Investors who use TradeStation get a full-feature trading platform built with active and high-volume users in mind. It is not for newcomers or long-term, buy-and-hold investors. But if you are an experienced investor who executes frequent trades or complex trades you should give this product a try. A financial advisor can help you decide what type of platform is best for your financial strategy and tactics, as well as for developing realistic financial goals.
Services & Features: What Does TradeStation Offer?
TradeStation is a full-feature trading platform that allows investors to trade almost any mainstream financial product, and even some uncommon ones. In addition to the standard range of equities, exchange-traded funds (ETFs), options and mutual funds, investors can also trade bonds, futures, cryptocurrency and IPOs (although the last two products can come with some legal restrictions). The only major asset class not offered by TradeStation is foreign exchange.
TradeStation offers a somewhat dizzying array of platforms on which to trade these various assets. While the platform’s main brand is available in desktop, browser and mobile versions, it has branded its desktop client separately as TradeStation Desktop 10. You can trade all of the same products across the desktop, mobile and web versions of TradeStation. However, many of the platform’s best research options and other tools are reserved for Desktop 10. This is the core TradeStation product.
In addition, while TradeStation’s core brand supports options trading, it also has an independent platform for options and futures called FuturesPlus. Cryptocurrency traders will use the TSCrypto platform, while much of the platform’s education and research has been moved to its website YouCanTrade, where you can choose from multiple different pricing plans based on how active a trader you are.
All of this speaks to the core experience of using TradeStation. This is a product designed for experienced investors who know exactly what they want. It is for technical traders and particularly favors active, high-volume investors who trade based on data indicators. TradeStation offers extensive research options for all of its asset classes, with investors able to find just about any technical indicators they would like, stretching back for the lifetime of any given asset. This is a significant edge over many comparable services that often offer basic data such as pricing and trading volumes, but fail to get into more complex metrics.
However, as suits its target audience, TradeStation offers almost no fundamental analysis within its trading platform. You will not find the significant news feeds, bespoke analysis or guidance that many other platforms offer. This makes it far less useful for both inexperienced investors – who may need this kind of guidance – and for less active investors – who often trade based on the companies that underlie an asset rather than the market position of securities themselves.
For investors willing to learn, however, TradeStation offers a variety of powerful utilities. Both its desktop and its web platforms support a high degree of customization, allowing you to see the data in ways useful to your own trading strategies. Traders can set up sophisticated order types and trade based on custom-built algorithms. FuturesPlus allows you to do extensive research on options and futures contracts, while Portfolio Maestro utility lets you analyze how various strategies would affect your portfolio now and into the future. Again, these tools and more are strong assets for technical, active traders who are looking for new ways to look at data before making their trades.
Fees: How Much Does TradeStation Cost?
There are usually four types of fees to look out for when choosing a trading platform. You should look out for these when evaluating any investment or trading service:
- Trading Fees – Any fixed charge attached to each trade that you make. This can come in the form of a flat fee or what’s known as the “spread.” This is when your broker charges you based on the difference, if any, between the buying and the selling price of an asset.
- Trading Commissions – This is when a broker will charge you a percentage based on the volume or value of each trade.
- Inactivity Fees – Any fees that the broker charges you for not trading, such as for keeping money in a brokerage account.
- Non-Trading/Other Fees – Any form of fee for trading on this platform not covered above. For example, a brokerage might charge you for making deposits into your brokerage account, taking money out of it or signing up for additional services.
Ultimately TradeStation has about as many pricing plans as it has choices. Exactly what this service costs will depend almost entirely on how you choose to use it. However, it does have two basic account types: TradeStation Go and TradeStation Select.
TradeStation Go is priced for its online users. This service charges $0 to trade equities and ETFs. Although this implies that all other trades are free, options and futures cost between $0.50 and $1.50 per contract. This plan does not require a minimum balance.
Users of TradeStation Go also pay a series of additional charges whenever they trade on TradeStation’s desktop software. For example, each equities transaction comes with an extra $10 fee, while futures add $1.40 per contract. As most of TradeStation’s more sophisticated features are on its desktop version, this is a significant difference.
TradeStation Select does not include any additional fees for using the desktop trading platform. Stocks and ETFs also cost nothing to trade. Options contracts cost between $0.60 and $1.50, while futures cost $1.50. (This is in contrast to TradeStation Go, in which futures cost $0.85 per contract.) This plan requires a minimum balance of $2,000.
TradesStation does not offer any no-fee mutual funds. It charges a $15 commission for its funds. Margin trading is available. While interest rates can technically go as low as 3.5% for very high balance customers, most investors should expect rates closer to 9%.
Effectiveness: How Well Does TradeStation Work?
TradeStation is sprawling and complicated, and a little more expensive than many other full-feature trading platforms on the market today. However, it is perfect for a certain type of trader. Inexperienced investors will almost certainly find TradeStation’s mass of options confusing. This platform allows a depth of customization that requires a steep learning curve to use, and a steeper one to appreciate. It presents information in a sophisticated way, with vast tables of data and a default option of relying on industry-standard candlestick charts for price histories. All of this makes TradeStation a very information-rich trading environment, but one which will likely confuse most investors.
Meanwhile, investors who do have the experience but do relatively little trading may not necessarily find TradeStation confusing – but they may simply not find it necessary. The depth of options that TradeStation presents simply isn’t particularly helpful for long-term investors. Plus they won’t find the fundamental analysis that many long-term investors rely on.
The Bottom Line
TradeStation is built with highly technical, highly active investors in mind. It is a fast, responsive system that takes no small amount of effort to learn how to use well. It presents a vast amount of data that can help someone make moment-to-moment trading decisions, a wall of numbers as invaluable to experienced investors at it is confusing to newcomers. For investors who trade on technical indicators and those who are highly active, TradeStation is an outstanding platform and well worth a look.
Tips for Investing
- What does it mean for a platform to emphasize technical analysis over fundamental? What is a trader looking for when they trade on technical data, and what do fundamental traders hope to achieve? These questions are at the heart of how you choose between systems like TradeStation and the rest of the market, and you can understand more about the difference right here.
- Consider working with a financial advisor to set up a financial plan and determine if an online brokerage like TradeStation is right for you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s matching tool can help you find a financial professional in your area who can help you on the way to understanding the ins and outs of the investment world, whether you want to just set up a retirement account or grow into true trading wizardry. If you’re ready, get started now.
Photo credit: ©iStock.com/ipopba, ©iStock.com/borabakan, ©iStock.com/MStudioImages