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TradeKing Review – Trade Stocks Online for $4.95

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Several years ago I was searching for a low cost brokerage for a few stock purchases and after comparing multiple discount brokers, I opened a TradeKing account. My decision was based on TradeKing’s low prices, services, features, education center, and industry level awards – in short, just about everything your would look for in a financial services company. This TradeKing review covers the major features at TradeKing, my personal opinions, and some videos which help show TradeKing’s features. First, let’s Watch TradeKing’s video tour, then I’ll fill in the blanks:

TradeKing Review

TradeKing consistently ranks as one of the top rated online discount brokers by several major third party financial companies. Here is a sampling of the recognition TradeKing has received in the past few years:

Barron’s:

  • 4 stars from Barron’s “Best Online Broker” review for the 5th straight year
  • #1 online broker for usability in 2011
  • Distinguished as one of the “Best for Options Traders,” receiving high rankings for its options trading tools and competitive options pricing.
  • Named one of the “Best for Long-Term Investing,”

SmartMoney Magazine:

  • #1 in customer service in 2008, 2010, and 2011 annual rankings
  • #4 overall in 2011 annual rankings (#1 overall in 2006 and 2007).

Opening a TradeKing Account

Opening a TradeKing account takes about 15 minutes, depending on how quickly you can read the terms and conditions. Like all brokerages and other financial institutions, TradeKing requires new account holders to enter the standard personal information such as name, address, SSN, employer information, trading experience, financial information, etc.

One thing I noted during the application process was a TradeKing security feature – the use of a virtual keyboard for entering your password and for logging in to the system once your account is open. This is similar feature to the PIN number on ING Direct accounts and the keyboard login for the Thrift Savings Plan and is designed to prevent key-logging software from recording your password. Added security is always welcome in my book.

Transferring money and Fee schedules

Investments offered. TradeKing offers a variety of investment options to meet most individual investor’s needs, including stocks, bonds, mutual funds, options, exchange–traded funds (EFTs), and U.S. Treasury and Agency Issues and CDs. TradeKing also features a no-fee IRA.

Commissions. TradeKing is among the industry leaders for lowest commissions. For Stock and ETF trades, TradeKing charges $4.95 per trade. TradeKing recently decreased their commissions for those who buy multiple options contracts. The current pricing structure is $4.95 base + $.65 per options contract for the first 8 contracts, and $8.95 base + $0.15 for more than 8 trades. This can work out in investors favor big time. For example, a single option trade of 25 contracts used to cost $21.20, but now only costs $12.7o, or a savings of 40%.

Fee schedule. TradeKing is an online only company, and one of the methods for reducing costs is reducing physical paperwork. As such, there is a $2.50 fee for paper statements. With almost everything being electronic nowadays I don’t mind passing on the paper statements and relying on e-mail and my printer.

Transferring money. TradeKing allows investors to link an account to their TradeKing account to transfer money via ACH transactions. It is important to note that ACH deposits are subject to a trading hold of 5 business days, and cannot be withdrawn for 10 business days. This might make you miss out on a hot idea if you aren’t prepared and already have your money in your account. You can only link one bank account to your TradeKing account, so it is recommend to do some planning before you open your account.

Dividend reinvestments. TradeKing offers free automatic dividend reinvestments (DRIPs), with the ability to purchase fractional shares. Investors have the ability to apply automatic dividend reinvestments to all stocks in their portfolio, or select stocks. This is an attractive feature.

Money Market Sweep. TradeKing gives their account holders the option of placing their uninvested money into a sweep account where they can earn interest (the rates change based on market conditions). It’s important to note that for this to take effect, you will need to contact customer service after setting up your account. The funds are FDIC insured.

