By request, I’m posting a review of my opinions experiences with online discount broker TradeKing. I’ve actually had an account with them for over a year now. This will be done from the perspective of a buy-and-hold investor in stocks and ETFs, not an active trader.
Commission and Fee Schedule Overview
TradeKing offers $4.95 stocks trades across the board – market or limit, online or broker-assisted. $4.95 isn’t as low as it used to be, with brokers like Zecco.com offering free trades now, but it’s still much cheaper than the big discount brokers like E-Trade or TD Ameritrade for non-active traders. They also offer options for $0.65 per contract, also a competitive price.
There are no minimum opening balances, and also no maintenance or inactivity fees to worry about. (You need $2000 to open a margin account.) There are no annual maintenance fees for IRAs, but to transfer out or terminate one costs $50. Electronic statements are free, but paper statements cost $2.50 each.
Opening Process
The application seemed pretty standard, including having to sign off on all those long disclosures. It was all online and I did not have to mail anything in.
One thing to note is that if you want to fund your account via an online bank transfer, you’ll have to be very patient. After you provide them with the account and routing numbers, they require 5 business days to verify it. Then, every online transfer (max $10,000) takes 5 business days to complete. So if you choose this option like I did, you’re looking at two weeks minimum before you’ll be ready to trade. The quickest way to start is to perform a wire transfer into your new account.
Trading Interface
My first impression of the account several months ago was that the interface was a bit sluggish. But recently, the response time has been great and overall I like the interface. Here are some screenshots of the Account Summary and the Trading screen:
They offer trailing stops and contingent orders based on price triggers, as well as complex options trades like spread, straddle, strangle, combo, butterfly, collar, and condor.
Customer Service. They are actually very responsive on the customer service side. I can usually get someone on Live Chat within 5 minutes, and they are faster to pick up the phone than my previous calls to Ameritrade and E-Trade. I can’t speak as to how they handle complex questions, as I haven’t been faced with any real problems yet.
Dividend Reinvestment. They offer free automatic dividend reinvestment, with the ability to purchase fractional shares. This can be set for all your stock holdings, or just specific ones. This is nice if you have ETFs and you want to reinvest dividends like you used to with mutual funds.
Money Market Sweep. By default, only 1% interest is paid on cash balances. You can sign up for one of three money market sweep accounts (taxable, tax-exempt, treasury), with the taxable option is currently paying 4.22% and is FDIC-insured. I highly recommend signing up for this right away, it takes just a second to send them an e-mail message and you’re all set. No forms to fax or mail in.
Long Transfer Times. Again, ACH deposits are subject to a trading hold of 5 business days, and also cannot be withdrawn for 10 business days. This can be a pain if you have a hot idea and want to make a trade fast, so I would keep whatever money you want to invest in the money market sweep above.
Awards. TradeKing has many of their awards on their site, including getting ranking #1 in Customer Service from SmartMoney magazine in 2010.
Sign-up Bonuses. For new customers they will reimburse ACAT transfer fees charged by your existing broker up to $150 when moving your account over to TradeKing.
I hope this helps people make a decision! I like TradeKing, but it’s very hard to simply call any broker “the best” or “the worst” as everyone has different trading levels and preferences. What one person deems a critical feature, another cares nothing about.
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Everyone seems to focus on cost per trade these days, but note that if you are buy-and-hold and wish to dollar cost average, plain old mutual funds nicely avoid the fees. The costs of many mutual funds are competitive with ETFs, and when the mutual fund balance gets high enough (depending on fees that may be $1K or $10K), you can move a portion of the mutual fund balance over to an ETF. So, I now think an “adequate” mutual fund selection is much more important than the absolute lowest cost per trade. Balance them both.
Tradeking is a disaster for those who play small situation arb deals such as the ones on fatpitchfinancials. Do deals that are not the norm, and they will freeze your accounts. You can’t reason with them…stay away!!!
I’ve been using them for 2 years. After the 1st ACH deposit, future ACH deposits can be used for stock purchase right away, even when the funds are actually still in my bank account, The transfer posts immediately and takes about 2 days to be taken out of my bank.
The site is a little sluggish but overall I’m fine with them.
Their customer service via Chat is great.
TT if you dont do shady microcap deals you dont have to worry about your account being frozen… TradeKing customer service rules!
John, I’ve been wondering about the best strategy for investing for dollar cost averaging, whether to go with ETFs or mutual funds. I would like to go with ETFs for a number of reasons , but the commissions really eat into the benefits. Buying into mutual funds and then, every so often, selling that to buy ETFs in larger chunks seems to get around some of the problems, but that opens one to paying capital gains taxes, at least when you’re investments are up. That adds to the cost of that strategy in a taxable account. Depending on how much you’re investing, or how much your investments are up, that could turn out to be more expensive.
I have had a horrendous experience with TradeKing. They misrepresent commissions (read the fine print or you might find yourself being charged hundreds of dollars for a simple trade) and awful execution. The traders don’t even have access to level 2 quotes….
