ThinkorSwim vs Robinhood 13 Things You Need to Know

Ross Cameron - Warrior Trading

16 Oct 202312:12

Summary

TLDRIn this video, the host compares two popular trading platforms: ThinkorSwim and Robinhood, focusing on features, usability, and cost implications of commission-free trading. Both platforms have zero minimum account sizes and enforce the PDT rule, but Robinhood offers advantages in price improvement and options trading without commissions. ThinkorSwim excels with robust charting tools, desktop application, and customizable hotkeys, making it more suitable for active traders. The discussion highlights the implications of payment for order flow in the trading ecosystem, concluding that while Robinhood appeals to casual traders, ThinkorSwim is the superior choice for more serious investors.

Takeaways

📊 Both Thinkorswim and Robinhood have a zero minimum account size, allowing easy access for new traders.
⚖️ Both brokers enforce the Pattern Day Trader (PDT) rule, requiring a minimum balance of $25,000 for frequent day trading.
💸 Robinhood offers slightly better price improvement compared to Thinkorswim, but both platforms have commission-free trading for stocks.
📈 For options trading, Robinhood does not charge commissions, while Thinkorswim charges $0.65 per contract.
🔗 Robinhood provides cryptocurrency trading, whereas Thinkorswim does not support crypto transactions.
⏰ Both platforms have the same extended hours trading from 7:00 a.m. to 8:00 p.m.
💼 Both brokers allow trading in traditional and Roth IRAs, offering retirement account options.
📉 Thinkorswim allows trading of OTC stocks, while Robinhood does not, providing an edge in this category.
📊 Thinkorswim excels in charting capabilities, offering a wide range of indicators compared to Robinhood's limited options.
🖱️ Thinkorswim features hotkeys for faster trading execution, which Robinhood lacks, making it more suitable for active traders.

Q & A

What are the founding years of ThinkorSwim and Robinhood?
-ThinkorSwim was founded in 1999, while Robinhood was founded in 2013.
What unique feature did Robinhood introduce that changed the trading landscape?
-Robinhood introduced commission-free trading, which was unprecedented at the time of its launch.
How did the introduction of commission-free trading by Robinhood impact other brokers?
-Other brokers, including Charles Schwab, E*TRADE, and ThinkorSwim, quickly followed suit by also offering commission-free trading to remain competitive.
What is the minimum account size for both ThinkorSwim and Robinhood?
-Both platforms have a minimum account size of zero, allowing users to open an account without an initial deposit.
How do ThinkorSwim and Robinhood handle the Pattern Day Trader (PDT) rule?
-Both brokers enforce the PDT rule, which requires traders to maintain a minimum balance of $25,000 if they execute more than three day trades within a five-day period.
Which platform offers better price improvement for traders?
-Robinhood offers slightly better price improvement compared to ThinkorSwim, with a price improvement of $1.28 for every 100 shares traded, compared to ThinkorSwim's $1.15.
What are the options trading commissions for both platforms?
-Robinhood charges no commission for options trading, while ThinkorSwim charges $0.65 per contract.
Does ThinkorSwim allow for trading of OTC stocks?
-Yes, ThinkorSwim allows trading of OTC stocks, whereas Robinhood does not.
What charting capabilities do ThinkorSwim and Robinhood provide?
-ThinkorSwim offers advanced charting capabilities with numerous indicators, while Robinhood provides only six indicators.
What is the cost for accessing Level 2 data on both platforms?
-Robinhood requires a $5 monthly subscription to access Level 2 data, while ThinkorSwim offers it for free.