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TradeKing Review: $4.95 Trades, No Minimums

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Tradeking - Discount Online BrokerI could only avoid the siren song of $4.95 trades for so long, here are my opinions of TradeKing in 2,144 words and 4 screenshots. Last week, I joined the masses and opened a TradeKing brokerage account. I did so partly because I wanted to understand the process and answer some of the emails I’ve been receiving, and partly because I was impressed by their Options Education Center and wanted to dip my toe in the waters of something I never really understood. I had heard that TradeKing offers the easiest way to pull off multiple options related transactions (because they’re often used as hedges) at once. More on that later, let’s get to the basics.

Until the end of November, TradeKing is running a $50 new account bonus promotion where you can get $50 for opening an account, funding it with at least $2,500, and making one trade. Click the link to learn more or email me and I’ll refer you.

Account Application Process

I opened an individual account (with margin enabled) and Level 1 – Covered Calls options trading. Opening an account at TradeKing takes about five minutes and three screens (plus a confirmation screen). They asked for all of your standard brokerage account information details like name, address, social security, employer information, financial information, trading experience, whether you want to be able to trade on margin and with options, etc. Nothing remarkable, quick and easy.

One interesting security measure they put in place was a pop-up keyboard for the password entry. You click on buttons to enter your password, a measure that seems a bit like overkill, though it’s nice that they thought of it. I’ve never seen a company use that during the account opening process. (this is the same keyboard used for logging on to TradeKing)

After the application process, you are asked to agree to several agreements. The agreements run the gamut of agreeing to accept real time quotes, certifying that you’re a nonprofessional, etc etc. After you agree to all those, you’re allowed to join the TradeKing “community!” Yay!

TradeKing Community

TradeKing Community Front Page ScreenshotThe TradeKing Community is TradeKing’s attempt to leverage the social media craze and create a place where traders can share thoughts, opinions, and ideas. I believe Zecco has a similar Zecco community but very few other brokerages do this. I know for a fact that there is no Vanguard or TD Ameritrade or E*Trade community like the one at TradeKing and Zecco. At the moment, it’s very slick looking but lacks a bit in participation. I’ll explain more later.

The major parts of the community are:

  • Community Home (shown right): The community front page captures a taste of every other section of the community, including three huge buttons in the header going to Trading Activity, Trade Notes, and the Forums.
  • Trading Activity & Trade Notes: You can trade with funny money and track your progress here, with the aggregate data of trades being listed in Trading Activity. You can tell that the community is still quite small as on this day (May 29th, 2008) the most active stock is Ford with 10 trades. Most of the notes have zero or one vote.
  • Groups & Forums: You can think of Groups as almost like forum categories and the forum as the big list of every discussion going on. The groups themselves are still of a reasonable size (Beginning Investors has the most with 126 members) but vary in terms of quality, scope, and purpose. Anyone can start a group, so you have groups with intuitive names like “Value Investing” and then ones that have less intuitive names (Street Addicts is one). Some groups have membership rolls in the single digits (Socially Responsible Investors has one member).

But let’s be honest, you don’t sign up with a brokerage because you want to meet friends, you sign up because you want to make money in the stock market.

Transferring Money

Step one to making money on the stock market, after opening an account, is getting funds into that account. They make it pretty easy, simply go to the navigation menu up top and click on Services > Transfer Money. I went with the ACH transfer, which required the basic information (ABA routing #, account #, etc). Unfortunately, there’s a mandatory minimum five day hold after you setup an ACH link. :(

After linking my account, you can only have one account link at any one time. If you want to link another account, you have to delete your current ACH linkage and add the other one (including five day wait). Another minor annoyance is yet another five day hold on ACH deposits if they exceed your account balance (if you deposit less than your account balance, there is no hold).

Making Trades

TradeKing Trading ScreenThe TradeKing trading screen is pretty slick. I like how you get a quick quote on the ticket you enter into the ticket trade form, it appears immediately with useful information (Bid, Ask, Last, Change, Volume, and Company name). It’s nice not to have to click “quote” or something silly like that. (ignore the fact that my account balance says $0.00, I took the screenshot before making any trades… five days is a long time to wait!)

