TD Ameritrade – An Overview
TD Ameritrade is a publicly-traded online brokerage that provides services to both individuals and institutions that invest online. The company hosts over 11 million customer accounts from across the world. Investors use the company’s electronic trading platforms to buy and sell securities such as stocks, ETFs, mutual funds, options, futures, foreign exchange, and fixed-income investments. Customers can trade these financial securities on their computer or via mobile phone applications.
TD Ameritrade is headquartered in Omaha, Nebraska, and operates a major trading center in St.Louis, Missouri. The initials “TD” are derived from the name Toronto-Dominion Bank, which is the largest shareholder in the company.
History of TD Ameritrade
TD Ameritrade was established in 1975 when the U.S. Securities and Exchange Commission banned the practice of fixed brokerage commissions. It was established by Joe Ricketts along with three other partners. In 1983, the founders established Ameritrade Clearing Inc. to provide correspondent clearing services for both brokers and investment advisors. In 1983, it was one of the first companies to offer touch-tone phone trading that made investing a lot easier and quicker.
With the introduction of online trading, TD Ameritrade acquired K. Aufhauser & Co. in 1995. K. Aufhauser was the first to provide online securities trading in 1994. The acquisition provided TD Ameritrade with a bigger platform to ensure a seamless trading experience for investors.
TD Ameritrade held its initial public offering in 1997, which was followed by the merging of all the company’s brokerage units into one large broker-dealer, Ameritrade Inc. The company was listed under the symbol AMTD. In 1999, Ameritrade became the first company to offer trading via a mobile device.
Mergers and Acquisitions by TD Ameritrade
Over the years, the company completed various mergers and acquisitions transactions as a way of expanding its reach in the market. The M&A transactions include:
2001: Acquisition of National Discount Brokers Corporation for $154 million.
2002: Acquisition of Datek Online Holdings Corporate. The purchase helped Ameritrade become the largest brokerage dealer in the number of daily trades.
2006: Acquisition of TD Waterhouse from Toronto Dominion Bank Financial Group. Ameritrade Inc. was renamed TD Ameritrade following the deal.
2009: Acquisition of Thinkorswin Group Inc., in cash and stock, valued at approximately $606 million.
2017: Acquisition of Scottrade, which brought the combined company’s assets to $1.1 trillion in assets.
Trading Platforms of TD Ameritrade
TD Ameritrade provides three trading platforms. They include:
1. Web Platform
The TD Ameritrade website provides investors with all the information they need to buy and sell financial securities. The site may appear complex for first-time users, but the web platform includes an “Ask Ted” chatbot feature that makes the platform user-friendly.
Another useful feature in the platform is the Portfolio Planner tool, which allows users to create a target asset allocation plan by creating a balanced portfolio of financial securities including stocks, ETFs, and mutual funds. The trading platform also provides users access to research and educational materials on-site. Investors can also catch up with the latest financial news from Yahoo! Finance.
The Thinkorswim trading platform is a professional level platform for serious traders who want access to premium tools for performing analysis and testing strategies. It comes with customizable screeners, backtesting capabilities, practice trading with a mock account referred to as “paperMoney” and advanced trading capabilities for stocks, ETFs, futures, and options.
Thinkorswim allows users to generate ideas and monitor the market for potential risks and rewards. Beginners also benefit from the “thinkManual” and platform tutorials that provide guidelines on how to use the platform.
3. Mobile Trading
The mobile trading platform is designed for on-the-go investors who want to manage their investments, seize opportunities, and receive alerts and streaming market commentary from their web-enabled mobile devices.
The company offers two apps – the TD Ameritrade mobile app that borrows from the web-based platform, and the TD Ameritrade mobile trader for Thinkorswim traders. Users can choose one or install both to access the full range of services.
Operating Costs for TD Ameritrade Accounts
For new traders who want to start trading with TD Ameritrade, there is no account minimum for brokerage and IRA accounts. The company charges a flat-rate commission of $6.95 for stocks and ETFs, and a similar commission plus $0.75 per contract for options trading. Futures are charged $2.25 per contract.
The company’s flat-rate commission means that the rate stays the same even if you trade a large number of shares. TD Ameritrade also offers hundreds of commission-free ETFs, as well as hundreds of no-transaction-fee mutual funds. Forex traders are charged $0.10 per 1,000 units with a minimum charge of $1.00.
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