When you day trade, you are only as good as your trading software. How it executes trades, helps you research and provides breaking alerts means a lot to your daily and monthly bottom lines.
Ameritrade is an online trading platform that many traders use every day. Every kind of trader from an institutional investor to day traders. How it works for day traders gets mixed reviews. The platform is excellent for beginners and the research elements are top-notch, but the bottom line comes down to commissions. Their per-trade commissions are very high compared to other platforms. Which makes it problematic for day traders that trade often and sometimes with high volumes.
If you are a retail trader that makes 2-3 trades per week, max, then Ameritrade is likely a good platform for you. But day traders will be hindered by the cost of commissions and the dearth of customizable hotkeys. Day trading is built on timing and speed, which means that having dedicated keys to get in and out of trades is essential.
Ameritrade brands its trading platform as Thinkorswim, a clever play on words that harkens back to the notion that the market is a jungle and you have to perform or get bounced. The desktop version has real-time data streaming, advanced charting features, stock scanners and in-depth research reports at the click of a button. And these tools are available to stock traders on the platform for free, regardless of account size or trading volume.
Some Ameritrade traders may be swayed by the learning tab with instructional videos and online courses. The educational resources are nice but they do not make up for the cost of commissions for day traders. The profits and losses at the end of the week are the measure of a day trader, so any overhead that cuts into the profits is a real bummers. Can be a deal breaker.
Beyond the research and education, Thinkorswim also features a trader community that interacts daily and shares watch lists, charts and strategies. The platform also streams CNBC and other market-focused video content.
One of the best features that may sway day traders is the Analysis tab. That allows traders to get an instantly available risk graph that can help traders determine the risk of any trade that they are about to make. Mobile trading is also available with a healthy amount of the desktop features replicated for those traders that make money on the go.
Slow executions are another problem for day traders, because sometimes the difference between a winning and losing trade is a matter of seconds.
Beyond the problem with high commissions, Ameritrade also has very high margin rates. And the short list is pretty much nonexistent, which means day traders that are interested in shorting stocks are going to be disappointed.
For day traders, the Ameritrade Thinkorswim platform may not be the right option, because of the high cost of trades, but also because of the overwhelming amount of information. Too much information streaming in at once does not help for quick decision making.
The bottom line: Ameritrade can be valuable for part-time, retail traders, but is not the best option for high-volume day traders.