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TradeKing Review: $4.95 Trades, No Minimums
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I 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.
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
The 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
The 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.
Options: 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
Trading 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 are no fees for account inactivity and IRA maintenance ($50 for termination or transfer, which is standard). 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!
{ 45 comments, please add your thoughts now! }
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Great review. Everything looks pretty spot on. I believe the Maxit Tax Manager was a recent addition in feature, and was pretty handy for the ‘recent’ tax filing. Haven’t had any major problems with TradeKing yet (whenever a company doesn’t screw me over, I give it a plus in my book).
There was an outage back in 2006 during marketing opening hours… I forgot what marketing event triggered it (I remember assuming people were trying to login to make trade), but the site was quickly back up in about 10-20 minutes. Didn’t really affected me, but I’m sure plenty of people weren’t happy about it.
Having said that, I haven’t experienced any significant problems since then. All my customer service inquiry have been answered in timely matter with relevant answers, so I see no reason for anyone looking for a discount broker to overlook TradeKing.
HSBC has a pop-up java keyboard for when you login. But they also have another password you need to put in, PLUS a sitekey. It’s horribly annoying.
I wish TradeKing would do a PROMO on sign-up of funding of account!!
I may hold out on signing up until I see something better than refer-a-friend.
Drew: TradeKing occasionally has a $100 sign-on bonus. They’d most likely have one again within the year… so just keep your eyes open for the promotion.
Cap and Drew. Please be aware. The $50 or $100 promos will only go to those sites its intended for. If you repost the links or click on a reposted link you will not get credit for the promotions.
T..R..A..D..E K..I..N..G —–SUCKS
the platform is slow and unresponsive, the streaming quotes suite is a joke and when I tried to take my money out they put a 10 business day hold on my money…YES 2 weeks to get my money out!!!
If you’re a trader you’re best off going with Ameritrade or the cheaper Ameritrade cousin I-zone(4.95 a trade).
you are lucky they gave you your money. i have been at a for 2 months, i can’t even get my own money out of the acct. everyday there is a new excuse.yes openning acct is easy but closing it. goood luccck;;;
any update on this issue? Were you able to withdraw any money? If so, did they charge any kind of withdrawal fee or anything?
Also, I-zone has a 5k minimum required to start and a 5k minimum balance rule. I wanted to start off smaller so I am going with Tradeking.
Beware. Tradeking’s can arbitrarily extend the ACH hold time to 60 days if they decided that they do not like you. I found this out the hard way.
I don’t want to leave a link here in case this is seen as spam. But if anyone wants to read it, google for
Tradeking is holding my money hostage
You should see my blog post on this issue.
indexfundfan
they have done the same thing to me for 2 months so far. they ask for additional papers that they did not originally ask for, and right after you provide them what they wanted they ask for another thing. i ve been at a for 2 months. stay away from them if you can, no really;;;
I’m trying out TradeKing now, but their login prompt is one of those stupid java typewriter thing which you have to push each key for your password. Its enough to keep me from using their service. It won’t let you manually type in a password.
That’s a security feature a lot of financial institutions are putting in because it prevents keyloggers from storing what you type in a keyboard and sending it off. While a bit of a pain, it’s designed to offer you greater levels of protection.
I don’t see how those things offer greater security.
First of all, anyone in the room can see each button I click, which is less secure than just letting me type it.
Secondly, rather than log keys, a program could just as easily capture a very small area around the cursor at each mouse click.
Also, it’s slow and painful, and frequently doesn’t register a click for some reason.
I just signed up for TradeKing, and I have HSBC and they use it too. They are annoying.
You can watch for people looking over your shoulder more easily than checking if a keylogger is running on a computer. A program could easily capture a very small area around the cursor, which is why many keyboards rotate the keys (TradeKing doesn’t) and that prevents that security risk.
Forget Tradeking if this applies to you:
Foreign citizens with a US Tax ID number and legally living in the USA may open a TradeKing account with the exception of citizens from the following countries: Australia, Austria, Belarus, Canada, Cote d’Ivoire (Ivory Coast), Cuba, France, Germany, Hong Kong, Italy, Iran, Iraq, Japan, Liberia, Libya, Malaysia, Myanmar (Burma), Netherlands, Nigeria, North Korea, Saudi Arabia, Singapore, Taiwan, Sudan, Syria, United Kingdom, Zimbabwe.
Tradeking customer service is abysmal. After 2 weeks of asking why my account was not setup, I gave up and went with another company.
So your review was quite helpful.
I’m like 17 and have researched several companies and have quite the piggy bank from my first job. And I don’t want to have to work again(Work=Sucks!). Do you recommend this for me.
I have been trying to fund my account since the first of April. They are very slow and I’ve had to reapply 3 times for 2 errors they made in setting up the ACH. Still waiting but I will likely cancel.
Can you explain the problem you’ve been having? I find it difficult to believe someone messes up an ACH, it’s a pretty standard process.
Where will you go instead?
Does anyone know if Tradeking does free automatic dividend reinvestments?
Yes they do.
I signed up and funded my account within two hours via wire transfer today. So far so good.
I’ve been using tradeking for about a year and overall I like it, but there are some caveats. The pro is obviously cheap trading for what you get- trades and options are cheap, and TradeKing has quite a few features that other discount brokers don’t offer, like extra-hours, advanced options, etc.
But I agree, the 5-day wait is annoying. And the platform (and whole site for that matter) is slow. Tradeking is the only brokerage site I’ve ever used, so I’m not sure what others do, but a few other things that get to me sometimes are how they determine which stocks need higher margin, how you can never use your full buying power…often not even half..how they require you to trade certain stocks over the phone..and how too many trades per day/week can get you coded as a day-trader. I’m not too keen on the 1cent charge on penny stocks either…but I’ve heard thats rather ubiquitious.