Disable Preview Step: If you hate previewing your order, it’s nice that they allow you to disable the preview step (you can also setup a default stock and option trade quantity on the same page, though I find that probably won’t be too useful). There is a link underneath the Preview Trade button that takes you to your Settings, then just click the “Bypass Order Preview Screen.” You’ll notice your trading button changes from Preview Order to Place Order. (if you want to change it back, it’s under Services > Settings > Trading & Real-Time Quotes)

One feature that is missing that I found valuable at TD Ameritrade was a floating window that allowed me to trade regardless of the screen I was on. At TD Ameritrade, there was a little Javascript-like form at the bottom of each screen that let me enter in tickers and submit trades even if I was on a general information screen. While it’s hardly a chore to click on trade, having that window was a “nice to have” feature.

TradeKing Covered Call Trade ScreenOptions: The screen to your right is the Covered Call Trading Screen and it, on one screen, lets you buy both the underlying stock and write/sell the Call option to go with it. I’m still very much a novice when it comes to Options, so the terms Butterfly and Condor and all that jazz are meaningless to me, but the Covered Call is something that’s pretty easy to understand. A call option is the right to buy the stock, “call for it,” at a specific price. When you write/sell a call option, you’re selling someone the right to buy a stock from you at a specified price. A covered call means you’re writing a call for shares you already own. This screen lets you buy the stock and write the option, two things at once, and is clearly more convenient than forcing you to buy the stock and write the option on two different screens.

I plan to read more about options trading, enough to become comfortable (I talk about the education center later, where I read their options playbook) and then I may speak to this section in greater detail.

Finally, the backend systems of TradeKing rely on Legent Clearing. Everything from actual trades, securities clearance to settlement is done through Legent and they service a bunch of well-known clients such as Pointe Capital, MyStockFund Securities and OptionsXpress.

Maxit Tax Manager

TradeKing offers a Maxit Tax Manager, by Scivantage Maxit, that tracks your gain and loss, including the following listed features:

  • Tracks all transactions and running cost basis of your securities.
  • Automatically adjusts cost for corporate actions (splits, mergers, spin-offs, etc.)
  • Automatically identifies and adjusts cost basis for wash sales
  • Sets default standing orders for matching sells to tax lots such as Minimize Tax, First In–First Out, Last In-First Out.
  • Calculates Unrealized and Realized Gains and Losses
  • Generates Tax Reports, such as the Schedule D automatically

As of this review, I haven’t really gotten a chance to look too much in depth about this because I haven’t sold anything.

Research

TradeKing MarketGrader Stock Research ScreenshotTrading is nice, but what about the information you need to make informed decisions? Most brokerages offer third party reports (or their own analysis) to help you made decisions. TradeKing uses a system called MarketGrader. MarketGrader describes itself as essentially a big quantitative calculator that crunches all sorts of factors and gives you a number. Yep… a number.

In the screenshot to the right, you can see Yahoo’s analysis. Growth got a B-, Value got a B, Profitability got a B-, and Cash Flow scored a B+. End result? A 48.8 and a flashing red Sell rating. If you want more information, the PDF Report doesn’t really provide it. There’s a paragraph explaining each of those four categories with a few pages of pretty graphs and charts. Surprisingly, the report’s Overall Grade of 42.8 didn’t match the initial Overal Grade of 48.8, which was strange.

Research overall isn’t bad at TradeKing, but the individual stock reports were a little disappointing. They did, however, garner four stars for research in the latest Smart Money 2008 Best Online Brokers survey, likely on the strength of their other data. Comparatively, E*Trade offers (for Yahoo) analyst reports from Credit Suisse, Reuters, Standard & Poors, Rochdale Research, Sabrient, Thomson, as well as a Jaywalk Consensus Report (by BNY Jaywalk). TD Ameritrade offers reports from The Street, Standard & Poors, Ford Equity Research, Market Edge, and the Jaywalk Consensus Report. Both firms received five stars from Smart Money (and both charge more for trades).

