TradeKing is a discount online financial trading platform. Why “discount”? As you’ll see below, its fees are lower than those of many other online brokers. It’s able to charge less by not offering the full range of services that some other online brokers provide. Whether that matters to you will largely depend on whether you want to go beyond stocks, bonds, and other trading basics.
Below, we’ll take a look at how TradeKing stacks up in several important areas, including fees, trading options, and customer service. If you like what you read, new clients can take advantage of $1,000 in free trade commission until Dec. 31, 2015, by opening an account here and using code FREE1000. Note that you’ll need to fund your account with at least $5,000 within 30 days to be eligible for the promotion.
Fees
TradeKing has some of the lowest fees among online brokers. Here’s a rundown of the basics, along with a comparison to one other discount trader, OptionsHouse, and two of the largest, most popular online brokers, Scottrade and E*Trade:
|
|
TradeKing
|
OptionsHouse
|
E*Trade
|
Scottrade
|
|---|---|---|---|---|
| Stocks and ETFs (online/no broker) | $4.95 | $4.95 | $7.99 each for more than 150 trades per quarter; $9.99 for fewer | $7 |
| Stocks and ETFs (broker assisted) | $20 | $25 | $25 | $32 |
| Options | $4.95 plus $0.65/contract | $4.95 plus $0.50/contract | $7.99 plus $0.75/contract each for more than 150 trades per quarter; $9.99 plus $0.75/contract for fewer | $7 plus $1.25/contract |
| Options exercises/assignments | $9.95/$4.95 | $4.95/$4.95 | $19.99 | $17 |
| Mutual funds (no load, no transaction fee) | N/A | N/A | No fee | No fee |
| Mutual funds (transaction fee funds) | $9.95 | $20 | $19.99 | $17 |
| Margin trading rates | 4% to 8.75% | 2% to 6.5% | 3.89% to 8.44% | 5.25% to 7.75% |
| Account maintenance fees | None | None | None | None |
| Inactivity fees | $50/year if no activity for 12 months and less than $2,500 in household accounts | None | None | None |
| Minimum initial deposit | None | None | $500 | $2,500 |
As you can see, TradeKing charges substantially less in fees for most of its services than full-service brokers such as E*Trade and Scottrade. The $4.95 fee for stocks and ETFs is just about as low as it gets (although not as low as Robinhood’s free trades) and the $20 charge for broker-assisted trades is lower than competitors’ fees, too. TradeKing is also much cheaper on mutual funds, undercutting E*Trade and Scottrade by almost half.
The other big pro here: There is no minimum initial deposit. That makes TradeKing an especially attractive place for beginners to get a feel for online trading without having to pony up a lot of cash.
TradeKing is a bit less competitive when it comes to options and margin trading, however. Discount broker OptionsHouse has the edge in both categories. Potential traders should also note TradeKing’s $50 inactivity fee, which applies if your account languishes for more than a year and has less than a $2,500 balance. There’s also an added penny-per-share fee for trades of stocks priced lower than $2; on a 50-cent “penny stock,” that amounts to a 2% fee.
If $4.95 for stock trades is still too rich for your blood, you can make certain trades for free — yes, free — with a new app called Robinhood. However, Robinhood lacks a lot of the more sophisticated trading options and features that you’ll have with an established online broker. For more, check out our Robinhood review.
Trading Options and Research
Most casual investors interested in stocks and bonds should be happy with their options at TradeKing, which also offers no-fee IRAs. As far as advanced trading goes, TradeKing offers foreign exchange (forex) but not futures trading, though traders should soon have futures access after TradeKing completes an acquisition of MB Trading later in 2015. By comparison, OptionsHouse currently offers futures but not forex. Neither brokerage offers commission-free ETFs.
There are more than 12,000 mutual funds offered at TradeKing, which is about on par with OptionsHouse. This includes more than 4,500 no-load funds. Both numbers top E*Trade, but not Scottrade. However, unlike E*Trade and Scottrade, TradeKing does not offer any no-load, no-transaction-fee mutual funds (NTFs).
