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TradeStation vs. OptionsHouse: Brokers for IRAs

By Jordan Wathen - Mar 31, 2017 at 11:07AM

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TradeStation and OptionsHouse may be better known for active traders, but they have a lot to offer in IRAs, too.

Individual retirement accounts are more than just ways to save for retirement. Used appropriately, an IRA can help you save tens of thousands of dollars in taxes, and Roth IRAs can even be used to put away cash for a down payment on a home.

But to get started, you'll need to pick a brokerage to house your IRA account. Let's compare how TradeStation and OptionsHouse stack up for opening an IRA

Commission prices per trade

As time goes on, commission prices are going even lower. OptionsHouse and TradeStation price most trades at a base price of $5.00 or less. 

Brokerage

Stocks and ETFs

Stock Options

Mutual Funds

OptionsHouse

$4.95 per trade

$4.95 + $0.50 per contract

$20.00 per purchase

TradeStation

$5.00 per trade (or $0.01 per share with $1.00 minimum)

$5.00 + $0.50 per contract (or $1.00 per contract)

$14.95 per purchase

Data sources: company websites.

The biggest difference between them is that TradeStation offers a variable commission schedule in addition to its flat-rate schedule. For investors who purchase smaller lots of stocks, its variable pricing can result in much lower trading costs.

Pricing is always subject to change, and new customers may receive better deals. Check out a current list of special offers to see if any brokers offer lower prices (or free trades!) for new accounts. 

Mutual funds, ETFs, and commission-free choices

Not all brokers are created equal when it comes to fund selection. As TradeStation and OptionsHouse tend to cater more to higher-volume traders and options transactions, they don't offer lengthy lists of commission-free mutual funds and ETFs like other discount brokers.

Brokerage

Total Mutual Funds

No-Load, No-Transaction-Fee Funds (NTF)

Commission-Free ETFs

OptionsHouse

More than 12,100

None

5 (O'Shares)

TradeStation

More than 4,800

None

None

Data sources: Barron's , company websites, and representatives.

Minimum deposit requirements for IRAs

While OptionsHouse is a true no-minimum IRA broker, TradeStation currently requires that new clients invest at least $5,500 to open an IRA account. While brokerage minimums may not be prohibitive for investors who are rolling over a 401(k), TradeStation's IRA minimum may not be suitable for some investors who want to build up their balance with small contributions over time.

Men at trading desks

TradeStation and OptionsHouse pricing seemingly caters more to options and higher-volume traders. Image source: Getty Image.

Investing in foreign stocks and ADRs

Brokers have a complicated relationship with foreign stocks. Both OptionsHouse and TradeStation enable you to buy and sell American depositary receipts (ADRs), which represent ownership of foreign stocks but trade on U.S. exchanges. However, if you want to buy and sell foreign stocks on foreign markets, you'll need to be pickier with your brokerage choice. Only a handful of brokers currently route orders to international exchanges.

Mobile app reviews

Thanks to mobile trading applications, you can manage your portfolio from a phone or tablet all around the world. Here's how each broker's users and customers rated their mobile trading apps, as of March 23, 2017.

Brokerage

Apple App Store

Google Play

OptionsHouse

1.5 stars

3.1 stars

TD Ameritrade

4.0 stars

4.0 stars

Data sources: Relevant app stores.

IRA account fees and service charges

Brokerage fees can run the gamut, but you should keep on the lookout for maintenance fees (for having an account) and inactivity charges (for trading too infrequently) before opening an account. OptionsHouse doesn't currently charge either fee on IRA accounts.

TradeStation has an annual $35 maintenance fee for IRA accounts. TradeStation customers who elect to use its per-share pricing schedule will need to meet minimum trading requirements to avoid a monthly account service fee of $99.95. Customers who elect to pay commissions under the per-trade structure will need to keep a $2,000 minimum balance or make at least five trades per year to avoid a $50 inactivity charge. 

OptionsHouse vs. TradeStation for IRAs

Depending on how you invest, either could be a good choice. OptionsHouse offers more mutual funds and slightly lower standard commission rates on stocks, ETFs, and options, and doesn't charge a maintenance fee just for having an account. High-volume traders can potentially save money with TradeStation's per-share commission schedules, though minimum activity requirements (to avoid the $99.95 monthly service charge) may not be attainable for everyone. 

Ultimately, it's all about how a broker's offerings align with your portfolio. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that's a good fit for you. Visit Fool.com's IRA Center to compare several leading discount brokers on one page. 

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