Personal Finance

TradeStation vs. Charles Schwab for IRA Accounts

Photo looking up at the New York Stock Exchange

When you're ready to start saving for the future, opening an IRA can be a fantastic way to start. But where you open an account can have a big impact on what you pay, and what you invest in. In the article below, we'll compare two popular discount brokers, TradeStation and Charles Schwab , to see how they compare for IRA accounts.

Commission prices -- costs matter

TradeStation and Charles Schwab both make trading simple and inexpensive. The table below dissects each brokers' 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
Charles Schwab $6.95 per trade $6.95 + $0.70 per contract $76.00 per purchase

Data source: company websites.

Notably, investors rarely pay the full published price on every trade. TradeStation rewards active traders with lower commissions that can fall as low as $4.99 per trade, or $0.002 per share. Charles Schwab has one of the largest list of investments that you can make for free, with thousands of mutual funds and ETFs that are free of commissions and transaction fees.

Savvy shoppers can also collect on some bonuses when they open an account. See if you qualify for a special offer for opening an IRA account .

Mutual funds, ETFs, and commission-free choices

TradeStation and Charles Schwab differ greatly when it comes to fund selection. The table below shows how they compare on funds, including fee-free fund choices.

Brokerage Total Mutual Funds No-Load, No-Transaction-Fee Funds (NTF) Commission-Free ETFs
TradeStation More than 12,100 None None
Charles Schwab More than 5,400 More than 3,200 More than 200 (Schwab, Guggenheim, PIMCO, and more)

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

Note how the availability of fee-free funds can reduce or eliminate commissions. While Charles Schwab's standard mutual fund commission of $76 is more than five times higher than TradeStation's fee, investors who stick to the 3,400+ funds on Schwab's fee-free list will pay nothing at all. Of course, TradeStation would be the less expensive broker for funds that aren't on Schwab's list of free funds.

Minimum deposit requirement for IRAs

When it comes to minimum deposits, brokers' requirements can vary substantially. TradeStation requires that investors deposit a minimum of $5,500 to open an IRA account. Charles Schwab requires a $1,000 minimum deposit for new IRAs, but the minimum is waived for clients who make automatic monthly deposits of $100 or more.

Photo looking up at the New York Stock Exchange

TradeStation and Charles Schwab bring Wall Street to the masses with IRA account minimums that are lower than most full-service brokers. Image source: Getty Images.

International stocks and ADRs

Not all brokers offer the same access to foreign markets. Many brokers only allow their clients to invest in foreign companies by investing in stocks or funds with U.S. tickers (TradeStation) while others offer the ability to send orders to foreign stock exchanges (Charles Schwab). The table below compares these two brokers on access to international stocks and ADRs.

Type of Investment TradeStation Charles Schwab
American depositary receipts (ADRs) Yes Yes
Stocks traded on international stock markets No Yes (12 markets electronically, up to 30 through its Global Services desk)
Mutual funds and ETFs of foreign stocks Yes Yes

Data sources: company websites and representatives.

Note that standard commission prices do not include trades on foreign markets. Schwab customers pay "the greater of the broker-assisted trade schedule or $100, or 0.75% of principal" to place trades on international exchanges.

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. 14, 2017.

Brokerage Apple App Store Google Play
TradeStation 4.0 stars 4.3 stars
Charles Schwab 4.3 stars 3.9 stars

Data source: relevant app stores.

Fees on IRA accounts

Fee schedules can be opaque, but there are two fees that are generally avoidable. Maintenance fees, or service fees, are the most basic type of fee. A maintenance fee is usually charged just for keeping an account open. The second type of fee is an inactivity fee, or a charge assessed to accounts that do not meet a brokers' 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 don't maintain a balance of at least $100,000 or fail to 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.

Charles Schwab does not charge a maintenance fee or inactivity fee.

TradeStation vs. Charles Schwab: Better broker for IRAs

Depending on how you invest, either TradeStation or Charles Schwab could be a good choice. On one hand, TradeStation may appeal to particularly active stock and option traders, who naturally stand to benefit most from its volume-based commission prices. On the other hand, Charles Schwab may win over investors who trade less frequently, and who therefore have a preference for lower minimum deposit requirements, no on-going fees, and a wide selection of fee-free funds.

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 specific requirements of your portfolio. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is 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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Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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