Interactive Brokers vs TD Ameritrade (2020): Fees, Safety Compared

Interactive Brokers vs TD Ameritrade

What happens when two leading forex brokers go head-to-head — with fees, safety, spreads, commissions, and performance compared? In this Interactive Brokers vs TD Ameritrade Forex comparison, we line the two brokers up on all fronts to show you the pros and cons of each.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Our writers nor our editors receive direct compensation of any kind to publish information on TheTokenist.io. Our company, Tokenist Media, is community supported and may receive a small commission when you purchase products or services through links on our website. See more information here about how we make money.

What is the link between coronavirus and forex? There is no link, you might be tempted to respond.

Interactive Brokers might ask you to reconsider. Each month the forex brokerage releases its DARt report (DARt stands for “daily average revenue trades”). This report reveals a confirmed link between increased coronavirus fears and increased daily trading activity.

The takeaway here? If you’re gonna go, go out with a bang, it would seem.

In other news, did you know TD Ameritrade and its forex platform, thinkorswim, weren’t always a duo? TD Ameritrade acquired thinkorswim back in 2009 for a cool $606 million in cash and stocks. TD Ameritrade wanted the platform for the entrée it could provide into the futures, options, forex and margin trading marketplaces.

Of course, perhaps that same entrée began to look slightly less rosy when thinkorswim customers then turned around in 2012 and sued TD Ameritrade for $8.2 million. The suit was linked to the final period of integration between the two platforms, when existing thinkorswim customers could not optimize options trading during an economic downturn.

TD Ameritrade called the integration upset a “glitch,” albeit an expensive one. This is particularly relevant as now, in early 2020, TD Ameritrade is once again reporting glitches to both its website and the thinkorswim platform, causing – wait for it – traders to be unable to place trades.

It’s just something to think about as we dive into a head-to-head comparison of major forex market makers Interactive Brokers and TD Ameritrade.

Two Market Makers Go Head to Head: Interactive Brokers vs TD Ameritrade

A market maker is one of two major types of Forex trading companies. Market makers are structured differently from the other main type, the STP (straight through processing) forex brokerage.

A market maker takes initial risks on behalf of a portion of the greater forex marketplace and all the participating traders therein. It does this by buying up securities and then turning around and offering these securities to its dedicated pool of traders.

Because of this, a market maker makes money based on the degree of risk it bears at any given time, which in forex trading is called the “spread.”

Deciding whether to trade through a market maker or a STP brokerage is one of the big initial decisions you want to make when choosing a broker. This is because it is a lot easier to compare market makers side by side than it is to compare one market maker with one STP brokerage!

The more alike any two brokerages are in their business structure, the easier it is to figure out which one is the closest match for your forex trading needs and goals. So read on now for a comprehensive and detailed comparison of Interactive Brokers vs TD Ameritrade.

Fast Facts

Interactive Brokers and TD Ameritrade think or swim are two of just a handful of forex brokers that are still allowed to accept United States traders. This is due to the 2010 crackdown on forex brokers operating in the U.S. The crackdown began with the signing of the Frank-Dodd Act of 2010. This scared off a number of forex brokers.

Others, perhaps most notably FXCM, were ousted later as a result of ramped-up oversight through the National Futures Association (NFA) and the Commodities and Futures Trading Commission (CFTC), which made it easier to research and prosecute brokerage violations.

So it says something that the two market makers we are comparing here have withstood the most rigorous regulatory oversight in the global forex marketplace. You could do worse than choosing either one. Much worse. So, who’s better when it comes to day trading — TD Ameritrade or Interactive Brokers?

Let’s begin with just a broad-brush overview of each company, Interactive Brokers vs TD Ameritrade thinkorswim.

Interactive Brokers at a Glance

We’ve gotta say it – Interactive Brokers has staying power. But just how good is Interactive Brokers?

Interactive Brokers Homepage
With almost $8 billion in assets, Interactive Brokers is one of the top Forex brokers in the world.

2020 marks the platform’s 42nd year as a brokerage leader. With nearly $8 billion in assets under its umbrella and holdings in 125 world markets, Interactive Brokers doesn’t mess around.

2019 was a big year for this global heavyweight – the year founder Thomas Peterffy finally stepped down as CEO and into an advisory role as Chairman of the Board. In his place, the company welcomed a new CEO, Milan Galik.

