TradeKing Review: Discount Online Brokerage

I‘ve been looking more seriously lately for places to invest my money as we complete our large emergency fund and will start really delving more into the investing arena. When you look at the options available out there when it comes to investing and stock trading, there really area a lot of decent online discount brokerages. When it comes to choosing the right one, however, there are quite a few things we’ll be considering, not least among them, the fees, minimums and costs associated with having an account. If trades are too expensive, it will take a bite out of your returns.

TradeKing, one of the first discount brokers that I’ve looked at has $4.95 trades, which is definitely one of the lowest in terms of cost when it comes to the discount brokerages. Add to that the fact that they consistently get good customer service reviews, and have a good set of online research tools to use, and they’re near the top of my list.

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TradeKing Background

A relative newcomer to the brokerage business, TradeKing was launched launched in 2005, and has since become one of the top online discount brokers.  From Wikipedia:

Launched in December 2005, TradeKing offers online brokerage services for active stock and option traders. The firm was an early user of social networking for investors and traders, offering free blog support and other Web 2.0-based tools to registered members and account holders since the firm’s inception. In March 2007, the firm opened a second office in Charlotte, North Carolina.

TradeKing is member of SIPC, which means your investments are protected by SIPC insurance up to $500,000 and $100,000 of it can be in cash. This means that you are protected against the company going into insolvency. You are not protected against market losses.

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Awards

TradeKing has earned quite a few awards over the years and has been recognized as one of the top online brokers. Among the awards:

  • Smart Money rated TradeKing #1 in customer service in 2010-2012
  • Barron’s ranked TradeKing #1 for site usability in their 2011-2012 annual review of online stock and option brokers.
  • Consumer Reports ranked TradeKing third out of 19 brokerages reviewed in an independent survey conducted in May 2007.
  • TradeKing earned four stars in Barron’s three-years running (2007, 2008, 2009) in Barron’s Annual Survey of Best Browser-Based Online Brokers.

TradeKing Fees, Commissions And Minimums

Probably one of the most important things to consider when opening an online brokerage account is to consider what fees, commissions and minimums you’ll see when using an account.

Stock Trades

TradeKing has one of the lowest rates for stock trades in the industry with $4.95 stock trades. That rate is regardless of how many shares are purchased or if it is a broker assisted trade. Compare that to some of their competitors, like ShareBuilder or OptionsXpress at $9.95 a trade, and you’re getting a pretty decent deal.

Options Trades

For option trades, they charge $4.95 per trade, plus 65 cents per contract. Compare that to some of their competitors as in the graphic below and you can do quite a bit better using them, depending on how much activity you expect to have. Trade more than 8 contracts and they’ll automatically lower the price to $8.95, plus 15 cents per contract. There’s only one base charge for multi-leg option-only trades.

Fees And Minimums For An Account

TradeKing doesn’t have account maintenance fees, monthly minimums, inactivity fees or additional charges for broker assisted trades. To see a full schedule of their fees, head on over to their site.

There is also no minimum account funding level to open a cash account and a $2,000 minimum to open a margin account.  Here’s a comparison to some other popular brokerages:

 
Stock Trade Commission
Option Base Rate + Commission
Loyal3$0
OptionsHouse$2.95$5.00 (+$1.00)
Zecco$4.50$4.50 (+$0.50)
TradeKing$4.95$4.95 (+$0.65)
Motif Investing$4.95/stock - $9.95/motif
Scottrade$7.00$7 (+$1.25)
tradeMONSTER$7.50$0.50/contract
Schwab$8.95$8.95 (+$0.75)
ShareBuilder by Capital One$6.95 ($4 automatic invest)$6.95 (+$1.25)
Etrade$9.99$9.99 (+$0.75)
optionsXpress$14.95$1.50/contract

TradeKing Tools

TradeKing has a variety of trading tools you can use including MarketGrader’s research reports, free technical analysis tools, interactive charts, tax reporting tools, probability calculators, profit and loss calculators, options calculators, options strategy scanner, stock screener and more!  According to TradeKing their full suite of tools are a big reason Barrons’ gave them 4-stars (tops among web-based brokers) in their 2008 survey.  In any event, they do have a ton of tools available for everyone to use – you’ll have no shortage of research, tools and calculators to aid you in making the most informed decisions possible.

TradeKing Community

Another one of the selling points of TradeKing is their well run blog and forums where you can chat with other traders, get advice, tips and tricks and learn from your fellow investors.  There is also a section for groups where you can join other beginning investors, options traders, or those who like to specialize in different types of investments including value stocks, penny stocks, ETF’s, hedge funds, dividend stocks, and various segments of the market such as automotive, biotech, or individual companies.

Conclusion

trade-king150x150When considering an online discount brokerage TradeKing is definitely one of the best best and most affordable options out there. They’ve got low fees, reasonable commissions and their slate of tools to help you make the right decisions are second to none. They’ve also been awarded for their customer service and for their general usability. When you consider all of these things together they are definitely at the top of my list and I have no qualms in recommending them.

Have you used TradeKing? What has your experience been like? Are you happy with them? Tell us your thoughts in the comments.

Open An Account With TradeKing Or Get Details.  Click Here.

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Last Edited: 17th December 2012

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