s, and online High Yield Savings account. It also provides a mobile trading platform for blackberry, iphones & other smartphones. Recently, it also offers 100 ETFs for free with no commission if the Exchange Traded Funds ETF was held for 30 days.


TD Ameritrade details

As one of largest brokerage in the world, TD Ameritrade was founded in 1971 as First Omaha Securities. The current headquarter is located at Omaha, NE USA. TD Ameritrade is a brokerage and banking company listed in Nasdaq with ticker: AMTD. TD Ameritrade also acquired ThinkorSwim (TOS) this part year.

It currently uses its own clearing service to hold the client asset. TD Ameritrade Clearing Inc, member of FINRA & SIPC, holds and clears all client trade. All TD Ameritrade accounts are insured under SIPC up to $500,000 ($100,000 cash) and supplemental Lloyd’s of London coverage up to $150 million ($1 million cash).

The following is the standard commission for trading using TD Ameritrade platform:

  • Products: Stocks, bonds, CDs, UITs, mutual funds, options, forex
  • Market Orders: $9.99/trade
  • Limit Orders: $9.99/trade
  • IVR Phone Orders: $34.99/trade
  • Broker Assisted Orders: $44.99/trade
  • ETF Market/Limit Orders: $9.99/trade
  • Commission Free ETFs: $0.00/trade with requirement
  • Mutual Funds: $49.99 for no-load funds. NTF mutual funds: $0.00
  • Options: $9.99/trade+$0.75/contract
  • Futures: $3.50/contract
  • Minimum to Open: $0, $2000 for margin account.
  • Electronic funding minimum: $500
  • Inactivity Fee: $0.00
  • Some Other Fees: Paper Statement: $2.00, DTC Out:$25.00/security, ACAT Out:$75.00.
  • Maximum Margin Rate: Based on proprietary base rate

Inside TD Ameritrade Trading Account

Click thumbnail to view full-size
TD Ameritrade Main LoginTD Ameritrade Account OverviewResearch Page
TD Ameritrade Main Login
TD Ameritrade Main Login
TD Ameritrade Account Overview
TD Ameritrade Account Overview
Research Page
Research Page

Opening an account

Opening account is straight forward; you just need to fill the online application through TD Ameritrade website. You can open various account types such as individual, joint, custodial, and Individual Retirement accounts (IRA) either traditional IRA or Roth IRA. They may require you to submit driver license identification copy. The application only takes about 10-15 minute. Once you are done, you’ll need to wait for their approval. Then, you can setup how you want to fund your account.

As many typical online brokerages account, there are 4 different ways to fund your TD Ameritrade account:

  1. Wire Transfer – usually can be done same business day
  2. Transfer an account from other brokers .This will take more than 10 business days
  3. Mailing a check will take 5 business days
  4. Electronic Transfer (ACH transfer) will take up to 2 business days.

For International or Foreign investor or non US resident, you can apply TD Ameritrade account through website. It will direct you to your regional international website such as TD Waterhouse and Internaxx. Typically, you will need to submit your account by mail. You will need to submit W-8Ben and ID or Passport along with your application. The minimum balance to open an account might be higher than US resident account.


Commission & Pricing Fees

For stock or ETF order, the standard commission is $9.99 per trade with no limit of shares amount. As noted, for broker-assisted trades, the commission is $44.99 per order. When trading during pre and post market hours, there is no additional fee such as ECN fees. TD Ameritrade applies a simplified flat-fee based commission structure. There is no catches or fine print notes for trading using Ameritrade. There is no limit on total trade size or price.

The following order types can be placed on TD Ameritrade: Market order, Limit order, Stop loss oder, Stop limit order and Trailing Stop Loss Order ($ and %).

For option trading, the customer can use their option platform to trade option. The cost of 1 contract will cost $10.74 commission fee ($8.95 ticket fee + $0.75 per contract), while 10 contracts will cost $17.49 commission fee.

For mutual funds, there are about 1,800+ no load no transaction fee mutual funds with no commission fee for buy or sell. It also offers Premier List Mutual Funds by Morningstar. There are 13,000+ mutual funds for selection with $49.95 per trade of mutual funds.

snapticket trade
snapticket trade

Free 100+ ETFs with 30 days holding period requirement

Recently, TD Ameritrade has started offering 100+ commission-free ETFs when the ETF is held for 30 days. The ETFs are selected by Morningstar. Compare to other brokerages (Vanguard, Fidelity and Charles Schwab), TD Ameritrade offering is definitely more. 30 days holding period is definitely a negative compare to other ETF provider. However, If you are a long term investor, this shouldn’t be a problem. Please note, if you don’t hold the ETF for 30 days, you will pay $9.99 commission per trade.