Education

This is probably one of my favorite parts of the site and I devoured their Options Playbook chapters, authored by Brian “The Options Guy” Overby. I knew very little about options and this little “playbook” gave me enough information to be dangerous to my bank account. It went through all the terminology, all the plays, all the scenarios for all the plays (especially valuable), and was done in an entertaining (a lot of jokes, some of which were bad jokes) that made it fly by. You don’t need an account to view the Education Center.

Customer Service

Customer Service is very responsive, I was connected to a CSR via their online live chat in less than five seconds. I asked him a litany of general account related questions (I was trying to clarify the whole ACH hold issue I mentioned above) and he was very responsive and informed. If I run into any “real” customer service interactions, I’ll post them in the future.

One interesting tidbit I learned was that the ability to add multiple bank links was not a priority at this moment, which is understandable.

Fees

So, trading looks good, the community is young but growing, everything seems on the up and up with TradeKing… is there a catch? If there ever was a catch (can you tell I’ve been reading Gotcha Capitalism?), maybe it’s in the fees… but they’re not. $4.95 a trade, no minimum balance requirement, no account maintenance fee. Mutual funds trades are a little pricier at $14.95 a trade for no-load mutual funds but they beat a lot of their competitors (TDAmeritrade costs $49.99, E*Trade costs $19.99). If you are only going to get funds from one brokerage, say Vanguard or Fidelity, then I’d recommend opening accounts with them rather than buying through TradeKing; otherwise TradeKing looks good on the transaction fee category.

There is a $50 fee for account inactivity but can be avoided if you have a combined account value of over $2500 or make one commission-charged trade in the last 12 months. If you want paper statements, those will cost you $2.50 a piece and trade confirmations will cost $1.00. I recommend going paperless anyway (or just print up the documents yourself).

Conclusion

My experience with TradeKing so far has been good. There were a few small annoyances like waiting five days for the ACH link, then another five days on the first deposit, but overall it’s been a solid experience. The TradeKing “community” area looks nice but I don’t know how great that’s going to be considering they’ve had it open for a while and it still appears to be in its infant stages (or at least it’s only a toddler).

The one area I was quite impressed with was the educational areas where they taught you about options. Options can get tricky so explaining all the scenarios is certainly a plus and if you fancy yourself an options house, which I believe TradeKing does to a certain extent, you definitely need a place where you teach people how to do those types of transactions. While I won’t be entering into any Butterflies or Condors in the near future, at least I’ll know what the heck they are.

If you made it this far, thanks for reading, this is by far the longest and most comprehensive review of… anything, that I’ve ever done. Hopefully you found it valuable!

{ 110 comments, please add your thoughts now! }

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110 Responses to “TradeKing Review: $4.95 Trades, No Minimums”

  1. Dissatisfied customer says:

    TradeKing also won’t send you a confirmation of any kind once you close the account.

    To close your account, you must call in (not mentioned anywhere on the website). To confirm that they closed your account (which takes a few days), you must call in a 2nd time. They won’t provide you with a confirmation number or anything in writing.

    Ridiculous

    • The Judge says:

      Maybe better to let it languish with 1.00 as the balance to avoid any hassle??

      In comparison, I wonder how other broker handle closing out an account, what are specs regarding method of request (only calls accepted? is email or fax alone ever ok?) and time wise how long the process?

      I had an active Sharebuilder accnt years back i used for dabbling in trading (before day trading was widespread/easy/cheap) but quickly realized fee’s were to high so instead of closing it i moved 99.9% of the money elsewhere and let the rest languish…

      Apparently to close the account officially the ‘punishment’ was (as that time) a fee of $50, so I never bothered.

  2. William says:

    Do NOT sign up with Trade King. If you are ever required to be assisted by a human being working in their office, they will incorrectly answer your questions and incorrectly input information on your account. I recently setup automatic withdrawals to my account (unfortunately, this was required to be done by a human being on their end) and they double input the information resulting in two withdrawals on the same day for the same amount when I only gave them written authorization for one. This is only the latest of a string of problems with the people that “work” at Trade King.