When it comes to research, TradeKing offers fully featured, easy-to-read charts and graphs. However, it includes third-party reports from just one source (Standard & Poor’s). Pricier competitors such as E*Trade and Scottrade offer multiple third-party reports, but TradeKing’s low fees make several research offerings too expensive, StockBrokers.com notes.
User Interface
TradeKing has traditionally lagged competitors when it comes to ease of use, with a clunky interface that requires way too much work to make a trade. As StockBrokers.com says, the simple commission of an all-in-one trade ticket page made the process cumbersome at best.
Fortunately, an improved, Web-based TradeKing LIVE platform addresses many useability issues, including the process of making a trade. StockBrokers.com even awarded the platform its 2015 Industry Award for #1 Broker Innovation. TradeKing LIVE is available to all TradeKing users, but it’s still not the default platform for traders. If you’re a tablet junkie, you’ll also want to note that there is no dedicated TradeKing app for iPads or Android tablets.
Customer Support
TradeKing offers live customer support from 8 a.m. to 6 p.m. ET on weekdays via phone and chat. While the chat feature is appreciated, note that some pricier competing brokers offer live support during extended hours. For instance, Scottrade representatives are available from 9 a.m. to 7 p.m. ET on the weekends, while E*Trade has 24/7 live support. TradeKing aims to answer all email questions within two hours on weekdays and 24 hours on weekends.
TradeKing makes a solid showing in a StockBrokers.com review of customer support among major online brokers, but representatives often “weren’t 100% positive when answering our questions,” the site notes.
TradeKing does not have any brick-and-mortar branches. While most online traders don’t choose their providers based on this option, it’s still nice to have. Scottrade, traditionally one of the best online brokers for customer service, has more than 500 locations nationwide for traders who want more personalized assistance. It also routes traders’ calls to local branches during business hours, enabling traders to build a more traditional client-broker experience than is usually possible online.
Banking
If you want the convenience of broker-provided banking services, you’re in for a disappointment: TradeKing, like OptionsHouse and other discount online brokers, doesn’t offer any of these services. If you want to bank with your broker, you’ll need to step up to a pricier competitor such as Scottrade, which offers checking, savings, CDs, and money market accounts.
Advisory Services
Want to take a more hands-off approach to investing? In 2014, TradeKing dipped its toe into the world of online wealth management by launching TradeKing Advisors. This service goes head to head with other online financial advisors such as Wealthfront, Betterment, and Personal Capital. The Simple Dollar has reviewed all of these services; click on their names for the scoop on each one.
TradeKing’s portfolios consist of exchange-traded funds (ETFs) and exchange-traded notes (ETNs). TradeKing decides which portfolio to assign primarily based on your financial goals, timeline for meeting those goals, and how much risk you’re willing to take, but they’ll fall into two categories: core, for cautious investors and/or those with less than $5,000; and momentum, for those with more than $5,000 who are willing to make riskier investments in hopes of greater returns.
With core portfolios of $5,000 or more, you’ll pay a yearly fee of 0.25% of your balance; with less than $5,000, you’ll pay $1 a month. Momentum portfolios require a yearly fee of 0.5% of your balance. There are no trading fees. You’ll need at least $500 to open a core account and $5,000 for a momentum account.
Bottom Line
TradeKing’s low fees and lack of minimum balance make it a bargain for everyone, from experienced traders who simply want to pay less, to beginners who just want to get a feel for online trading before committing a lot of money to an account.
Who might want to steer clear? Investors who want a full range of advanced investment options or a lot of third-party research reports; those who may not trade every year and don’t want to pay an inactivity fee; or anyone who hopes to bank with their broker.
If TradeKing doesn’t seem like your cup of tea, we offer more reviews in our guide to the Best Online Stock Trading Brokers of 2015. There, you’ll find a review of one of TradeKing’s major competitors, OptionsHouse, as well as TD Ameritrade, Scottrade, and E*Trade. For a more in-depth comparison of those last two online brokers, see our recent article, E*Trade vs. Scottrade.
The post TradeKing Review: Can a Discount Broker Meet Your Investing Needs? appeared first on The Simple Dollar.
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