The current ETFs offering include:

  • 31 Equity ETFs:
  • 3 REIT Sector ETFs
  • 32 Bond ETFs
  • 31 International ETFs
  • 4 Commodity ETFs

I have provided the list of 58 ETFs which has Morningstar rating of 3 stars. Most of these ETFs have low expense ratio and a good vehicle for investment diversification.

Note: The ETFs include Vanguard ETFs, ishares ETFs, SPDR ETFs, Powershares ETF and more.


Pros & Cons of TD Ameritrade

Advantages of TD Ameritrade Account

  • Feature and research rich offering for all client types including research by Morningstar, S&P, and Market Edge, etc
  • Customer service is very friendly and knowledgeable
  • Offer thinkorswim by TD Ameritrade trade platform.
  • Also offer Pre market and Post Market trading for no additional fees.
  • Offer 100+ ETFs for free when the ETF is held for 30 days
  • Straightforward pricing. There is no hidden fee and there is no minimum account balance.
  • Many powerful trading tools for use.


Disadvantages of TD Ameritrade Account

  • Commission rate is still higher despite competition with Fidelity & Schwab
  • Most tools can only be accessed by paying premium fees

Customer issues from research

  1. Some customer has a poor customer service experience
  2. Issue with trading platform from time to time
  3. Issue with third party marketing ploy
  4. Issue with Margin rate not as advertised
  5. Order was canceled without notice


Final thought

In recap, TD Ameritrade offers a standard web based trading platform and a desktop software application of thinkorswim from TD Ameritrade. It also offers a series of mobile applications. Some of the various mobile applications compatible with TD Ameritrade include TD Ameritrade Mobile for the iPhone, ipTrader, another iPhone specific application, and iStockManager, a generic mobile platform that is compatible with iPhone, BlackBerry and most smartphone handsets.

TD Ameritrade does offer a lot of product innovation for brokerage industry but falls flat with poor stock trading execution under extreme conditions for limit trades. Margin rates are also not the strongest part of TD Ameritrade offering compare to other brokers at all balance levels.

With the new offering of 100 ETFs to trade for free, it does create a new opportunity for long term investor or trader. Though the commission fee is still high compare to Fidelity or Schwab or Scottrade, I would recommend you consider TD Ameritrade especially for their premium tool and research report as well as free ETFs offering.


