My Review of TradeKing Online Stock Brokerage 2011
TradeKing is an online brokerage that offers low cost stock trades to its large client base of investors. Investors as well as traders can buy and sell stock for $4.95 per trade. Well-known for being a no hidden cost discount broker, TradeKing also provides low cost options trades and fixed-income or bond trading for its customers. Through its free online trading community, the Trade Network, they let their members to share online trades and investment ideas with other active traders or long term investors. TradeKing also offers a mobile trading app for iphone, Blackberry and other smartphones. For cash management, TradeKing also offers check writing and debit card capability for additional fee.
TradeKing History and SIPC
TradeKing was founded and launched on 2005. The current headquarter is located at Fort Lauderdale Florida, USA. It is also considered as the market leader in social networking community for its traders and investors. TradeKing is a privately held company (i.e. non public listed brokerage). In 2006 & 2007, SmartMoney magazine and Wall Street’s Journal Business Magazine named TradeKing as #1 discount broker. Over time, TradeKing has consistently named as one of the top rated discount brokerage. It is known as one of the best brokerage for option traders and long term investing.
On February 2010, TradeKing decided to switch its clearing house. TradeKing switched their clearing house from Legent Clearing to Penson Financial Services. As of early October 2010, TradeKing’s customer will use Penson Financial Services, Inc. as its clearing firm to hold their client asset. For security protection, TradeKing and Penson are members of SIPC & FINRA.SIPC protects against the insolvency of a brokerage firm, but does not protect against market loss. It will cover the securities of customers of its clients up to $500,000 of which $250,000 can be cash and supplemental coverage by Penson Financial Services insurance up to $150 million ($2.15 million cash). Note: Penson is very well known clearing firm. Several brokerages also use Penson such as OptionsHouse, Lightspeed Trading, Zecco Trading, and more.
The following are the product offerings and commission details:
- Products: Stocks, bonds, mutual funds, options
- Market Orders: $4.95 per trade
- Limit Orders: $4.95 per trade
- Broker Assisted: $4.95 / trade
- Mutual Funds: $14.95 for no-load funds
- Options: $4.95/trade+$0.65/contract
- Bonds: $4.95 per bond ($14.95 minimum / transaction)
- Treasuries: $24.95 per transaction
- Minimum to Open: $0; $2000 for margin accounts
- Inactivity Fee: $0.00
- IRA Maintenance Fee: $0.00/ year
- IRA termination fee: $50
- Some Other Fees: Tender Fee:$50.00. DTC Out:$25.00 per position. ACAT Out:$50.00.
- Maximum Margin Rate: According to table on website.
Opening account is straight forward; new applicant just needs to fill the online application through TradeKing website. Traders and/or investors can open various account types such as individual, joint, custodial, and Individual Retirement accounts (IRA) either traditional or Roth. They may require you to submit driver license identification copy. The application only takes about 10-15 minute. New applicant would need to provide your name, address, employer information, social security number and years of experience in trading or investing. Once you are done, you’ll need to wait for their approval. Then, you can setup how you want to fund your account.
Investors can open the following accounts type:
A. Brokerage account:
- Individual, Joint, Custodial
- Trust Account
- Corporate Account
- Investment Club Account
- Partnership Account
- LLC Account
- Sole Proprietorship Account
B. Retirement account:
- Traditional, Roth, Rollover IRAs
- SEP Account
- SIMPLE IRA Account
As many typical online brokerages account, there are 4 different ways to fund your TradeKing account:
- Wire Transfer – usually can be done same business day
- Transfer an account from other brokers .This will take more than 10 business days
- Mailing a check will take 5 business days
- Electronic Transfer (ACH transfer) will take up to 2 business days.
Note: New fund will be hold for 5 days before it is available for trading. There is additional 5 days (10 days total) for withdrawal availability.
For International or Foreign investor or non US resident, you can only apply TradeKing account if you live in a US address and have a social security number (SSN). Otherwise, there is no international applicant support currently. However, if you are a citizen of 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; you can’t open a TradeKing account.
To provide internet protection, TradeKing offers:
- Firewalls and SSL technology when customers access their account.
- Protection on Username and Password Security
- Limitation on failed login attempts
- Customized automatic logoff
- Provide additional account privacy and security policies
Cash Management & Checking Account
For cash management account such as checking account, TradeKing offers 2 type of checking with different fees such as:
- Base Gold product: $50 annual fee
- Platinum product: $75 annual fee
Others fees related to checking account or debit card are:
- Check re-order (100 checks): $10
- Returned checks: $30
- Stop payments: $30
- Check copies or other research: $5
- ATM Withdrawals: $2
- Check/Visa Cancellation Fee: $30
Commissions and Fees
is an online discount brokerage with a very straightforward flat rate commission
fee schedule. The following are the details.
For stock trades, All stock trades are a flat $4.95 per trade. If you need broker assistance, you will be charge $4.95 per trade as well. This is one of the most competitive among online discount brokerage. There is no limit of order type and size. For any stock under $1.00 per share, an additional $0.01 per share is charged (max commission 5% of trade value) per trade. For OTCBB and Pink Sheet stocks, traders or investors need to make a minimum of $100 worth of stock trading at time of order.
For instance, if you buy 100 shares of $5.00 stock, it will cost you $4.95 commission ($504.95 total trade cost) and if you buy 100 shares of $0.95 stock, it will cost you $5.95 commission ($100.95 total trade cost)
Investors can place the following order types:
- Market On Close
- Stop Loss
- Stop Limit
For Options Trades, Options trades are $4.95 per trade + $0.65 per contract. For example, 1 contract option will cost $5.60 commission and 10 contracts will cost $11.45 commission.
- Option exercise: $9.95
- Option assignment: $4.95
management: regular commission + $100
For Mutual Funds trades, Mutual funds cost $14.95 for no load funds. Load Mutual Funds cost $0 per trade. Note: There are other charges apply for loaded funds charged by the mutual fund itself.
For Future Trades, There is no support currently.
For Forex Tradings, there is no support currently.
Advantages & Disadvantages
Pros of TradeKing
- Well known for its best customer service via chat, email or phone.
- TradeKing Trader Network is great online community network
- Provides excellent educational resources
- Offers deals such as up to $150 bonus for new account transfer and earn $50 for referring your friends
- Supports mobile trading
- Offers DRIP (Dividend Reinvestment Plan)
- No IRA maintenance fees
- There is no minimum to open an account
- Margin rates are low
- It offers Maxit Tax Manager for Tax purposes
Cons of TradeKing
- Trading platform is easy to use but could be improved;
- Mobile trading support limited
- No Forex and Futures Trading support
- Additional fee for checking account
- Extra fees for penny stock less than $1.00
- No desktop software platform or direct access platform
- No support for international applicant/ investors
Customer’s complaints from research:
- Fees for buying no load mutual funds
- Long hold for new fund
TradeKing is among the top discount brokerage with its flat rate commission of $4.95 per trade. TradeKing provides two platforms such as a standard web based trading platform as well as a mobile trading platform. The mobile app supports iPhone, BlackBerry and most other smart phones but it is still lacking some features.
As discussed, TradeKing has excellent commissions and fees. Beyond the low costs, TradeKing features good stock and options trading engines, quality charting tools, and competitive research tools. Its margin rates are also among the most competitive among online brokerages. The only major drawback is the registration process needs some improvement. There is no maintenance fee for any IRA retirement account. If you trade stock value less than $1.00, I won’t recommend using TradeKing. Otherwise, TradeKing is highly recommended for brokerage account as well as IRA account.
Updated on 3/12/2011
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