Personal Finance

TradeStation vs. TD Ameritrade for Your IRA Account

A middle-aged couple examining paperwork.

Say it with me: "Where you open an IRA matters."

But it might not matter for all the reasons you're thinking. Sure, different brokers have different commission prices and research, for example, but they differ on investment selection, too. Depending on how you invest, where you decide to open an IRA can really affect your returns over time.

Let's take a look at how TradeStation and TD Ameritrade , two popular online broker s, compare for IRA accounts.

Commission prices -- costs matter

While what you pay to make a trade isn't everything, it should play a role in where you decide to open an account. We've compared the published commission prices for TD Ameritrade and TradeStation customers:

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
TD Ameritrade $9.99 per trade $9.99 + $0.75 per contract $49.99 per purchase

Data source: company websites.

These two brokerages have commission structures that generally cater to different types of investors. TradeStation offers volume-based discounts that reduce commissions to a flat price as low as $4.99 per stock trade, or as low as $0.002 per share under its unbundled, variable commission structure. Investors can also score a discount on TD Ameritrade's pricing, thanks to its commission-free mutual funds and ETFs.

Bargain shoppers will want to be on the lookout for ways to score effective discounts in unconventional ways. For example, brokers routinely advertise special offers for IRA accounts , which include cash or extra commission-free trades just for signing up.

Mutual funds, ETFs, and commission-free choices

TradeStation and TD Ameritrade differ considerably when it comes to fund choices, particularly for commission-free ETFs and no-load, no-transaction-fee mutual funds.

Brokerage Total Mutual Funds No-Load, No-Transaction-Fee Funds (NTF) Commission-Free ETFs
TradeStation More than 12,100 None None
TD Ameritrade More than 11,800 More than 3,800 More than 100 (Vanguard and iShares, among others)

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

This is one of the reasons it's important to look beyond a broker's basic commission schedule. While TD Ameritrade charges substantially more to trade mutual funds ($49.99 per purchase), it has more than 3,800 mutual funds you can invest in for free. In addition, its commission-free ETFs include some of the most widely used ETFs on the market. TradeStation charges a commission or fee for investing in any mutual funds or ETFs.

Minimum deposit requirement for IRAs

Before we go much further, it's important to point out that some brokers require more of new customers than other brokers. TD Ameritrade doesn't have a minimum initial deposit requirement for IRA accounts. TradeStation has a $5,500 minimum for IRAs, currently equal to the annual contribution limits for Roth and traditional IRAs for people younger than age 50.

Depositing more than the minimum can occasionally have its advantages, as brokers have specials that vary based on your account size. See if you qualify for a bonus for opening a new IRA .

A middle-aged couple examining paperwork.

Image source: Getty Images.

International stocks and ADRs

TradeStation and TD Ameritrade may not be suitable for investors who would like to invest in some foreign companies. Neither broker currently offers trading directly on international markets, instead limiting clients to ADRs that trade over-the-counter or on markets in the United States.

Type of Investment TradeStation TD Ameritrade
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.

As a general rule, many of the largest foreign companies have an ADR or a dual listing that enables American investors to invest in the company by trading on American markets. Honda , Royal DutchShell , and soccer team Manchester United are examples of well-known international companies with tradeable tickers in the United States. You don't need to send trades to Tokyo or London to invest in these companies.

However, if you prefer to invest in foreign small caps, you'll find few have an American ticker. Only a few discount brokers offer foreign stock 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. 1, 2017.

Brokerage Apple App Store Google Play
TradeStation 4.0 stars 4.3 stars
TD Ameritrade 4.6 stars 3.5 stars

Data source: relevant app stores.

Fees on IRA accounts

Fee schedules can be opaque, but there are two common IRA fees you should know about. The first is a maintenance fee, or a fee you might pay just for having an account. The second is an inactivity fee, which brokers charge to customers who don't make a minimum number of trades each month or year.

TD Ameritrade doesn't have either type of fee. 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 don't 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.

TradeStation vs. TD Ameritrade for traditional or Roth IRAs

Ultimately, depending on how you invest, either broker could be the better choice. TradeStation offers lower commissions in a pricing schedule that favors high-activity investors, but fund investors may be disappointed by the fact it doesn't have fee-free mutual funds or ETFs. TD Ameritrade has generally higher standard commissions but offers thousands of commission-free mutual funds and ETFs, plus no-fee and no-minimum IRA accounts.

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'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 and recommends TD Ameritrade. 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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