Traders have many choices when selecting a broker platform, ranging from simplistic online brokers to comprehensive software providers. Over the past several years, TradeStation has become synonymous with active trading with its extensive feature set and ease of use relative to many other platforms. The following guide is designed to help you decide if TradeStation is right for you.
TradeStation offers the choice between per-share or flat-fee commission plans that are both competitively priced within the market. For stocks and ETFs, commissions are as low as $0.006 per share or $4.99 per trade. For options, commissions are as low as $1.00 per contract or $4.99 per trade. And for futures, commissions are as low as $0.25 per side contract unbundled or single stock.
Margin rates range from 6.25% to 8.5% depending on the borrowed amount and there are additional fees for things like financial transaction taxes, purchase of foreign securities, and other things.
TradeStation provides access to all major asset classes, including stocks, options, futures, and currencies, as well as access to many international markets throughout North America, Europe, and the Asia Pacific region. Traders have the choice of making these trades via the web or via its award-winning platform.
Founded in 1982 as Omega Research Inc., the broker has been a subsidiary of Japan’s Monex Group since 2011.
Tools & Features
TradeStation offers an extensive set of tools designed to help traders identify promising opportunities and execute on them. In particular, the broker’s platform was designed from the ground-up to support programmatic trading, which can help enhance risk-adjusted returns by taking human emotion out of the equation.
Some of the broker’s best features include:
- Strategy Development – TradeStation enables traders to develop custom indicators and trading strategies or use pre-built strategy components that can be tested against historical data going back 90+ years in some cases.
- Portfolio Maestro – TradeStation provides sophisticated portfolio-level performance analysis, risk assessment, and optimization, including correlation analyses and genetic algorithm optimizations.
- Market Scanner – TradeStation lets traders quickly identify promising ideas by automatically scanning the market for certain patterns that are dynamically ranked and presented as potential trades.
TradeStation clients can open a new chart by selecting file from the main menu and then selecting new and then window. In the subsequent pop-up window, select chart analysis and click ok to close the window and open the chart. Charts can also be opened by clicking on the new chart analysis window in the tools section or by right clicking on a security in a watch list or list of positions.
See also How to Read Stock Charts
Traders can access technical analysis tools, like Fibonacci lines or trend lines, by selecting view from the main menu and then going to toolbars and drawing. Adding indicators can be accomplished by clicking on the insert analysis technique icon in the chart analysis toolbar, while strategies can be added by clicking on the insert strategy icon in the chart analysis toolbar.
Buying & Selling
TradeStation clients can place orders in a variety of different ways. In general, the easiest way is to select view from the main menu and then click order bar or click on the order bar icon in the main toolbar. Traders can then place market, limit, and stop orders directly from the window, as well as advanced orders like OCO and OSO orders, with all trades being logged in real-time.
Trades can also be placed directly within charts using a click-and-draw order-entry methodology. To trade directly within charts, traders can simply navigate to the desired chart and click on the chart trading icon in the toolbar or activate it within the toolbar by clicking on view in the main menu and then selecting toolbars and then customize, and finally dragging the icon onto the toolbar.
TradeStation offers a number of advanced features geared towards active traders, which sets it apart from many other brokers. In particular, the platform’s EasyLanguage programming language provides traders with the ability to create and modify any indicator or trading strategy to meet their needs. New resources are also being continuously added to expand the language over time.
In addition to developing customized strategies, the Portfolio Maestro enables traders to generate portfolio-level performance reporting, risk assessment, and optimization for various strategies. The RadarScreen and HotLists features also enable traders to automatically highlight gaps up/down, unusual volatility
TradeStation offers some of the most comprehensive features in the industry for active traders, although there are some drawbacks that should be considered. In particular, the company’s commissions may be low but its $99 per month fee for relatively inactive traders (those trading under 5,000 shares or 50 options contracts per month) could find it a rather expensive option.
The fact that the broker also caters to experienced active traders means that many of its tools may have a steep learning curve for beginners. Specifically, the company’s EasyLanguage may be difficult for traders without any programming experience to pick-up and use in a functional way. However, the firm does provide a lot of educational resources for those willing to invest the time to learn.
The Bottom Line
TradeStation provides one of the most comprehensive feature sets for active traders within the industry, combined with relatively low commissions and fees for those who trade frequently enough. That said, there are a few things traders should watch out for including the monthly fee for inactive traders and the high learning curve for inexperienced traders that don’t have programming experience.
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