    • The Judge says:

      Interesting you say that Trade King employees goof up- I just signed up and have yet to start trading but found just joining was a bit of a hassle due to an err on their side.

      First I signed up online, gave all the requested address/business/personal ID info. I was accepted within a day or so, sent a nice email, thought things were good and was ready to continue to the next step of funding the account when on the third day I receive an apology email that my new account was now on hold, i cannot fund the account because that they need me to forward an image of my ID to re-verify a detail about my age/address….

      Sure security is an issue everywhere, i understand, it’s great they’re double checking to be safe i guess, but I shouldn’t have been sent this ‘happy welcome’ email so fast if all wasn’t truly cleared.

      Better to clear up any glitches internally before issuing an official Welcome and getting a customer excited then cooly yank it back. Pretty amateur mistake.

      Hopefully they’ll smooth out such simple problems by whipping their employees harder with a wet noodle, drilling it into them to confirm first, then approve! Little things may be a sign of things to come, or not, I’ll give ‘em a fair shake but any serious hassles an i’m outta there faster than a Nadal on clay forehand ripper….

    • The Judge says:

      Btw William, that debiting your account twice is a pretty egregious error, doesn’t compare with my minor hassle story of signing up. It’s just that type of serious goof–assuming it’s truly all on their end– that they need to avoid at all cost.

      “Double billing” or anything similar is enough is to turn away a number of traders interested in joining or those who already have accounts.

      Mess with the small fry stuff no big deal, mess with peoples money is another matter entirely. With sufficient hands on experience their staff will learn quickly to avoid newbie mistakes… and perhaps how human error can cost them their job.

  3. mike says:

    i account worked well till they now stopped reinvesting your dividends from stocks or etf. i finally found another discount broker that would reinvest the dividend and that one is eoption. the trade is even less than trade king at $3 i hope they dont change the reinvestment policy

  4. Robert says:

    Nothing but problems…was not able to trade and they stil have my money…complete morons…go to Options Xpress…

  5. not happy either says:

    Order execution seems stupidly slow. I’ve had market sell/buy orders take literally hours to execute. And what is the deal with the stupid javascript on-screen password keyboard?

    I’m looking for another broker.

  6. Kingfish15 says:

    TradeKing sure has not impressed me at all. I signed up and sent them all the info to get shares from my other broker on 8/31/2011. It is now 9/22/2011 and they still have not completed funding the account. Nothing, Nada, No calls, just a big nothing. I finally started calling and I get the runaround that it takes 5 business days for this and 5 business days for that and the 5 to 7 business days for your rep to pass enough gas to work on your account or some other lame excuse. Then on 9/7/2011 I get a note saying they have sent the request to the clearing house to get my stocks. (NOTE THAT IS 38 DAYS ALREADY) I wait there 5-7 days and still nothing in the account. I call again and was told it takes 5 to 7 days–I immediately point out it has already been 5-7 days what is going on?? I do get an email answer that “the contra firm stated they did not successfully receive the account transfer paperwork.” No follow up when their request was not acted upon in a timely manner. This is lame. They treat your money like it is garbage and don’t bother them, things will happen when they are good and ready and they see no need to do follow ups nor keep you informed of what is going on. Think real hard before signing up with a company that is so loose with your funding. 53 DAYS GONE BY for something that should have take a week at the most. I’m sure glad I sent them all the paperwork needed overnight mail. Amazingly poor execution.

  7. Paulo says:

    Tradeking is the worse broker I have deal in my entirely life. They treat you and your money like a garbage. Think real hard before signing up a company that only nothing but problems. The tradeking employees is just ridiculous, but the danger is your money desapperece over night and no clear explanetion. Please beliave me, forget about open account with Tradeking.

  8. Anonymous says:

    TRADE AT YOUR OWN RISK. I tried Tradeking for the first time today. I have used ScottTrade, OptionsHouse, Etrade, Ameritrade, Bank Of America, and OptionsXpress… I have NEVER encountered issues like this before.