Shortly thereafter, Interactive Brokers also welcomed a new trader account called IBKR Lite, which added a fresh and welcome diversity to its growing user base. Then the company added fractional share trading and cash quantity stock orders plus two new exchanges to its roster of offerings. To date, net holdings are estimated at $22.53 billion.

TD Ameritrade at a Glance

TD Ameritrade has been operating for 40 years to date – just two years shy of Interactive Brokers’ own founding milestone.

TD Ameritrade Forex Trading Page
As one of the largest investment firms in the world, TD Ameritrade offers a massive array of investments, including Forex.

TD Ameritrade wasn’t always the global powerhouse it is today, however. The company was once a small investment banking firm with the un-catchy moniker of First Omaha Securities, Inc.

While the company is still headquartered in Omaha to this day, today it has 120 offices nationwide and has added a number of critically acclaimed “firsts” to its illustrious history, including first to offer automated trades by phone, first to offer mobile trading, first 10-second trade execution guarantee and first to offer 24-hour access to equity markets in the United States.

That is a lot of firsts.

When Charles Schwab announced its plans to acquire TD Ameritrade for $26 billion, this rocked the industry yet again. Together, the two so-called “titans” will eventually hold a cool $5 trillion in customer assets under the Schwab umbrella. The deal is still unfolding at this point and investors are watching their progress with fairly equal parts excitement and apprehension. As they say, much more to be revealed.

Looking for the best Forex brokers? See our list of the top Forex trading platforms.

TD Ameritrade vs Interactive Brokers Day Trading

Because Interactive Brokers and TD Ameritrade are both market makers (dealing desk brokers), and heavyweights at that, this comparison will not shy away from minor details to ferret out which platform may better serve your forex trading needs.

In other words, with two such similar platforms, the devil (or the winner as the case may be) is often in the details. If you need to make a quick decision, however, you can simply eyeball the start of each section to see who comes out on top.

Trading Functionality and Forex Spreads

Interactive Brokers makes it difficult to do a true side by side comparison when it comes to evaluating the competitiveness – or lack thereof – of each company’s forex spreads, since the platform chooses not to publish their average spreads. What we can tell you is that TD Ameritrade tends to have an average spread of 1.065 pips, which makes it evenly competitive in the greater industry as a whole.

In terms of overall trading functionality by asset classes, Interactive Brokers and TD Ameritrade are literally even. Both offer the following types of securities:

  • Forex
  • Cryptocurrency
  • Options
  • Futures
  • Metals
  • ETFs
  • Mutual Funds
  • Stocks
  • Bonds

The only reason we chose TD Ameritrade as the winner in this category is because they are clearly staking their reputation on their claims of transparent pricing.

Note to Interactive Brokers: failing to publish (aka hiding) your average spreads history is not an attractive quality when it comes to choosing a broker to trust in today’s ultra-risky forex marketplace.

Winner: TD Ameritrade

Not sure how spreads work? Learn about Forex commissions and spreads.

Fees, Pricing and Commissions

What about Interactive Brokers vs TD Ameritrade on pricing? When comparing commissions, pricing and fees side by side, it quickly becomes obvious that Interactive Brokers is in it to win it. In fact, many wonder, why is Interactive Brokers so cheap?

Take a look at this: At Interactive Brokers, margin rates for $100,000 or lower are, at most, going to work out to 5.4 percent. At TD Ameritrade, you will pay a cool 9 percent every time. Starting at $1 million, margin rates at Interactive Brokers are 3.4 percent. At TD Ameritrade, they are a whopping 8 percent.

No question who is owning it in this category. For forex trades, Interactive Brokers takes a different path than does TD Ameritrade, making it obvious where you will want to go to have more control over the fees you pay. In the end, Interactive Brokers is much cheaper when compared to TD Ameritrade.

So exactly how good is Interactive Brokers with fees? The platform offers two fee schedules: a fixed commission of $0.15 per contract or a tiered commission starting at 0.85 for trades of 1,000 or lower and culminating at 0.25 for trades of greater than 20,000. TD Ameritrade, in contrast, assesses a flat commission of $0.10 for every 1,000 trade units, period. For their non-commission plan, the spreads are dictated by the liquidity provider. Here, you have your basic chicken versus egg comparison.

