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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. KP says:

    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.

  2. indexfundfan says:

    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.

  3. HP says:

    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?

    • Hondaddy says:

      HP,
      WARNING…. read all the TradeKing fine print and understand every word of it… they will use it on you when you want your money and stocks back. They have no problem taking… giving back is a different story.

  4. Trader says:

    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…..

    • Trader says:

      i guess what i mean to say is….how can you review “making trades” when there were no trades made??

  5. Vic says:

    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.

  6. Robert says:

    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.

  7. aua868s says:

    my vote to the Schwab’s brokerage account….no transaction fee for schwab etfs

  8. t.k. says:

    Beware TradeKing charges extra for stocks under a dollar unlike zecco and Ameritrade

    TradeKing is horrible when they decide to pull the plug on you. I am US citizen living in Lebanon for a brief 1 year project. I informed them this in an Email and they it wouldn’t be a problem. In the meantime I changed the address to a friends in Denton, Texas, fast forward 9 months later while on the phone the customer associate was a UNT grad and asked me how I liked Denton I told him I didn’t live there at the moment. The next day my account was closed, I have had horrible customer service since. Every time I call and ask for something I get a new answer everytime for multiple questions. Their staff is not knowledgeable nor are they very professional stick to the big boys whose reputation precedes them.

  9. Hondaddy says:

    The 60 day dog and pony show gives you an idea of what TradeKing is all about. I’ve never been more disappointed in a company I thought was on the up and up.

  10. george says:

    is there a fee for sending out dividends monthly ?

  11. george says:

    I have read enough ! Thanks guys for telling me about another one that holds on to your money, I don’t need that I already have one! What is wrong with the SEC or don’t they have any juristriction with on line brokers.

  12. trader says:

    seriously! check out sogotrade, other than research, they’re the BEST!!

  13. Matt says:

    I have ever had any problems with TradeKing. They have always been really great to me. I’ve found it very easy to withdraw money from them. Received deposit in my account 48 hours after submitted request.

  14. Anonymous says:

    Wow! Seems too good to be true. I was intrigued by the low cost and great customer service but… Everything has a price I guess. Thanks all for helping with my decisuion.

  15. ktkt86 says:

    Their trading system went down for a half hour during the market crash yesterday. Was unable to access my account just when I needed it most. The login keyboard is a joke – it rejects my password 30% of the time, even when I am positive I typed it in correctly. I will be transferring my accounts out of there soon.

  16. john says:

    ACH deposit delay is very annoying, especially when your trying to quickly sell or purchase a stock on a trend. I hope they change their policy soon and given all the customer complaints it -should- happen. Besides that they’re inexpensive, the second cheapest brokerage I’ve discovered so I continue to use them.

  17. Brandon Robbins says:

    Amazing article. Can I transfer my Sharebuilder account to TradeKing for free?

    • Jim says:

      I’m not sure what the fees are but if you’re opening a new TradeKing account they will reimburse you for the transfer fees.

  18. Keith says:

    I’ve been with tradeking for several years with my Roth IRA. After initially setting up my retirement account with a few index ETFs, I never had to make any more trades. When I signed my father up for the $100 bonus, they refused to give me the money because they said I was not a valuable customer because I have not traded in over a year. That is poor customer service and false advertising. I was blown away at how blatantly poor they treated me on the phone and on email. They had no intentions of keeping me as a customer. I am transferring my money (over $30,000) to sogo.

    • abc says:

      that is really BS. I hate this kind of service. I you do advertise, you must commit to your word. This kind of broker who keep your hard earn money will run away anytime soon. Like Verizon phone. I hate this Verizon..the story is I called them to setup wireless internet at my house. They went to my house next day and setup everything but the cable was on the ground. They said another group would go to my house to dig ground and bury it. I waited for 2 months, cable was still on ground. I called Verizon customer service several times. They said they already created tickets and dispatched to other groups. It took another 2 weeks but cable was still on ground. I had to write long email to send to all directors, CEO and after 4 minutes, there were couple directors call me and the next day they went to my house to bury cable. The funny thing that I called customer service to cancel contract only after first 2 week. They said I had to pay for 200 dollar termination fee. I said only 2 weeks and your advertisement said new customer could try 2 months without obligation. They said those were wrong. After 1 year contract was over, they pumped my money fee to 60 dollar. I called them again. They said because contract expired. I said okay..so I extend old contract which I pay only 49.99 per month. They said NO we don’t have those contracts. New contract is 54.99 and upgrades my line to 5 GB download and 15GB upload. I said ok.. after they search, they said my house in the location that could not go to 5/15GB but the new price I have to pay is up 5 dollar which is 54.99. I said okay..do it. After 1 week, I saw my credit card charged 60 dollar. I called them they said nobody did contract for me. I asked that guy to do new contract for me. He said oka..after 5 minutes, he said okay..here is your confirmation..I wrote it down.. following month my credit card showed 60 dollar again. I called again..and story is just going on and on.. I said forgot it. I want to move to Cox cable. But the problem is I trade stock every day. I was with COx cable before but the internet is not reliable like Verizon. I have with Verizon for 1 year but I have never got stuck or network frozen. The quality of internet is good 100 point. But the product and customer service is so terrible. If I have another internet service provider is my neighbors I will go to them.