Trading Stocks at TradeKing

Making trades at TradeKing. The TradeKing platform is both intuitive and robust. TradeKing’s trading interface allows investors to perform multiple transactions from the same page, meaning you can set up covered calls, puts, spreads, straddles, and other trading options from the same screen. This is more advanced than my current needs, but will come in useful to many traders. This video will show you how to make a trade on TradeKing. TradeKing also has an extensive selection of tutorials and videos to help you if you ever get stuck (see learning center, below). Watch “Placing a Stock Order” from TradeKing:

TradeKing iPhone and Blackberry Apps

TradeKing iPhone AppTradeKing currently offers smartphone apps for the iPhone and Blackberry, with the Android and iPad apps coming soon. These apps allow you to check your account activity, trade stocks and options, perform research, track stock news, and more. You can check out the TradeKing iPhone and Blackberry apps here.

TradeKing’s Investment Research and Learning Center

Investment Research. The TradeKing platform features online equity, options and fixed-income trading tools including real-time portfolio information, advanced order entry, customized charting and alerts, free research and integrated news, stock, option and mutual fund screeners, volatility charts, a pricing probability calculator, enhanced option chains and interactive educational information.

Learning Center. TradeKing’s Learning Center offers tutorials on a number of investing topics. The Learning Center utilizes a variety of different media, including articles, blogs, free live webcasts and webinars, podcasts, video tutorials, calculators, tools, e-books, newsletters, and links to external resources. Just about any kind of information anyone needs can be found inside the Learning Center or through one of its external sources. The learning center is accessible to everyone, regardless of whether or not you have a TradeKing brokerage account.

The TradeKing Community

The TradeKing community is well organized and well run. It features a blog and forum section where members can trade notes and ideas and learn from each other. Members can track recent trade activity and trade notes from those who are willing to share some insight as to why they made a trade. They can also join TradeKing community groups which are organized and run by TradeKing members. There are quite a few groups, including those for beginning investors, options traders, and those who prefer to specialize in different types of investments including value stocks, penny stocks, ETF’s, hedge funds, dividend stocks, and various segments of the market such as automotive, biotech, or individual companies.

Other features at TradeKing

Maxit Tax Manager. TradeKing features the Maxit Tax Manager, a cost basis and tax reporting tool that tracks gains, losses, and other information to help you with your taxes. This tool makes it easy to monitor your monitor your realized and unrealized gains, identify wash sales, and calculate other potential tax implications. Maxit Tax Manager is FREE to TradeKing customers.

Account Records. TradeKing maintains records for account holders, including trade confirmation reports, monthly or quarterly account statements, and tax documents such as 1099 forms.  Account records are stored online and can be downloaded into a .pdf format, or Quicken, Microsoft Money 2007, or Excel. The account records are nice because TradeKing charges for paper statements.

TradeKing and CoolTrade Partnership. TradeKing recently partnered with CoolTrade™ to offer TradeKing customers access to automated stock trading. This capability is avilable in the TradeKing trading platform and gives TradeKing clients the ability to make fully automated stock trades for one, low per-trade cost (the standard rate of $4.95 per trade). There is a monthly subscription for this service, which is aimed at professional level traders.

TradeKing Customer Service

TradeKing has won several awards based on their customer service support, including the #1 rankings for in customer service in 2008, 2010, and 2011 Smart Money Magazine annual rankings. TradeKing customers can contact the customer service department via Online Chat (Available 8am – 6pm EST, Monday – Friday); Email (service@tradeking.com), or telephone (877.495.5464). My experience with TradeKing’s customer service has been excellent.

Switch to TradeKing and get up to $150 in transfer fees reimbursed.

tradeking-150-transfer-offerTradeKing offers an asset transfer reimbursement of up to $150 for new customers who transfer their assets to a new TradeKing account. This is beneficial for new customers since most brokerages charge a fee to transfer your assets out of their brokerage. Be sure to visit the the TradeKing site for more information about the TradeKing Asset Transfer program.

TradeKing Review – Conclusion

Overall, I think TradeKing offers great value and capability in a low cost, easy to use package. Based on my initial impressions and its award winning ways, I don’t hesitate to recommend TradeKing if you are searching for a new brokerage firm.

