In this episode, I'm going to compare Finger Swim versus Robin Hood Two Top Brokers and they're going to go head-to-head and I'm going to tell you which one I think is best, but I'm going to put it all out there on the table so you can decide which of these two Brokers and these two platforms is the best for you. And at the end of this episode, I'm going to answer the question of what is the real cost of free commissions because these are both commission free Brokers but is free Really free? All right. So let's set the stage here. Thinker Swim was founded in 1999, Robin Hood was founded in 2013.

Both these platforms have been around for a long time. However, when Robin Hood came on the scene, they had something that no one else had at the time free commission trading but a lot of Traders like myself I disregarded it because it was a mobile app and I thought, well gosh, I've been using desktop software I Don't want to trade on a mobile app? There's no way professional traders who are trying to really make money at this are going to to use a mobile app. But as you know, Robin Hood started to gain some traction and in fact began taking away market share from Thinker Swim. ER Trade Fidelity Interactive Brokers and some of the others.

So much so that in let's see, it was 2019 Charles Schwab Did something crazy we no one saw this coming Charles Schwab announced free commissions at Charles Schwab and within a month I'm not kidding. within a month a Merit Trade Think or Swim E Trade Interactive Brokers. They all did commission free. They were like if you're going to do it I'm going to.

We all have to do it. We have to compete and suddenly the the playing field changed and this was a this was a real problem for Robin Hood Because all of a sudden you know Robin Hood People were able to kind of say well it's a mobile app and it's not as good as these other platforms. but at least it's free commission. Okay so now today with all of these other platforms also offering free commission is Robin Hood Do they really have a viable business model? Is there a good value proposition for you as an aspiring Trader or an investor? Well, let's start comparing the features.

We're just going to go straight down the line. We're going to begin at the top with the features related just to the platform as a whole. The minimum account size for both of these Brokers is zero. You can set up an account today.

you could put a penny in a dollar in. You don't have to even fund the account right away. You can open it account with no deposit which allows you to get in, look at the platform and start getting comfortable. So minimum account size for both of them is zero.

Level Playing Field They're the same the PDT rule. Both of them enforce the PDT rule. they're United States broker dealers. They both will tell you that if you want a day trade which is more than three trades, uh, more more than three trades in a 5-day period or four trades in a 5-day period.

if you take the fourth, you're a day trader. You've got to maintain a minimum of 25,000 if you're interested in Brokers that do not enforce the PDT rule. I'll have some links Down Below in the description and you guys can check those out. but PDT rule.

they both enforce it so they're the same price. Improvement Now this is interesting because both of these Brokers participate in payment for orderflow. They are selling your order flow to institutions who then fill the orders and they pay the broker for basically buying your order flow so they make a profit off of you off of us. We are the commodity.

Remember anytime something is free, we're the commodity. But in this uh relationship, we as the Traders get price Improvement and Robin Hood here actually beats the price. Improvement for the last quarter was A128 for every hundred shares traded, while the price Improvement at Thinker Swim was A1 15. So Robin Hood here in this category beats out think or Swim marginal, but not significantly.

It's not incredibly substantial, but it is marginally better. As we already discussed commissions for stock free, both of them are free. same Level Playing Field here. commission for options Robin Hood is free, think or Swim charges 65 cents per contract.

so if you are an options, Trader Robin Hood is going to be the preferred platform. although Thinker Swim does have really good option analytics and their platform is easier to navigate for options. Traders especially if you're doing complex options like spreads. Well, that's a little tricky, so you know.

Again, if you really want free, Robin Hood is the place to go if you're trading options. Similarly, both Brokers offer leverage, so no difference in that category and the next is crypto. Robin Hood offers crypto trading Thinker Swim does not. So, so if you're interested in trading crypto again, Robin Hood Now wins Thinker Swim fall short.

So does Thinker Swim excel in any of these categories? So far, we're leaning slightly to Robin Hood All right, what about Extended hours? Extended hours is the same 7:00 A.m. to 8:00 P.m. which means you can't trade from 4:00 A.m. to 7: A.m.

That's a little bit disappointing because there are some opportunities in that early morning pre-market session, but both platforms are the same in that regard. So, 7:00 A.m. to 8:00 P.m. What about retirement accounts? Well, it's a tie.

They both allow you to trade in either traditional or Roth IRAs OTC stocks. Okay, finally a win for Thinker Swim. Thinker Swim allows OTC trading. All right.

Well, Robin Hood doesn't, but honestly, not that many people are really trading OTC stocks these days. Those are penny stocks Really, really cheap penny stocks. So although the wind goes to think or Swim Robin Hood doesn't allow it, they're really risky to. it's risky to trade OTC stock so that one for me doesn't really make a difference.

The next feature: stock scanners. Robin Hood doesn't currently offer any stock scanners. Thinker Swim does. but I don't think they're very good.