  19. David says:

    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!

  20. sonya says:

    oh boy, read it too late, but all the online trading sites seem to have similar complaints.. so where does one go? Is there any governing body to complain to?

    • abc says:

      I agree with Sonya that US government or Obama’s administrator should open a Online Broker Commission who receive all complaint from us and who is going to investigate problem for us to justify those brokers. What if they just disappear, where we are going to pursue them?

  21. Anonymous says:

    Tradeking is horrible! They held my money up on multiple occasions, even though it was wired to them. 10 business days! No other platform does this. There platform sucks, its very archaic. Dont recommend. Pay a little more money for either Thinkorswim or OptionsHouse.

    • abc says:

      we need to look for big picture even though every day we trade we pay 10 dollar for each sell or buy but overall those reputation brokers are holding our money more secure than the cheap one. Your money will not going to wind when you need it. Those are your retirement money…

  22. bertie says:

    Trade King switched clearing firms to Penson in September. The reliability of the site and services since then has been a disaster. Positions and cash balances are screwed up, and the cutstomer service reps seem to think we should have sympathy for them because they have to field our complaints. They really messed up on this conversion. I’m closing my account and going elsewhere.

  23. Gunnar says:

    Tradeking is a joke. I’ve been a customer for over 3 years and they still have a 5 day trading hold on every ACH deposit I make, even though I never once had any problem with any deposit. In Tradeking’s mind, you’re nothing but a potential criminal who is trying to launder money or bounce checks through their system.

    I recently missed out on some big opportunities because of their bullshit 5 day trading hold.

    They also have a 10 business day hold before withdrawing any deposit you make. I just recently switched to Etrade and am in the process of withdrawing all of my money out of Tradeking’s system and closing my account.

    I would rather pay a few extra dollars in commission and deal with a professional broker who doesn’t treat a long-term client like a criminal.

    • abc says:

      how is etrade? Good customer service, execution fast? Good tool? How is commission?

    • abc says:

      oh yes.. 5 days is long one and sometimes you need money ASAP to buy or sell short stock right away.. chance comes to you only one time… I think they use 5 days because Banks send to them only 1 days, they use another 4 days to trade your money and make money in those 4 days.. and give back your money..

  24. Ryan says:

    On a good day, the link is very slow to the point that you can’t navigate from screen to screen when you want to make a trade. I have only made 3 trades out of my $5K initial account set up, but lost about $180 on price changes in delayed trades. I am actually writing this review while waiting for a confirmation of the trade I am trying to make.

    • abc says:

      I had this problem with Fidelity in year 1998. So I experienced this problem. After skipping number of year trading I went to open account again. I asked many brokers on execution time, I asked Etrade about this question, but they said they not guarantee, they blames on market condition. Only TDAmeritrade said they guarantee. I opened with them 2 years already and had only one problem which I set to sell MGM at 11.62 via Commander v2.0 webbase of TDAmeritrade..the transaction went through but I did not see my stock sell or any activity..I did several time but nothing happens, MGM dropped down to 11.00 after 2 minutes. I called customer service and they said the application has problem since premarket. I told them you should post warning or block COmmander application from user so they can use different tool to trade. They looked to history of transaction and saw I made trade at 11.62. I paid me 62 cents on my 2000 shares. They gave me number of free trade to pay my 62 cents x 2000 shares = 1400 dollar.

      10 dollar if you make money on sell or buy is no problem but if you loose on trade, you will very shit about 10 dollar. But if we look for safety on your 20K money, you feel okay because reputation broker keeps your hard earn money safe right?
      That is good right.

  25. Dissatisfied customer says:

    Tradeking’s “customer service” is horrendous. I contacted the company on multiple occasions with questions about opening accounts and transferring funds over. Each time, the representatives either didn’t fully understand rollovers and transfers, or they gave me wrong answers that had to be corrected by a 2nd individual with follow up calls. All too disconcerting to trust an institution with my money and extremely frustrating and time-consuming to have to contact so many people for what should have been simple questions.

    Another note: Throughout this process, I’ve had my questions and concerns bounced around to different people and somehow my original concerns weren’t transmitted accurately to the next person. A rep “answered” what she thought was my concern, but she clearly didn’t have the right information. Rather than deal with more nonsense, I asked to speak with a supervisor. She ignored my request. After repeated requests, the rep tells me she already sent my concerns over to a supervisor and corrects me by saying that I only requested a supervisor once.

    The supervisor “answers” my concern, tells me that he’s reviewed the information that the previous rep gave me, finds that there is no problem and considers the issue resolved. How the heck can they answer my concerns correctly without actually asking me what my concerns are? I called to complain and to close my account.

    The next supervisor tells me that it isn’t their fault that the rep received the wrong information. When asked if he considers it to be good customer service to never stop and ask the customer what the question or issue is, he says “I’m asking now!”

    Maybe Tradeking used to have great customer service in the past. I certainly haven’t seen anything resembling good customer service. And I wouldn’t trust them to handle anyone’s hard-earned money.


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