    I am a high-volume options trader, my average trade size is roughly $10k, average execution time on this site was between 20s-30s. I missed out on nearly all my trades today. Every single order had to be a market buy, or a market sell because every single trade had to be ‘reviewed’ (as per a supervisor) and added all of that overhead. I called up and complained… asking how they could justify putting my trades through a review every single time (all of these trades should have ended up at +15% profit today instead I netted a LOSS of 30%)

    When asked how I as going to be compensated for all of these issues, they said, we will not compensate you, Wen I asked how they were going to address the ‘required review’ of each trade they said that will not change.

    YOU GET WHAT YOU PAY FOR… DO NOT GO WITH TRADEKING IF YOU TRADE A LOT. They may be cheap, but the extra bucks you save are NOT worth it… you WILL lose WAY more money than you will save in fees.

    • sacrzuniga says:

      so who would you pick to trade with. i have etrade and the near 10 bucks is steep.. thats 10 for buy and 10 for the sale. which company has the best phone app. etrade likes to crash up to 4 times a day.

  9. rex anderson says:

    My problem with TRADEKING is their website, it has gone dow 3 times recently, the 1st and 3rd site outage affected me $. On the first outage they gave me 5 free trades so i stayed, now the third outage i know of, their could have been more. I asked for ten free trades this time, because it is ridicules to try and trade when your money balance disapears.Basically they said i should try another broker that fits my needs better LOL! I say an online broker who’s website actually works fits my needs. They said they would wave the $50.00 fee, I told them thank you and then signed up with a new broker.Just waiting for paperwork process to happen, trades are less only$3.99 and they gave me 100 free trades.I have had no problems with their employee’s they have always been professional and polite so far.I truly like the website when working and did not want to leave honestly but, i feel 10 free trades for a service i am paying for and that service not working was not much to ask for.You not only lose money but trying to keep logging in and not being able to is stressfull and irritating .As of now i cannot recomend TRADEKING.They are problems and you can go to the TK forums and read about the website problems and people being upset besides myself.

  10. rex anderson says:

    TRADEKINGS website went down on 12-02-11 again.Tradeking would not send my average price per share to myself or my new broker, that i have switched over to.In my opinion TRADEKING WILL BE SUED OR OUT OF BUSINESS SOON IN MY OPINION! Please go to their free forum and look at post that says (site problems again)!

  11. rex anderson says:

    TRADEKING just sent me my average cost per share info.I can complain and i can also say thank you.Thank you for sending my info.

  12. Aaron Hung says:

    I like Scottrade better, ACH deposit is instant…no waiting 5 days.

  13. David Chase says:

    It may have something to do with the increased volume from the recent Zecco merger, but I have had enough technical problems to drive me mad. I am closing my accounts and going to another broker.

  14. PotentialCustomer says:

    Wow…No longer the days of hiding “bad customer service” with potted plants, PR jingles, and slick dressing brokers. I was 1 step away from signing up with TRADEKING…now you guys have me looking into other discount brokers and reading reviews. THX

  15. america says:

    Check it out.

    It has taken me three weeks to withdraw money from tradeking. I still have not gotten it. It is on 750.00. A small amount I needed. They have given me an incredibly skilled runaround.

    Here is what I think: THEY ARE FAILING.

    Tradeking is losing money so fast after their merger with Zecco they do not know what to do and so they are just holding on for dear life.

    If you think I am joking…try to make a withdrawal yourself…they will end up just lying to you because they literally do not have the money.

    Two of their employees told me their company is having “money access issues”

    Get out before you lose everything.

  16. Evo says:

    My account was transferred to TradeKing from Zecco.com. It turned that several months later I was charged out of nothing $50 “inactivity fee”. I won’t be surprised all my money to disappear from there pretty soon just for made up fees and charges. I’ll do my best to transfer my account to Scottrade as soon as I can.

