Introduction
Day trading has become increasingly popular in recent years, with many people looking to make quick profits by buying and selling stocks on the same day. However, day trading fees can quickly add up and eat into your profits. In this article, we will take a closer look at TD Ameritrade’s day trading fees and what you need to know before you start trading.
TD Ameritrade’s Day Trading Fees
TD Ameritrade charges a flat fee of $6.95 per trade for stocks and ETFs. This means that if you buy and sell a stock on the same day, you will be charged $13.90 in total for the trade. This fee is higher than some other online brokers, such as Robinhood, which offers commission-free trades. However, TD Ameritrade offers a more comprehensive trading platform and research tools, which may be worth the extra cost for some traders.
Pattern Day Trading Rule
It’s important to note that TD Ameritrade, like all online brokers, must follow the pattern day trading rule. This rule was put in place by the Financial Industry Regulatory Authority (FINRA) to protect traders with smaller accounts. Under this rule, if you make four or more day trades within a five-day period, your account will be classified as a pattern day trader. Once classified as a pattern day trader, you must maintain a minimum account balance of $25,000 or you will not be able to day trade.
Other Fees
In addition to the flat fee per trade, TD Ameritrade charges other fees that you should be aware of. If you trade options, there is an additional fee of $0.65 per contract. If you use TD Ameritrade’s automated phone system to place trades, there is a $5 fee. If you need to speak with a broker over the phone, there is a $25 fee.
Tips for Minimizing Fees
While day trading fees can add up quickly, there are a few tips you can follow to minimize the costs. One option is to trade less frequently, which will reduce the number of trades you make and therefore the fees you pay. Another option is to trade in larger quantities, as the flat fee per trade will be a smaller percentage of your overall investment. Finally, you can also consider using a different online broker that offers lower fees, such as Robinhood or Webull.
Conclusion
TD Ameritrade’s day trading fees are competitive, but they can add up quickly if you are making frequent trades. It’s important to be aware of the pattern day trading rule and other fees that may apply. By following the tips outlined in this article, you can minimize your trading costs and maximize your profits.
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