Other brokerage reviews: How to choose and online brokerage, Best Online Discount Brokerage Firms.


Published or updated August 1, 2011.
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{ 8 comments… read them below or add one }

1 Dividend Growth Investor

I trade at Zecco – you simply can’t beat 10 free trades/month.
But I have heard a lot of people say nice things about tradeking..

Reply

2 Ryan

DGI, I haven’t tried Zecco yet. I have a ShareBuilder account, but don’t trade there often. Their trades are $4 each, if you set them up to trade automatically. Otherwise thay can be higher. TradeKing’s pricing structure is a little nicer.

Reply

3 Nobrokeryet

Great review! I’ve been shopping around for a broker and none of the reviews mention taxes. Don’t people care about doing their taxes?! It’s a big deal to me. One review said something about dividend reinvestment. I read a bunch of magazine reviews but prefer blogs and comments by actual people. Magazine’s want advertising revenue and charge for their awards that companies advertise. Just like JD Power. I selected Scottrade then read that they don’t allow dividend reinvestment. Focused on Firsttrade because they allow DR. FT has Gainskeeper software but only for accounts with $75,000 minimum. This morning I was doing a quick search about brokers and found your article. I linked to TradeKing and will check out. Right now TK looks to be my selection unless they have a high minimum to use their tax software or I read reviews sayings it isn’t any good….

Thanks a lot!

Reply

4 Ryan

Nobrokeryet: Taxes are a huge deal, especially for people who trade often. TradeKing offers GainsKeeper free to all account holders regardless of minimum. I also love their research and education tools (free to everyone), and their trading prices are among the best you will find. When you take into account all the features they offer, TradeKing is my favorite online brokerage.

Here is another article in which I compare TradeKing to Zecco and ShareBuilder: How Does Zecco Compare to TradeKing and ShareBuilder?

TradeKing was better than the other two brokerages in terms of free services and research, and was not much more expensive than Zecco. It was much cheaper than ShareBuilder.

Accounts are free to open, so I encourage you to take a look and try it out!

Reply

5 Tee

I am currently thinking about TradeKing. What is the minimum amount required to open an account with them. Thanks

Reply

6 Ryan

Tee, There is no minimum to open an account, and no inactivity fees. There is, however, a federal regulation that requires a minimum of $2,000 to open a margin account.

Reply

7 Michelle

Hi Ryan,

I’ve been digging around for a while to put together both a Roth IRA and HSA account, and have been reading a lot of your articles.

So: I’m torn between TradeKing and E*Trade. I like the looks of TradeKing for the lower fees and myriad free tools. But I think E*Trade looks good, too, for their longevity in the industry and the fact that they offer foreign investments, too, that TK doesn’t appear to offer.

Thoughts? Is it better, overall, to open a Roth that includes foreign stocks for better diversification, or is it better to go the cheaper route and then rollover or open a second account later?

Thanks!
-Michelle

Reply

8 Ryan Guina

Michelle, The most important thing to consider is how you will use the account. If you aren’t a frequent trader, then the cost difference per trade may not be substantial. On the other hand, of you are a frequent trader, you may wish to go with the less expensive option.

You also mentioned overseas investments. Most brokerages allow you to buy mutual funds or ETFs which include foreign investments. So you may be able to get the foreign exposure you desire through a brokerage such as TradeKing if you are OK with investing in mutual funds and ETFs instead of buying individual stocks.

There are two schools of thought for opening one account now and another later. The first is that it is easier to maintain everything in one account. This is true, but in your case, you may find it better to have an account for more frequent trading and lower costs, and another for overseas investments. In the latter case, you will want to make sure you monitor your investments to make sure you understand your asset allocation. A great (Free!) tool for this is Personal Capital, which aggregates all your investments and shows you how they work together (asset allocation, performance, fund fees, and more). It’s like Mint.com for investments. You can read our Personal Capital review for more information.

Personally, I think both of these brokerages are great – just take a little time to review your needs and go with the brokerage(s) that best meets your needs. Hope this helps!

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