For high-volume forex traders, the sliding scale perks that Interactive Brokers is offering are a clear win-win. For trades at lower volumes, TD Ameritrade may work out to be nearly equal or perhaps even advantageous.

Winner: Interactive Brokers

Platforms Available

You might not agree on this point if you are an advanced trader. For the forex trading elite, Interactive Brokers Traders Workstation (TWS) is available for use with both Mac and PC and is feature-rich, if dense and difficult to navigate at first or forever.

Screenshot of TD Ameritrade ThinkorSwim DayTrading Platoform
TD Ameritrade’s thinkorswim platform is preferred by traders all across the globe.

Here is an example. In just one area of the TWS configuration menu, you have more than 500 different options for column headers. Spend any significant amount of time on customization and you might get down to trading forex next year or never.

And it is here where TD Ameritrade has built a loyal following of beginner to intermediate traders who prefer to learn as they go. Overall, thinkorswim offers a much more user-friendly introduction to forex trading online and has won more than a few awards for design and technology because of it.

Here is an example. Each investment class (such as forex pairs) is segregated out into its own tab, making it easy and fast to find what you need and get to trading. You can still customize later if you feel like it. But if what you find works, why break it and then try to put it back together again when you could be trading?

Interactive Brokers Platforms Available

Traders Work Station, or TWS, is the desktop-only trading interface. This is the only tool that comes with the full suite of options, making it both very dense and uniquely customizable for advanced traders who have customization on their minds.

The web application, Web Trader, is simpler but doesn’t win any points for it, given that you can’t even open forex using this portal. Web Trader offers access to stocks, futures and indices only.

Interactive Brokers Mobile AppsInteractive Brokers Mobile Apps

The iOS/Apple app has been showing signs of improvement of late. Based on recent user reviews, the last few updates seem to be resolving some of the funds transfer and account login issues. But it is clear they still have a long way to go.

As for the Android app, a recent spate of recent one-star reviews pretty much says it all. In all fairness, both apps were recently redesigned and so are still in user testing mode to some degree. But forex waits for no beta and Interactive Brokers would do well to remember this going forward.

  • iOS/Apple app: 3.6 (out of 5 stars)
  • Google/Android app: 3.7 (out of 5 stars)

TD Ameritrade Platforms Available

Thinkorswim is literally a standalone desktop platform that TD Ameritrade has integrated into its greater suite of platform offerings. As such, the platform is built with forex trading in mind and is packed with useful tools such as candlestick indicator customization options and ThinkScripts, which lets you create your own customized indicators.

You can also create custom forex pairs through thinkorswim. It is unclear whether you can also trade forex through the main TD Ameritrade portal, but you can definitely use the mobile app to do so.

TD Ameritrade Mobile Apps

TD Ameritrade has won multiple awards for its thinkorswim mobile apps. Recent user ratings support this at least for the iOS/Apple version, as you will see here shortly.

TD Ameritrade Mobile App Platform
TD Ameritrade’s mobile app has higher reviews in the App Store when compared to Google Play.

The Android version, unfortunately, does not seem to deliver the same reliability and functionality, at least not when judging by the most recent user reviews. Android app users complain about dropped connections, chart deletions, poor design and difficulty figuring out how to use the app to actually trade forex (whoops).

If you are a smartwatch fan, it may also be worth mentioning that TD Ameritrade now offers a limited functionality smartwatch app that may be useful to monitor your trades and the market in general.

  • iOS/Apple app: 4.7 (out of 5 stars)
  • Google/Android app: 3.5 (out of 5 stars)

Winner: TD Ameritrade’s thinkorswim

Regulation, Oversight and Operation by Jurisdiction

Keeping in mind that both Interactive Brokers and TD Ameritrade thinkorswim are authorized to accept U.S. traders, a designation only a handful of forex platforms in the world currently hold, a side by side comparison of regulatory oversight might seem like overkill…as might choosing a designated winner in this arena.

Yet the fact remains that Interactive Brokers has more than twice the international regulatory oversight of TD Ameritrade, which operates primarily in the United States. So this puts them out in front in our opinion.

Having extra international regulatory oversight may or may not be relevant to your personal forex trading needs at this time, but it feels worth pointing out just the same.