  17. rafael says:

    thieves, bandits, crooks!!! I opened an account with Zecco, i was satisfied with that service and the no Fee’s policy they had. NOW, for no fees you need to have 2500.00 in the account or trade once a year. which isn’t so bad, but why throw money away? Plus they have been charging me for no activity every month 4.95 without saying a word, so what extra monies i did have is gone. they wont mind waiving the 30.00 fee for as long as you relinquish your shares. NEVER Will i play in stocks again. I did my research opened an account with the right company. Then they sell to a bunch of bandits. Imagine the money & stocks they are getting from all the “small guys” wait… Almost forgot!!!! when getting the details the “sales” person said that he couldn’t continue reviewing the options with me because it was a small amount. all i can say is WOW!!! review the options… i’m waiting for the class action suit against them.

  18. Casey says:

    I am so frustrated with their customer service. I am no longer a customer with TradeKing but unfortunately am still dealing with them. They incorrectly reported a cost basis for a covered security to my new brokerage account – who needs to get the cost basis info from TradeKing because of the new covered security rules. I have been calling customer service since the beginning of the year, when I discovered the error. I must have called them over 20 times by now as nothing had been done. Each time I called I had to re-explain my problem as nothing was reported on my account about it. I finally got someone recently who actually contacted their clearing firm to have it changed, and just today heard back saying it has been too long so they refused to change it. So frustrated as the only reason it has been so long is because no one at TradeKing did anything to help me or even understood what I was asking. They don’t seem very knowledgeable on the industry.

  19. Ravi Gupta says:

    I used to use Zecco and moved to Tradeking as part of their merger. I have used Tradeking for quite some time. I am very disappointed with them. Their UI is not friendly as Zecco. Besides this, In last one month they restricted my account 2 times stating that they have returned as undeliverable mails, while I received mail from them couple of weeks back. I demanded the proof of returned mail but they declined. The customer service is very rude and uncooperative besides other issues.

  20. I recently had the displeasure of dealing with TradeKing’s customer support, and decided I no longer want to do business with a company with their policies. Sadly, I had to learn the hard way and I am hoping I can save a reader or two from this ordeal.
    At the end of last month, I deposited some money to buy some stocks. Since it is an ACH transaction, it takes a couples of days. So, I forgot and didn’t log back in until this month. To my surprise, there is an outrageous $50 charge in my account for an “inactivity fee”. This is a fee they added late last year and they claim they emailed me about it during that time. I can not find an email to this effect and even then, why not notify me before charging me this time around? Would it hurt them to drop a line with all the technology available nowadays? A text, IM, tweet, or something like hey we are about to charge you this fee if you do not make a transaction soon. Instead, the first month there is enough money in the account for them to charge me a fee, they just charge away.
    In the following chat(see my blog), I tried to talk them out of charging me this fee but they will mostly just argue the validity of their fee that is hidden in a 100 question long FAQ that I only found after googling for it. I honestly recognize it was my mistake not to research the company further. But, since I though I was somehow grandfathered in from Zecco, Inc. which they merged with, I did not do my due diligence. I admit I snoozed. However, I don’t want to and advise you not to do business with a company where if you snooze, you lose.

  21. Jim Martin says:

    My account was migrated as part of the Zecco Merger and I just funded and started trading today. I found the executions fast and easy. Customer Service explained how to place Limit Orders that are GTC and seemed very helpful. The Alert part of the site was very easy to use.

    One thing I did NOT like is they cleared my deposit and I tried a test withdrawal just to see how easy that would be. They hold ACH funds for 3 business days and you cannot withdraw cash for 10 business days.

  22. sirboss says:

    King Trade commission is totally fake, here where they get you. I traded RNN at 1.12/share, bought 18,300 shares they charged me $187 commission. This is highway rubbery, I did not know that and I am stuck now, I still have to sell it and pay $187, total of $374. This is unreal these day, Don’t get fooled by this low commission, they know how to get you. I am cancelling this account.

  23. Lisa says:

    Trade King stole all of my money. Sneaky and sleazy $60 inactivity fees applied without warning. Every last penny was taken out of my account. Needless to say, I am very upset!Steer clear of this company.


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