Getting started with an online broker can be a challenge, thanks to the competition out there. Let’s take a look at TradeKing, which is one of the popular online brokers for stock and options trading. I happen to like this broker quite a bit, mainly for its tools and pricing.
TradeKing Review: Top Discount Brokerage
TradeKing has a top discount brokerage designation, given that they have won several awards of late. Some awards include:
- #1 Online Discount Broker by Smart Money (for 2006 & 2007)
- 4 out of 5 Stars, according to Barron’s (in 2009)
- Top-Rated Customer Service, according to Kiplinger’s (in 2008)
But before proceeding with online stock trading, it’s also a good idea to find out how much their trades will cost you. At TradeKing, you’re charged $4.95 per trade, plus 65 cents per options contract. It’s the same price whether you’re making your transaction online or if it’s broker-assisted. Compared to higher-priced brokers like Fidelity or TD Ameritrade, where you might pay over $40 for broker-assisted trades, the savings can add up.
You don’t have to worry about account minimums and inactivity fees here. For a margin-enabled account, you do need to meet the federal $2,000 minimum to open an account.
How To Get Started With TradeKing
To start an account, you can fill out the online application. If you prefer, you can fax in your forms, scan and email them, or simply mail them in. You can open an individual, joint, or custodial account. In addition, there are options for trust accounts, corporate accounts, investment club accounts, and other choices, such as retirement accounts.
As is standard when opening any online financial account, you’ll need to provide information like your Social Security number or Tax ID, address and employment information, and a W-9 certification for tax purposes. The application also has a deposit ticket so you can add funds to your account. Since TradeKing may impose a five day hold on deposited checks, you probably shouldn’t expect the opening process to be instantaneous. Be aware that you can’t open an account here if you live outside the U.S.
A variety of resources can make the business of trading easier. Here, you can benefit from MarketTrader research reports, technical analysis tools, interactive charts, and option chains. There are also a lot of helpful investment tools here, such as a tax manager, an assortment of calculators, and an options scanner. You should also take advantage of their stock screener to help you pick out the right choices for your portfolio to suit your goals.
The TradeKing Community: Getting Social
Some investors might be wary of striking out on their own. Or maybe a trader would like to see what other traders are up to and see what’s popular right now. In either case, the Trader Network can help. There’s a leaderboard, so you can see what the top traders are achieving; blogs from different traders and professionals; forums where you can interact with other users; and features like live streams of trades.
One section I appreciate is the Learning Center. In particular, the Rookies Corner has informative videos, intelligence reports, and blogs to help educate beginners. Another section has options strategies by skill level, newsletters, and books.
As for matters of security, it’s reassuring to hear that accounts are protected up to $25 million (via the Securities Investor Protection Corporation or SIPC coverage). And if you leave your computer alone too long, the system will log you off. With all the interruptions I have in a typical work day, this is a good idea. Another security measure ensures that thieves are locked out of your account after several failed login attempts: a good thing in case your laptop ever gets lost or stolen.
If you have questions or if you run into problems, you can contact customer service by phone, email, or chat via the website.
Miscellaneous Features
There are a few things that TradeKing can improve upon. For instance, withdrawing funds might take some time. The deposit ticket in the application warns that it may take 10 days to withdraw your funds via check or ACH, and it’ll take 30 days for a wire withdrawal. Due to this sort of time restriction, I wouldn’t rely on such an account for an emergency fund. For money you need quick access to, it’s much wiser to set it up in a high yield savings account instead.
If you want to write checks or have a Visa debit card tied to your account, you’ll be charged $50 annually. To get check writing, your account needs to be enrolled in the Legent FDIC insured deposit program or be signed up for a money market sweep. You’re also required to maintain a minimum of $10,000 in your account.
Unfortunately, TradeKing doesn’t yet have a demo account nor a virtual stock trading environment for you to test out their features. But on the bright side, they do offer a DRIP or dividend reinvestment program, easy money transfer mechanisms and decent tax support.
Overall, it’s hard to dislike TradeKing’s $4.95 per trade. The site has a lot of tools for traders and friendly resources for beginners. It’s worth a look if you’re in the market for a reliable brokerage for your investment funds.
No inactivity fees. That is a big plus. Too often people trade just to avoid a fee.
The only drawback that I see in Tradeking is that your money is held hostage for 5 business days or 1 week on any funds transferred via EFT. This is Tradeking’s loophole on ‘minimum account balances’.