TradeKing Review: The Best Brokerage for New and Intermediate Investors?

By Miranda Marquit on 9 August 2013 (Updated 15 August 2013) 2 comments

One of the most well-known online discount brokerages in the space is TradeKing. TradeKing was launched at the end of 2005, and itwas one of the first online brokerage firms to add social networking tools for investors. The brokerage is also known for its Options Playbook (available free online), as well as its 2012 merger with another online brokerage, Zecco.

Why Choose TradeKing?

The biggest reason that many investors choose TradeKing is due to its relatively low pricing for stock trades. TradeKing also receives high marks for its easy to use platform and for its highly-rated customer service. Additionally, if community is important to you, TradeKing offers an active community that can provide you with answers to your questions and pass on interesting trading ideas.

TradeKing has won recognition as one of the best brokers from Barron's, SmartMoney, Wall Street Journal, Consumer Reports, and the StockBrokers.com Online Broker Review. With all of this recognition, investors can feel safe knowing that they aren't risking their money with a fly-by-night organization.

Fees and Account Minimums

You will pay commissions no matter where you invest your money. TradeKing, though, offers one of the best deals on stock trades.

  • The stock and ETF fee is $4.95 per transaction. (As long as the price per share is above $1. For stocks priced at less than a dollar, you pay the $4.95 transaction fee, plus one cent per share.) This is among the lowest transaction fees available, especially for a brokerage with the wide range of research and investment tools.
     
  • Options cost $4.95, plus 65 cents per contract, up to eight. Once you move beyond eight contracts you pay $8.95 per transaction, but the per-contract fee drops to 15 cents.
     
  • Mutual funds cost $9.95 to trade, and corporate bonds can be traded for $4.95 ($14.95 minimum).
     
  • Treasury bonds cost $24.95 per transaction; you are probably better off opening a TreasuryDirect account and buying Treasury securities from the source. CD transactions cost $24.95 as well.

One of the disappointments with TradeKing is the fact that there are no commission-free ETF offerings as of this time. More brokerages are offering trades on select ETFs with no commissions, so there are hopes that TradeKing will join the trend.

Account Minimums

You don't need a minimum deposit to open a TradeKing account. You do need to provide a way to fund your account if you expect to trade, but you don't need any money to open your account.

Be aware that activity fees are a possibility, however. If you don't execute at least one commission-charge trade each 12 months, AND if you have less than $2,500 in combined account value, you will be charged an annual fee of $50. You can avoid this fee by simply making one trade a year until your account value reaches $2,500, and then making sure that your account value remains above that level, whether or not you make a trade.

Customer Service

TradeKing has long been cited for its great customer service. Representatives are generally knowledgeable, and if you pay for phone broker services, you normally speak with someone who can help you place a trade.

Customer service is available via Live Chat during the week, as well as through email, telephone, and mail. It's usually possible to get a hold of someone (chat or phone) Monday through Friday, from 8 a.m. to 6 p.m. Eastern. Otherwise, TradeKing is generally fast at answering emails, and you can get customer service help through social media channels like Twitter and Facebook as well.

Research and Education Tools

TradeKing offers a number of research and educational tools. Investors have access to a stock screener, real-time research, and a number of educational resources, including the Options Playbook. Not only that, but there is an extensive trader community that acts as a resource as well.

Investors with TradeKing have access to a variety of account choices, including corporate accounts, trust accounts, IRAs, and Coverdell accounts. However, you are mostly on your own when it comes to account management. The low prices and abundant research tools mean that you are expected to use what is offered, avail yourself of the community, and then make your own portfolio management decisions.

Other Features and Services

TradeKing has been recognized for its trading platform, which is intuitive and easy to use. Additionally, TradeKing offers a complement of mobile trading features that make it easy to execute trades from just about anywhere.

How Does TradeKing Compare?

TradeKing offers fairly low-cost trades and is competitive with most other brokerages. There are brokerages that offer lower transaction costs, but these brokerages generally offer less in terms of research tools. TradeKing does cost a little more when it comes to penny stocks and options trading, but many beginning investors aren't really interested in those items, anyway.

TradeKing is one of the more responsive brokerages, and the thriving community is bigger than many of the communities seen at other brokerage sites.

How TradeKing Could Be Better

The main complaints against TradeKing center around high penny stock commissions, and the lack of paper trading availability. It would also be nice if TradeKing offered commission-free ETFs. With ETFs increasing in popularity, it makes sense to provide a wider selection, and add in some without commissions (TradeKing could still make money on the expense ratios).

Who TradeKing Is Good For

For the most part, TradeKing is good for an investor at just about any proficiency level. TradeKing is especially helpful for beginning and intermediate traders, though. The educational and research tools available can help less experienced traders get a leg up.

TradeKing is great for long-term investors who are interested in building up a portfolio for retirement or for wealth down the road. This brokerage is ideal for those who utilize dollar-cost averaging.

The brokerage is less ideal for options traders and frequent traders. There are other brokerages with lower commissions (as low as $2.95) and better options' prices that more active traders should use.

Bottom Line

TradeKing is one of the best online discount brokerages out there. It offers relatively low commissions and makes it easy for beginning to intermediate investors to get started with low-cost investment choices. Most "regular" investors will find TradeKing more than adequate for their needs.

Click here to open an account now

Do you invest with TradeKing? Which online brokerage do you use?

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Guest's picture

I don't have TradeKing but I use USAA and I love their services. It's banking but includes investments too. Thanks for the info, it's worth looking into.

Guest's picture

I've never tried TradeKing either, but they best brokerage software I've seen BY FAR is thinkorswim. Check it out if you're serious about investing/trading. It really has the best charting software on the planet (Prophet Charts).