Anyway, I can still recommend them, the education and customer service available there are great and they are improving services regularly, so I’ll stick with them for now. And again you can’t beat the price!
Thanks for the post. I’ve been comparing the various companies and this post was a huge help in clarifying questions I had. I was a little skeptical about the low fees, but I think I’ll take a chance on this and see what happens.
With respect to withdrawal of funds, there seem to be negative comments only. Could anyone provide info on their experiences withdrawing funds and/or closing their accounts from Tradeking? It would be terrible if I were to put in funds but have difficulties withdrawing them later.
Many thanks.
I have only taken out $500.00 at a time, but I have never had a problem.
After reading your rather positive review and the negative issues listed herein, I will not be opening an account any time soon.
It’s clear to me the longer holds are merely a jocking of money… the place where they recover on the ‘reduced’ fee schedule. When I hear back that they have solved this ‘issues.’ I will reconsider them.
Refused to honor my request to cut a check from my account because I had cut a similar check that same day. However, they had emailed me to say that my requests were being processed and checks would mail within 24 to 48 hours. When I called to ask why the second check hadn’t been cut, they said it had been rejected because it was too similar to the check I cut on the same day. They went on to question me like the Inquisition as to why I would cut two similar checks on the same day. I asked if they could wire the money into my account and wave the fee. They flat out refused. Very unprofessional customer service. Terrible experience all around. I’ll be moving my money elsewhere.
Well, sadly after reading these comments I think I’ll go for another company (I’m thinking scottrade, a bit more expensive though). The fees sounds great here, but the service sounds terrible. As a first time investor, I want to make a good decision.
Some people have had bad experiences but the vast majority have had good ones, as evidenced by their awards. Maybe the negative experiences go to the more vocal users?
Please let’s hear from folks with positive money withdrawal / account closing experiences. This talk of trouble in this area bothers me.
I’ve been with Tradeking for about a year. Your review is pretty thorough and accurate. I have not had any problems with them except once a $1000 deposit was credited as $10000 (I emailed Tradeking to correct this so that they didn’t temporarily freeze my account or something when they caught it themselves).
The only negative is the 5-day wait on deposits. This seems like overkill, especially if it is a deposit that does little to your overall balance (for example, a deposit which increases your balance by less than 5%). The good news is that you can call Tradeking via phone and usually place an order before the 5-day wait is over. Sure, that means you need to actually talk to a trader rather than hit a few keystrokes, but I’ve never had more than a couple second wait and it’s still $4.95 a trade.
I haven’t had any other problems like the ones some posters have mentioned, and therefore I’d recommend Tradeking.
I recently opened an Account with TK because Scottrade likes to hold withdrawal Checks for 3 days before mailing. TK may very well pull the same tactic, but they are $3 cheaper on trades.
I haven’t opened an account anywhere yet needing some suggestions i was looking at tradeking but some of the posts have really made me question them so what are some suggestions for first time traders with only about 1000-2000 to invest…is tradeking worth opening an account or should i go somewhere else
With $1000-$2000, I think you have to go with a discount broker of some kind. I’ve never had an issue with TradeKing and they charge $4.95 a trade with no minimum balance requirement.
what about sogo can’t really find much on them but i have heard they are aren’t bad
been with them for about 4 years (since they were sogoinvest) if you’re a trader that has research and level2 elsewhere, they are the best!!! LOVE their clearing house!!
Can Canadian Citizens use trade king? Is there any additional steps for non-US citizens?
Wish you would post the year of the comments. Possibly some of the earlier problems have been cleared up.
I am signed up with Tradeking but before I send any money I need to know how hard it is to get the money out and or close the account.
I have had problems with another well known broker when my wife died and it took 9 months and a letter to SEC to get my money back.
I don’t need another experience like this.
KP, Tradeking is aggressive in holding your money. Last year, I ACH’ed substantial money in, and when I tried to withdraw the funds, they stopped it and placed my account in “restricted mode”. They justify their actions using the catchall “security reasons”. I have documented my episode with Tradeking in my blog.
After I complained to Finra, they said they will impose a 60-day hold on my funds. Needless to say, after the 60-day is up, I pulled out everything I have with them.
Guys, I am planning to use Tradeking for over $25K deposit and use daytrading priviledge. The reason is it’s a lot cheaper than Ameritrade and I can do frequent trading without getting killed on margin. Does anyone do day trading on Tradeking? What is your experience?
i use sogotrade for trade execution, and td for research. So far i have not been able to find another broker as quick in executions as sogotrade, i am disappointed in sogotrade because of the added fees they have recently been giving me because i trade penny stocks and also because about 1/2 of otc stocks are not tradable on sogotrade. i think i will deal with these issues with sogotrade if i don’t fing another broker who clears and executes as quickly as sogo, that is very valuable to me.
so, when i read your review, i was disappointed that you added a “trading” part of the review without even placing a trade or two. there is no review on how tradekings clearing house works with them or how the trades are executed.
oh well, i guess i’ll stick with sogo & td for now…..
i guess what i mean to say is….how can you review “making trades” when there were no trades made??
Thanks for an excellent, informative, fair minded review that helped me to decide to join this company, having a sense of what the company offers.
I’ve had a modest account for 3 months and cannot recommend this Co. for frequent Traders. It’s just tooooo slow! Log-on is ridiculous and price quotes platform is tedious. Better to use for retirement account, IMO.