So I guess you could say the wind goes to Thinker Swim for trying, but it's just a participation trophy. They don't actually get much from me in that regard cuz I Don't love the scanners, but let's give Thinker Swim a chance. Here's a category where they really do Excel and it's on charting. The charts with Thinker Swim are really terrific.

They are really good charts and they have more indicators than you could possibly dream of putting on your charts, so they are really robust on the charting side of things. Whereas Robin Hood they only offer six indicators. so their Suite of indicators is very, very limited and and that all kind of plays in with a little bit of a theme. Here Thinker Swim has a desktop application that you can install and run on your computer.

Robin Hood is a web app. so yes, you can use Robinhood on your desktop computer, but it's a web app. It's not the the same as a native, uh, executable file running on the computer. Thinker Swim on desktop is phenomenal.

It it really is an extremely robust platform. You've got level two data which you do have with Robin Hood Both have level two, but you've got a really solid platform with these great charts and the option analytics and all that stuff. So the Wi here goes to Think or Swim Now let's talk about on that desktop platform: Hotkeys Robin Hood Doesn't have hotkeys? Thinker Swim has hotkeys so you can set up your buttons with shift one to buy a th000 shares control Z whatever. To sell the whole position, sell a th000 shares.

the Hot: Keys they're not as, um, they're They're not as customizable as software designed for Traders Like you know when you see see those uh movies where they're all hedge fund Traders You know with all the computers, they're not using Thinker Swim and they're not using Robin Hood But Thinker Swim really is a a perfectly suitable platform, not just for the Casual investor buying and selling here and there, but also for the Trader who wants to be a bit more active in the market. So now we've stacked up a couple of wins for Thinker Swim now. I Mentioned they both have level two data, but with Robin Hood you have to pay $5 a month and be a gold subscriber to get that level two data. Now $5 a month.

They're taking a loss on that because I know Market data costs more than that for me. but they're trying to cover their costs a little bit. I Guess so $5 for them? Thinker Swim, It's totally free, so they take the loss on that. They make it up somewhere else.

But yeah, $60 a year doesn't really feel that significant. But the win here does. go to Thinker Swim. Now at the beginning of this episode, I said that I would answer the question of what is the true cost of commission Free trading.

The fact is, commission free is not exactly free as you know these Brokers are selling your order flow to Institutional Traders the wholesalers and they make a profit on every single trade that you execute. And they make billions of dollars a year on this payment for orderflow relationship. So you do get price Improvement But obviously the broker's also getting paid and the wholesalers making money so it's it's. kind of a funny thing.

Well, you might say who really loses here in this relationship isn't it just a win-win winwin? Well, something that's kind of interesting. Who loses really are the exchanges? Because the exchanges have different pricing requirements. They price stocks in minimum increments of one penny, and Institutional Traders can split pennies. So you know a penny on 10,000 shares is 100 bucks.

So if you split that penny in half or you split it three ways, some some goes to you, the trader, some goes to the broker, and some goes back to the wholesaler, then you know that's a win and that's kind of what's happening. So maybe the exchanges will decide to change their pricing requirements. Maybe Regulators will change the payment for orderflow relationship they've talked about. Maybe changing it.

Not sure if they think it's fair, but right now at the end of the day, retail Traders do seem to be winning. Free commissions is great. Institutional Traders are winning and the Brokers are happy too the exchanges. I Think feeling the squeeze as the market moves more and more off the the main primary trading venue because that's the thing.

A lot of these orders are routed internally at that broker and they never actually come out to the main market. So it's kind of interesting. But in any case, I I Think that between these two Brokers I told you that I would tell you which one I think is best and you might have already guessed it. I For me, it's Thinker Swim.

They Edge out in a couple of categories. now you're It's true that Robin Hood does give you slightly better price Improvement but Robin Hood it they. they don't have hot keys. They don't have a desktop platform.

It's very simple. So I I think that it's good for people who want to trade crypto. You do get a little bit of price Improvement but Finger Swim is a much more robust platform both in Mobile and on desktop. The charts are far superior.

The hot keys are terrific, You know it, you pay a little bit in the price Improvement but it's it's not a lot. So I think for a Trader who is more active, you're going to be happier with Thinker Swim. Robin Hood I'm concerned that their business proposition their value offering is just becoming less and less compelling compared to these other brokers who have gone commission free. So if I was going to go head-to-head with two of them, I would choose Thinker Swim.

but there are some reasons why I could see why you might choose. Robinhood If you're thinking about using Thinker Swim for day trading, make sure you check out this episode on the 3 settings you have to enable that's a deep dive on the platform. and I'll put another recommendation here of a video that YouTube thinks that you would love. so check that out and make sure you stay tuned for the next episode that I Upload here real soon! Thanks again for tuning in.

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