TD Ameritrade was a U.S.-based online brokerage firm known for its comprehensive trading platforms and customer support. After Charles Schwab acquired TD Ameritrade in 2020, the integration was fully completed by May 2024.
Following the integration, clients can now access their accounts and trading services through Schwab’s website and thinkorswim mobile apps. While Schwab allows users to trade futures and offers numerous investment products such as ETFs, stocks, options, CDs, crypto, etc. we are going to focus only on Forex in this article.
Can You Trade Forex on Charles Schwab? Key Features & Availability
Yes, Schwab does offer trading platforms and resources that help traders take on Forex, the largest market in the world. Forex trading is provided by Charles Schwab Futures and Forex LLC. It is important to note that Forex accounts are not protected by the Securities Investor Protection Corporation (SIPC).
Schwab’s Forex – Key features and availability
Based on your trading style, Charles Schwab allows you to execute trades through several platform options. The features of Forex in Schwab are quite impressive.
- Commission-free Forex trading and trading costs are reflected in the bid-ask spread
- Access to over 65 currency pairs
- Specialized thinkorswim tools
- PaperMoney trading in a live market simulation
- In-depth Forex education with articles and insights
- 24/5 support from Forex specialists
- Free real-time market data on forex quotes through thinkorswim
How to Trade Forex on Schwab: A Step-by-Step Guide
How to trade with Charles Schwab? You can use the Schwab.com website for opening a new account or accessing your existing account.
Below are the requirements for opening a brokerage account with Schwab. You will need:
- A Social Security or Tax Identification Number
- Your employer’s name and mailing address
- Your email address and mobile number
Here is how you can set up your Forex trading account with Schwab.
- Log in to Schwab if you are already a user. If new user, do register, that takes 5 minutes to create your Schwab login.
- Once you log in, you will be taken directly to the “Trade Forex” page.
- Choose one of your eligible brokerage accounts from the drop-down list.
- Once you select your preferred account, click the “Open a forex account” button.
Users can easily start buying or selling currency pairs in forex on a desktop or mobile. The forex market hours on thinkorswim are 24 hours a day, 5 days a week, aligned with global FX trading hours.
Best Strategies for Trading Forex on Schwab
Schwab’s forex platform tools are comprehensive, and thinkorswim Forex strategies may be very effective if used properly and aligned with your trading style. You will also have access to several professional-grade forex order types. However, honestly, there are strengths and limitations to applying these strategies to obtain good results.
Schwab offers Forex trading strategies, specifically tailored to the thinkorswim platform, thereby leveraging its advanced features such as charting tools and indicators.
Moving average crossover strategy
This is a trend-following method where you can fix the timeframe from 1 hour to 4 hours. Set up a short EMA (9 or 20) and a long EMA (50 or 100). When short EMA crosses above long EMA, it is a buy signal and vice versa.
Add the moving averages in the “studies” tab in thinkorswim and create alerts for crossovers. You can also combine volume or RSI for additional confirmation.
Bollinger band reversal
This is a range-bound or volatility-based strategy with a timeframe of 15 minutes to 1 hour. For setting up this strategy, you can add Bollinger Bands (20,2) and wait for the price to touch the outside band. You can buy at the lower band and sell at the upper band. RSI <30 or >70 can be used as a filter.
You have to add BB and RSI in thinkorswim chart studies. Use OCO – One-Cancels-Other orders to bracket entry and exit.
Fibonacci pullback strategy
This is a trend continuation strategy with a timeframe of 1 hour, 4 hours, or daily. You have to identify the trend and pull a Fibonacci retracement from the recent swing low to high. Watch 38.2%, 50%, and 61.8% levels for price bounce and confirm entry with MACD crossover.
In thinkorswim, use “drawing tools” for Fibonacci Retracements and add MACD or stochastic oscillator.
Breakout from consolidation
This is a momentum/volatility strategy with a timeframe of 15 minutes to 1 hour. You need to wait for low-volatility sideways movement and enter a trade when the price breaks above or below the range. You can use Average True Range (ATR) for stop-loss sizing.
In thinkorswim, draw horizontal lines over the ranges and add the ATR indicator. Then create alerts for breakout levels.
MACD divergence strategy
This is a reversal strategy with a timeframe of 1 hour to daily. You can use MACD (12,26,9) on the chart. Look for the price making a higher high or a lower low, but MACD should show the opposite. Get additional confirmation with a breakout from the trendline or reversal candlestick signs.
In thinkorswim, enable MACD in studies and use drawing tools to mark divergence manually.
Charles Schwab Forex Fees, Spreads & Leverage Explained
Schwab offers commission-free forex trading through its thinkorswim platform, with costs primarily reflected in the bid/ask spread. So you don’t have to pay a separate commission, but the difference between the buy and sell price of a currency pair constitutes the cost of your trade.
The minimum allowed trade size is 10,000 units for forex trading, that is one standard lot. Schwab offers competitive spreads that vary by currency pairs. They mark up the bid/ask spread by 25 basis points in lieu of commission changes.
Schwab also offers 20:1 leverage on a minimum basis for forex traders. Maximum offered leverage is 50:1, so that traders can control a larger position with a smaller amount of capital.
Conclusion
We usually recommend traders to practice with a demo account to familiarize themselves with forex trading strategies. It is essential to set realistic goals and stick to your trading plan, and manage your leverage wisely to avoid the risk of potential loss. The Schwab trading environment is designed to accommodate both beginners and experienced traders by offering flexible and powerful tools.
If you are a Forex trader looking to build solid strategies based on trend-following, price action, or breakout methods with top-tier analysis tools, thinkorswim is one of the best options among U.S. brokers.
Pro Tip
Trading forex with Schwab is a solid choice for U.S.-based traders who value reliability. Use our broker finder tool to explore the best brokers and compare their offerings. There are numerous investment options such as stocks, crypto, banking, trading, etc. to explore.
