The following is part of our Online Stock Broker Reviews series to help you find a better broker.
You may have noticed the TradeKing advertisements that feature $4.95 trades and have super cheap options contracts, but you may have wondered to yourself… is TradeKing a good broker? Well to be honest I wondered that myself so I opened an account and checked it out for myself.
Here’s All You Need To Get Started With TradeKing…
1. Open an Account
2. Make a small deposit in your account
3. Start Trading
It’s really that simple!
Commissions and Fees
Obviously the biggest draw for TradeKing is their affordable commission structure on stock trades. Online trades are just $4.95 each, as compared to $7 for Scottrade and $9.99 for TD Ameritrade and ETrade. For you options traders TradeKing charges $4.95 per trade plus $0.65 per options contract, which is again much cheaper than the brokers listed above. For those of you who trade options contracts in large amounts this can result in a significant money savings!
For mutual funds TradeKing charges $14.95 for the purchase or sale of No Load funds and $0 for Load Funds (but they note that it is subject to charges from the fund itself). Bonds are $4.95 per bond and treasury securities are $24.95 per transaction.
The application process takes about 5-10 minutes to open an account (depending on how much reading you want to do) but in all isn’t terribly difficult. You will have to supply the standard information such as your name, address, social security #, etc and then let them know what kind of accounts you are looking to open. There are options for traditional accounts, IRA, Roth IRA, options, margin, etc so you can select any or all options that are right for you. The part that takes the longest is that you will need to go through a lot of agreements from the NYSE, NASDAQ and TradeKing themselves, but this is standard no matter what investment brokerage you go with.
Stock, ETF and Mutual Fund Screeners
Perhaps the most useful tool on the Trade-King site are their Stock, ETF and Mutual Fund screener tools.
The stock screener allows you to select from financial ratios such as PE Ratio, Price to Sales, Current Ratio, company specific information such as revenue, revenue growth rate and debt to equity ratios. Stock screeners are extremely helpful for investors that aren’t sure of which stocks to buy and don’t have any in mind when they open an account.
On the mutual fund side the Trade King fund screener allows you to select by fund family, objective, load type, leaders scorecard, performance indicator and/or minimum investment. When I leave all the criteria unchecked there was just under 7,300 mutual fund options available so you should be able to find an option that is right for you.
As someone who rarely trades options, I found the options calculator to be very interesting. You can enter a company’s stock ticker symbol and the calculator updates with the current stock price and lets you select from a list of strike prices and expiration dates to help you determine which option you prefer. The calculator also provides implied volatility which is a tricky calculation but a must for options trading.
TradeKing Learning Center
One of the things I found most interesting about TradeKing was their “learning center” which is a great feature for beginning investors looking to learn how to invest. The learning center features training lessons by type of security, by type of trading strategy as well as more specific resources like tutorials on technical analysis and even a “rookies corner” that features videos and blogs for first time traders to pick up a tip or two.
TradeKing Trader Network
TradeKing features what they call the “trader network” which allows you to connect with other investors and see how they are trading and more importantly why they are trading the way they are. It allows you to track their portfolios and see how they are doing to help you gain some insight in to your own personal investment strategy. The Trader Network also features a forum where you can chat with other investors who have similar interests. I like the idea of tracking others’ activity, especially if you can see their real portfolio, but I do want to let everyone know to always be cautious when it comes to message boards… there are a lot of people with other agendas (maybe to drive a stock price up or down) so always be objective when listening to advice in a forum.
TradeKing promises that calls will be answered quickly and that you won’t have to sit on hold for a long period of time. Their hours of operation for phone calls are 8AM-6PM Eastern time Monday through Friday. There is also the option to email or chat with a life representative during the same hours.
One of the things that I like is that the customer service reps on the other end of the phone are real brokers rather than the normal customer service rep. The TradeKing website claims that their customer service reps “know their stuff” so I plan on testing this out over the next few weeks and I will certainly keep you posted!
TradeKing has a lot of awards under their belt which gives me a good feeling about them. They were rated #1 in customer service by SmartMoney from 2010 to 2012 and the TradeKing online trading platform and was awarded 4 out of 5 stars in a similar category from Barron’s from 2007 to 2012. High praise from two very distinguished sources.
Overall I was pretty impressed with TradeKing, certainly the low commissions are appealing and their customer service seems very solid. I would like to hear what you think, please leave your comments about TradeKing in the comment fields below!