58 free commission ETFs with 3 stars MorningStar Rating

(click column header to sort results)
No  
Fund  
Symbol  
Type  
Expense Ratio  
Rating  
Morningstar Category  
1
Vanguard Dividend Appreciation ETF
VIG
Stock
0.23%
5
Large Blend
2
Vanguard High Dividend Yield Index Fund
VYM
Stock
0.20%
4
Large Value
3
Vanguard Growth ETF
VUG
Stock
0.14%
4
Large Growth
4
Vanguard Total Stock Market ETF
VTI
Stock
0.07%
4
Large Blend
5
Vanguard Small Cap Growth ETF
VBK
Stock
0.14%
4
Small Growth
6
iShares S&P MidCap 400 Index Fund
IJH
Stock
0.22%
4
Mid-Cap Blend
7
Vanguard Extended Market ETF
VXF
Stock
0.13%
3
Mid-Cap Blend
8
Vanguard Value ETF
VTV
Stock
0.14%
3
Large Value
9
Vanguard Mid Cap Growth ETF
VOT
Stock
0.14%
3
Mid-Cap Growth
10
Vanguard Mid Cap Value ETF
VOE
Stock
0.14%
3
Mid-Cap Value
11
Vanguard Mid Cap ETF
VO
Stock
0.14%
3
Mid-Cap Blend
12
Vanguard Small Cap Value ETF
VBR
Stock
0.14%
3
Small Value
13
Vanguard Small Cap ETF
VB
Stock
0.14%
3
Small Blend
14
iShares Russell 3000 Index Fund
IWV
Stock
0.21%
3
Large Blend
15
iShares Russell Midcap Value Index Fund
IWS
Stock
0.25%
3
Mid-Cap Value
16
iShares Russell Midcap Growth Index Fund
IWP
Stock
0.25%
3
Mid-Cap Growth
17
iShares Russell 2000 Growth Index Fund
IWO
Stock
0.25%
3
Small Growth
18
iShares Russell 2000 Value Index Fund
IWN
Stock
0.41%
3
Small Value
19
iShares Russell 1000 Growth Index Fund
IWF
Stock
0.20%
3
Large Growth
20
iShares Russell 1000 Value Index Fund
IWD
Stock
0.20%
3
Large Value
21
iShares Russell 1000 Index Fund
IWB
Stock
0.15%
3
Large Blend
22
iShares S&P 500 Index Fund
IVV
Stock
0.09%
3
Large Blend
23
iShares S&P SmallCap 600 Value Index Fund
IJS
Stock
0.25%
3
Small Value
24
iShares S&P SmallCap 600 Index Fund
IJR
Stock
0.20%
3
Small Blend
25
Vanguard REIT ETF
VNQ
Stock
0.13%
3
Real Estate
26
SPDR Nuveen Barclays Capital Municpl Bnd
TFI
Bond
0.30%
5
Muni National Long
27
Vanguard Intermediate Term Bond ETF
BIV
Bond
0.12%
5
Intermediate-Term Bond
28
iShares Barclays TIPS Bond Fund
TIP
Bond
0.20%
4
Inflation-Protected Bond
29
iShares S&P National Municipal Bond
MUB
Bond
0.25%
4
Muni National Long
30
iShares Barclays 3-7 Year Treasury Bond Fund
IEI
Bond
0.15%
4
Intermediate Government
31
iShares Barclays Intermediate Govt/Credit Bd Fd
GVI
Bond
0.20%
4
Multisector Bond
32
iShares Barclays 1-3 Year Credit Bond Fund
CSJ
Bond
0.20%
4
Short-Term Bond
33
Vanguard Short Term Bond ETF
BSV
Bond
0.12%
4
Short-Term Bond
34
Vanguard Long Term Bond ETF
BLV
Bond
0.12%
4
Long-Term Bond
35
iShares Barclays 1-3 Year Treasury Bond Fund
SHY
Bond
0.15%
3
Short Government
36
iShares Barclays MBS Bond Fund
MBB
Bond
0.33%
3
Intermediate-Term Bond
37
iShares iBoxx $ Inv Grade Corporate Bond Fund
LQD
Bond
0.15%
3
Long-Term Bond
38
iShares Barclays Intermediate Credit Bond Fund
CIU
Bond
0.20%
3
Intermediate-Term Bond
39
Vanguard Total Bond Market ETF
BND
Bond
0.12%
3
Intermediate-Term Bond
40
iShares Barclays Aggregate Bond Fund
AGG
Bond
0.24%
3
Intermediate-Term Bond
41
PowerShares DB Commodity Index Tracking Fund
DBC
Commodity
0.85%
4
Commodities Broad Basket
42
iPath Dow Jones-AIG Commodity Idx TR ETN
DJP
Commodity
0.75%
3
Commodities Broad Basket
43
Vanguard Emerging Markets ETF
VWO
Stock
0.27%
4
Diversified Emerging Mkts
44
Vanguard FTSE All World ex US ETF
VEU
Stock
0.25%
4
Foreign Large Blend
45
iShares S&P Latin America 40 Index Fund
ILF
Stock
0.50%
4
Latin America Stock
46
iShares MSCI Spain Index Fund
EWP
Stock
0.56%
4
Europe Stock
47
iShares MSCI Japan Index Fund
EWJ
Stock
0.56%
4
Japan Stock
48
iShares MSCI Canada Index Fund
EWC
Stock
0.55%
4
Foreign Large Value
49
iShares MSCI Australia Index Fund
EWA
Stock
0.55%
4
Pacific/Asia ex-Japan Stk
50
Vanguard European ETF
VGK
Stock
0.16%
3
Europe Stock
51
Vanguard Europe Pacific ETF
VEA
Stock
0.15%
3
Foreign Large Blend
52
SPDR DJ International Real Estate ETF
RWX
Stock
0.59%
3
Global Real Estate
53
iShares S&P Global 100 Index Fund
IOO
Stock
0.40%
3
World Stock
54
iShares FTSE/Xinhua China 25 Index Fund
FXI
Stock
0.73%
3
Pacific/Asia ex-Japan Stk
55
iShares MSCI Brazil Index Fund
EWZ
Stock
0.65%
3
Latin America Stock
56
iShares MSCI UK Index Fund
EWU
Stock
0.55%
3
Europe Stock
57
iShares MSCI France Index Fund
EWQ
Stock
0.55%
3
Europe Stock
58
iShares MSCI EAFE Growth Index Fund
EFG
Stock
0.40%
3
Foreign Large Growt

Comments

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    • profile image

      walter 

      4 years ago

      i am in china and they don't open account for residents in china

    • chan0512 profile imageAUTHOR

      chan0512 

      6 years ago from Camarillo, CA

      Monica,

      Great to hear you like TD Ameritrade. They also have a great selection of free commission ETFs.

    • monicamelendez profile image

      monicamelendez 

      6 years ago from Salt Lake City

      I have an account with TD Ameritrade that's attached to my HSA. I really like it so far and have had it for about 3 months or so

    • chan0512 profile imageAUTHOR

      chan0512 

      7 years ago from Camarillo, CA

      Thanks Brandon! Tradeking is a good choice. I'll write about it in my future issue as well.

    • TheBrandon profile image

      TheBrandon 

      7 years ago from Tennessee

      Very informative hub. I used to have a TD Ameritrade account, but I'm with Trade King now, and I have been very happy with it. $4.95 per trade and $.65 per option contract!

      http://www.tradeking.com/

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