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TradeStation vs. Capital One: A Complete Comparison for IRA Accounts

Golden egg in nest

When you're ready to save for retirement, opening an IRA can be a smart move. IRAs allow your wealth to compound over time, and you enjoy tax-free (Roth IRAs) or tax-deferred (traditional IRAs) growth from your investments. But getting started isn't as easy as snapping your fingers. It's important to choose the right broker for an IRA so you can invest in what you want to own, and so your account isn't drained by avoidable fees or expenses. Let's see how popular brokerages TradeStation and Capital One compare for IRA accounts.

Commission prices per trade

While all online discount broker s make investing easy and inexpensive, small nuances in commission structures can make one broker a better choice than another. Below, we've compared TradeStation's and Capital One's commission prices by investment type.

Brokerage Stocks and ETFs Stock Options Mutual Funds
TradeStation $8.99 per trade (or $0.01 per share, $1 minimum) $8.99 + $0.70 per contract (or flat rate of $1.00 per contract) $14.95 per purchase
Capital One $6.95 per trade $6.95 + $0.75 per contract $19.95 per purchase

Data sources: Company websites.

One thing investors might like about TradeStation and Capital One is that their pricing is flexible. TradeStation offers two commission structures -- fixed and variable -- but both become less expensive the more you trade. TradeStation's fixed prices can fall as low as $4.99 per stock trade for its most active clientele. Capital One's ShareBuilder feature enables investors to make trades for just $3.95, provided that they aren't time-sensitive (ShareBuilder trades process every Tuesday).

You can really maximize your benefits and reduce your costs by keeping special offers in mind. Brokerages frequently offer cash just for opening a new account, in addition to commission-free trades. See a current list of special offers for IRAs here .

Fee-free mutual funds and commission-free ETFs

Like most discount brokers, TradeStation and Capital One have higher commissions for mutual funds than individual stocks. That said, not all mutual funds carry a transaction fee or load, and many can be purchased without paying a single penny to your brokerage.

Brokerage Total Mutual Funds No-Load, No-Transaction-Fee Funds (NTF) Commission-Free ETFs
TradeStation More than 12,100 None None
Capital One More than 1,100 More than 400 None

Data sources: Barron's , company websites and representatives.

As you can imagine, paying roughly $15 or $20 per mutual fund transaction can really add up, especially if you make smaller, add-on investments over time. Fund investors should study a brokers' fee-free fund lists carefully, as funds and pricing varies from broker to broker and fund to fund.

Minimum deposit requirement for IRA accounts

One big difference between brokers is how much you'll have to deposit to open an account. Capital One doesn't require a certain minimum initial deposit for new accounts. However, TradeStation requires that customers deposit at least $5,500 to open an IRA.

If you are rolling over a 401(K) balance into an IRA, the differences in minimums may be less meaningful than if you are just getting started with a new IRA.

Golden egg in nest

Some brokers' IRA minimums are better suited for building up a nest egg over time. Image source: Getty Images.

International stocks and ADRs

TradeStation and Capital One offer the ability to invest overseas, with some limitations. Both offer the ability to trade ADRs and invest in mutual funds and ETFs that hold foreign stocks, but neither currently route orders to international exchanges.

Type of Investment TradeStation Capital One
American depositary receipts (ADRs) Yes Yes
Stocks traded on international stock markets No No
Mutual funds and ETFs of foreign stocks Yes Yes

Data sources: Company websites and representatives.

What does all of this mean for you? Well, if you like individual stocks, it could be pretty important. Generally speaking, only the largest foreign companies -- Toshiba , Toyota , and Vale , for example -- have ADRs or U.S. listings that you can trade without venturing overseas. Investors who prefer small caps will find that most smaller foreign companies can only be traded on their home exchange, so you'd need a broker who can route orders globally to trade them. See the Fool.com IRA Center to see how brokers compare for international trading.

Mobile app reviews

You can check your account and make trades from your mobile phone or tablet from anywhere around the world. Here's how each broker's users and customers rated their mobile trading apps, as of Feb. 9, 2017.

Brokerage Apple App Store Google Play
TradeStation 4.0 stars 4.3 stars
Capital One 2.5 stars 2.9 stars

Data sources: Relevant app stores.

Fees on IRA accounts

Brokerage fees vary, but there are two that are common and worth paying attention to. The first type of fee is a maintenance fee, or a fee just for having an IRA account. The second type of fee is an inactivity fee, or a charge assessed on accounts that do not meet a broker's minimum trading requirements.

TradeStation charges an annual IRA account fee of $35. In addition, it charges a monthly minimum activity fee of $99.95 if you do not maintain a balance of at least $100,000, or do not meet minimum trading requirements. Minimum monthly trading requirements include meeting one of the following: 10 round-turn futures and/or futures options contracts, 50 options contracts traded, or 5,000 shares traded.

Capital One doesn't charge a maintenance or inactivity fee on Roth or traditional IRAs.

TradeStation vs. Capital One for IRA accounts

Each broker has a different line-up of features that cater to different types of investors. TradeStation's commission structure really favors the high-volume trader, but monthly inactivity fees may make it unsuitable for people with less than six-figure account sizes. Capital One's no-fee IRAs offer more selection in no-load, no-transaction-fee mutual funds, but frequent traders may pay more in commissions with its fixed-price model.

The truth is that every broker caters to a particular subset of the market, and for that reason, there isn't a perfect brokerage for every type of investor. It's all about how a broker's pricing and capabilities fit within the individual needs of your portfolio. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that's a good fit for you. Visit Fool.com's IRA Center to compare several brokers all on one page and see if you qualify for any special offers for opening a new account.

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The author(s) may have a position in any stocks mentioned.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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