This week brings the first in a series of new BankShout reviews: online brokers. As the Internet Era has changed the way people do business, online brokers have seen an explosion in popularity. Just as online banking cuts out the “middleman,” such as the bank branch teller, online brokerage firms make trading faster and more efficient by decreasing the dependency on professional stockbrokers. Beyond this, online brokers like Scottrade, ETrade, and OptionsHouse also offer the chance to trade not just equities, but also things like options, exchange traded funds, and mutual funds.
One thing that online brokers have done is to help lower prices; while price used to be a considerable barrier for the average person, now to start trading online your portfolio (not to mention your cash flow) don’t have to be all that huge. As brokers have crowded into the online action, the price of trades has been one of the first things to fall. Among online brokers, TradeKing is known as a low-price leader. TradeKing also has some slick trading platforms–a necessity when you are trading online–and high customer service ratings.
First and foremost, TradeKing has a very low per trade fee schedule. TradeKing charges just $4.95 per trade (option contracts add .65 cents). One huge advantage with TradeKing is that you don’t pay anything additional for “broker-assisted” trades, or when you call the company for help on a position. Other online brokers charge as much as $50 extra for such assistance. Limit orders, which most online brokers charge extra for, are also only $4.95 with TradeKing.
BankShout is, of course, all about saving you money. In that purview, TradeKing is one of the best options for online brokers. TradeKing’s website has several illustrations of how much you can save over a given number of trades, compared to other brokers. For instance, for one option trade with 25 contracts, you pay only $21.20 at TradeKing versus $28.74 at TD Ameritrade and $37.50 at OptionsXpress.
Of course, price means little if the product isn’t any good. Thankfully, TradeKing has platforms–programs that assist you in your online trading–that are user-friendly and functional. For instance, traders who like to examine fundamental analysis can use TradeKing’s MarketGrader Research Reports, which the broker’s website says uses “a quantitative approach to highlight the strengths and weaknesses of each company.” Conversely, if your style is technical analysis, you might want to use TradeKing’s Recognia tools, which examine things like chart-pattern recognition and price forecasting.
TradeKing also features a host of other platform tools, including a tax-implication manager, as well as calculators for volatility probability and profit and loss. Of course, the main TradeKing platform shows you real-time price quotes as well as relevant market news, and you can set up a “Watchlist” of your own company picks.
The true test of an online broker is in its customer service. You may be sailing along smoothly in your trading, and liking the low pricing, but what if a technical problem or other complex issue arises?
TradeKing’s website notes several financial press citations for the broker, including being named Kiplinger’s top-rated online broker for customer service in 2008. That bodes well. So does TradeKing’s promise of “short hold times” when you call them on the phone, as well as a live broker chat option. TradeKing’s website says that they try to answer emails within two hours during regular business hours, a pretty unusual pledge to post publicly. The broker provides Securities Investment Protection Corporation insurance for accounts of up to $25 million.
In addition, TradeKing has some added bonuses. When you refer a friend who opens an account with a minimum of $1000, you get a $50 bonus. Separately, TradeKing is offering $150 for (non-IRA) account transfers from other brokers.
As for intangibles, I like the friendliness and no-nonsense language of TradeKing’s website. The company seems to be targeting investors who are somewhat new to the equity game–there is a tab specifically called “Rookies Corner,” where newbies can interact with seasoned traders. Keeping in mind the risk associated with trading, I would recommend TradeKing especially to investors who are looking for a low-price broker that will still provide them with some hand-holding and needed support. If you are interested, you can sign up for a TradeKing account here.
- Cheap trades at $4.95 each
- Broker-assisted trades don’t cost extra
- Account transfer and referral bonuses
- Website ease-of use
- Limited amount of trading products compared with other brokers
- No mobile trading support
- No futures trading
- Margin schedule rates slightly higher than other brokers, so may not be best choice for daytraders
(No Ratings Yet)
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Comments:
July 26th, 2010 at 4:44 pm
I just signed up for Tradeking after finding out about there $4.95 flat fee. Biggest mistake of my life. They have the price to attract the customer, but customer service was terrible. I had wired funds and was successful at my bank end, but to find out about their unusual document limitations they had rejected the transfer because I had a joint account. They stated that I cannot use 3rd party to deposit funds. Clearly, I was the account holder showing my name and my partner’s name on the bank statement they had requested from me, but they insisted that I was the 3rd party. They had redefined the definition of 3rd party according to “their 3rd party policy”. They had wired back the money and deducted the fee from their side. Although it was a small amount of $25 that they had robbed from me, I had spent almost 6 hours going back and forth sending documents and conversation to find out I was robbed at the end. It was just a waste of time. I am definitely not going to recommend them for that matter!