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Is TradeStation a Scam? Is TradeStation a Safe and Legitimate Company?
Is it FDIC Insured? TS BBB Rating for 2025
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Is TradeStation Safe?
The online brokerage firm TradeStation Securities, Inc. is part of TradeStation Group, Inc., which is now owned by Monex Group, a Tokyo Stock
Exchange-listed company that owns one of Japan's leading online brokerage firms (learn more in this Wikipedia article).
Founded in 1982 and originally named Omega Research, TradeStation is best known for their analysis software and electronic trading platform.
Is TradeStation a Scam?
TradeStation offers a complete array of investment options such as stocks, bonds, ETFs, and mutual funds to its customers as well as options and futures. It's
registered to do business in all 50 states plus the District of Columbia and is registered with the Securities and Exchange Commission (SEC) along with 14 other
self-regulatory organizations.
In addition, TradeStation is a member of the Financial Industry Regulatory Authority (FINRA), a non-governmental corporation that acts as a self-regulatory organization for the securities industry. Since scam companies are generally fly-by-night businesses that come and go on a very short-term basis and in limited areas of the country, it's doubtful that TradeStation, with its long history and extensive membership in regulatory groups, would be a scam.
Is TradeStation a Safe and Legitimate Firm?
Along with the groups mentioned above, TradeStation is a member of the New York Stock Exchange and CME Group—the leading commodities and futures exchange owner.
Membership in these groups gives a degree of guarantee that TradeStation operates in a legitimate manner with regard to handling all types of securities transactions.
TradeStation has also won numerous industry awards from groups such as Barron's broker survey
and Investor's Business Daily. In particular, their trading platform has won multiple awards for best trading system for stocks and futures from the magazine Technical Analysis of Stocks & Commodities, a leading periodical for sophisticated traders.
An online search for complaints or problems about TradeStation being safe and legitimate found very little other than the occasional complaint or bad review.
No discernible pattern was noticed of unsafe business practices or questions of legitimacy.
The takeaway here is that TradeStation is legitimate, enjoys a good reputation among a variety of expert industry sources, and is patronized by a sufficient number of
customers to ensure at least a reasonably positive reputation within the investment community.
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Is TradeStation FDIC/SIPC Insured?
As TradeStation is not a financial institution, it does not provide banking services or investment options like Certificates of Deposit (CDs). Consequently, it is not affiliated with the Federal Deposit Insurance Corporation (FDIC) and does not receive insurance coverage from them. Instead, TradeStation is a member of the Securities Investor Protection Corporation (SIPC), which offers protection for investors. In case of bankruptcy or failure, investors' accounts are guaranteed up to $500,000 per account, with $250,000 of that amount covering cash holdings. It is important to note that SIPC insurance does not safeguard investors against losses resulting from market downturns. However, it does ensure that the investor's cash holdings, up to $250,000, remain secure and that the investor retains ownership of their shares or bonds, regardless of their current value.
Is TradeStation Free?
TradeStation is not free because it charges commissions to buy and sell securities. These prices are competitive with other brokerage firms and are a usual and customary cost of doing business in the investment world. This is actually a good thing since any company offering a product for free that other companies charge commissions for would be immediately suspected of hiding some fees or commissions deep in the fine print of their account agreements.
TradeStation BBB Rating and Complaints
TradeStation Securities standing with the Better Business Bureau (BBB) is perfect, with an A- rating. The company is not accredited by the BBB, which is not unusual
for online brokerage firms and should not because for concern. In the past 3 years, 6 TradeStation complaints have been closed with the BBB. Here's the
breakdown:
Advertising/Sales Issues - 1
Billing/Collection Issues - 1
Delivery Issues - 0
Problems with Product/Service - 4
Guarantee/Warranty issues - 0
The company has received no customer reviews from the BBB.
The takeaway here is that TradeStation's business operations have not raised any major red flags with the BBB.
Conclusion
TradeStation is a safe and legitimate online brokerage. As with all brokers, or any other business dealing with large amounts of customers' money, individual
employees may behave unethically or even criminally, but that doesn't mean the company as a whole is corrupt or unsafe or a scam. Investors should always perform
due diligence on any broker with which they may be interested in doing business and be sure to understand fully the terms of any account agreement
and commissions and fees schedule before opening an account.
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