Interactive Brokers Regulation, Oversight and Operation

  • United States: National Futures Association (NFA) and Commodities Futures Trading Commission (CFTC)
  • Canada: Investment Industry Regulatory Organization of Canada (IIROC)
  • United Kingdom: Financial Conduct Authority (FCA)
  • Europe: Commission de Surveillance du Secteur Financier (CSSF).
  • Japan: Kento Local Finance Bureau
  • India: Securities and Exchange Board of India (SEBI)
  • Hong Kong: Hong Kong Securities and Futures Commission (SFC)
  • Australia: Australian Securities and Investments Commission (ASIC)

TD Ameritrade Regulation, Oversight and Operation

  • United States: National Futures Association (NFA) and Commodities Futures Trading Commission (CFTC)
  • United Kingdom: Financial Conduct Authority (FCA)
  • Hong Kong: Hong Kong Securities and Futures Commission (SFC)

Winner: Interactive Brokers

Educational Tools

Is Interactive Brokers or TD Ameritrade better for beginners? It’s important to note that TD Ameritrade has long been a leader in the greater fintech industry for its comprehensive suite of all-level educational tools and resources.

TD Ameritrade Trader webcast
When it comes to forex trading, TD Ameritrade is known to offer top-notch educational tools.

In addition to TD Ameritrade’s main educational center, thinkorswim maintains its own separate learning center complete with manuals and guides on pretty much every topic you could ever think of. The topics are organized with handy menu buttons that make it easier to find what you need fast.

In contrast, Interactive Brokers is simply not known for its educational tools, unless you happen to be an advanced or elite-level forex trader who likes to go on treasure hunts to find the intel you need. User reviews are crystal clear that the platform can be confusing for all but the most experienced traders and the information that is available often does not relate to trading forex specifically.

Interactive Brokers Educational Tools

  • Traders’ Insight and Market Pulse for industry and market news
  • Streaming news from Reuters
  • Live webinars and recorded videos
  • Educational courses (including trading forex)
  • Interactive tours of the various platforms and features
  • Traders University education center

TD Ameritrade Educational Tools

  • Loads of live market coverage, including from CNBC and TD Ameriprise’s own in-house network television station
  • Data available from Dow Jones, Thomson Reuters, FX Wire Pro, Morningstar and others
  • FRED Data and other sources of historical economic and market data
  • Economic calendar with customizable filtering options
  • Social signals research linked to Twitter
  • Thinkorswim Learning Center
  • thinkMoney magazine and other research materials

Winner: TD Ameritrade

Customer Service and Support

You can’t beat the opportunity to walk into a brick-and-mortar retail center and actually sit down with a TD Ameritrade customer support team member or financial planner face to face. While you may never need or want to take advantage of this service, and you also may not live near a physical location (which frankly becomes less and less likely as the Schwab-TD Ameritrade merger begins to take shape), it is still nice to know it is available.

In contrast, Interactive Brokers remains a solid choice for customer support if all you need is phone, chat or email contact options.

Interactive Brokers Customer Service and Support

Interactive Brokers offers 24/5 customer support via phone, email and chat.

TD Ameritrade Customer Service and Support

TD Ameritrade offers 24/5 customer support via phone and in person. Email and live chat support is available 24/7.

Screenshot of TD Ameritrade Ask Ted Support Page
‘Ask Ted’ is TD Ameritrade’s automated assistant — which is surprisingly quite helpful.

Winner: TD Ameritrade

Final Thoughts: Interactive Brokers vs TD Ameritrade

Overall, while both Interactive Brokers and TD Ameritrade thinkorswim inhabit the same basic market circles and are structured to operate as market makers, they really do what they do quite differently in many ways. While TD Ameritrade concentrates the great majority of its investments and focus in the United States, Interactive Brokers caters to a truly international customer base.

While Interactive Brokers is clearly set up to welcome the advanced to elite trader who prefers to work from a desktop with a deeply (if not completely) customized platform, TD Ameritrade thinkorswim is designed to create a more turnkey solution to get you up and running quickly with trading forex.

And TD Ameritrade’s recent announcement of the acquisition by Charles Schwab sets the stage for a truly overwhelming market presence (including in the brick-and-mortar sphere) in markets where the company already dominates.

Interactive Brokers, in contrast, operations wholly online and seems to harbor no plans to change that. So now the whole remaining question on the table is this: which one, Interactive Brokers vs TD Ameritrade, is best for your forex trading needs?

You have all the information now about how each compares to the other across the most important major criteria sets. The rest – and the choice – is up to you.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).