TradeKing charges $14.99 for 1000 shares OB and PK stocks. Surprise surprise!! I am looking for transfer…Jan 28 2008
I’ve been thinking about opening up an account with tradeking just to play around with, but I see that their acat transfer out fee is $50. I was wondering what the charge would be if I just sold everything and transfered the money out. Does anyone know if they hit you with a termination fee?
And dennis, you say they could charge hundreds for a trade? how so? I’m currently using sharebuilder, and I usually trade several thousand penny stocks (usually pink slips) at a time. sharebuilder adds an additional $.0015 per share on orders over 1000 shares, which quickly add up to several hundred dollars a month if you buy and sell large orders often. Does anyone know if tradeking has large order surcharges such as these?
For stocks less than $2.00, there’s a $0.01 per share cost. I’d guess Jossie bought OB and PK less than $2.00 too for getting charged $14.99?
I’m thinking about transfering account to TradeKing at the moment. The other broker I’m considering is Scottrade, but TradeKing seems to be catching up in terms of how well they perform (web speed, and now tax tools).
Experience with TradeKing has not been a good one. The live chat is great but:
Firstly you can’t take advantage of pre-market trades.
Secondly, you can’t turn around buy and sell on the same day. If you sell a stock today, and buy another, you won’t be able to sell it the next morning. The restrictions cause loses.
My other account with Tdameritrade is growing in spite of shaky market because I take full advantage of the fast turn around and premarket trades. Extra $10 per round trade is nothing compared to the loss because of poor timing.
I am looking for a new discount/online broker. BROKERSXPRESS HAS TOO HIGH OF COMISSIONS. I TRADE OTC.BB AND PK.S I also need no minumum to open,no inactivity fees,…although I am an active trader.WHO IS BEST, and CHEAP.I am confused about every thing I read. Also this site ROCKS. THANX.
What did Hannah mean when she said “Secondly, you can’t turn around buy and sell on the same day. If you sell a stock today, and buy another, you won’t be able to sell it the next morning.”
Does this mean I cannot buy a stock and sell it on the same day??? That is weird!
Madyline….I guess TradeKing, Firstrade or Scottrade could be the ones you may want to try.
“Secondly, you can’t turn around buy and sell on the same day. If you sell a stock today, and buy another, you won’t be able to sell it the next morning.”
Only if you are identified as a pattern day trader. In such a case, you will be able to sell the stock only the following day. One way to avoid such a scenario would be to have atleast $25,000 in your trading account (correct me if I am wrong) according to SEC.
“Secondly, you can’t turn around buy and sell on the same day. If you sell a stock today, and buy another, you won’t be able to sell it the next morning.”
Is this right? Does this only apply to Margin accounts? Do you have a margin account Hannah. I’m not signing up for Tradeking if this is right. I’m not that active, but just the thought of this is kind of ridiculous…
The only way what Hannah is saying could be true is if she was in a cash account and used up all her funds due to settlement rules. You can definitely buy and sell on the same day. I have no idea what she is talking about.
I like TradeKing, but if you are trading pennies it’s not the way to go. You would want some more serious software and real-time streaming quotes anyway to make money there. TK is a nice account with no fees and $5 trades, much better than Etrade or Ameritrade
What is difference between margin account & cash account? I am considering going with TradeKing or Ameritrade. I probably will be a buy and hold kind of trader, and don’t want to be eaten up by inactivity fee’s or maintenance fee’s or minimum balances. I have read many different reviews and websites. Any help appreciated.
In a cash account, it usually takes 3 business days for a buy or sell transaction to “settle”. This means that if you buy a stock, you get the stock immediately but it may take 3 days to take your money. If you sell a stock, the money will be take out 3 days later.
SEC T+3 Rules
So in a cash account, if you keep buying and selling quickly and in amount close to your total cash available, you may not have enough cash to cover all these transactions.
If you switch to a margin account, your trades settle immediately, but you are then subject to pattern day trading rules. Here, you can’t make more than 4 roundtrip daydtrades in 5 business days unless you have $25,000 in your account.
Basically, if you have a cash account, and want to buy and hold, you will be fine.
If you had exactly $100 total in a cash account, buy $100 of GE stock in day 1, sell $100 of GE on day 1, then no, you will not be able to buy $100 of GE again. If you had $200 in that account, then you could buy $100 of GE again.
Hope that helps…
You cannot make more than 3 round-trip trades in a 5-day period. 4 is a violation.
I called TradeKing and their highest rate taxable money market sweep is 1%. The tax-exempt rate is 1.24%
TradeKing (TK) is the one of the worst platform I have come across. I had few problems in the start regarding the order execution. They are slow compared to other brokers. I missed some nice trades due to such slow executions. I missed ABK buy which was running higher and I had to change the price again to match the rising price. Trakeking not worth the pain for less fees.
I was thinking of making 20K transfer to my TK account thinking that I wont face the same issues but luckily I was trading yesterday and kept my buy order, I saw the bid price going lower than my buy order price but it did not get filled. It just showed open order. I had to cancel the order. I tried once again after a while and I faced the same issue. The stock was consolidating intraday. I placed another buy order and faced the same issue. I got into chat with one rep and I was told that the stock never went below my buy price. I could not believe it. I was watching level 2 prices on Ameritrade and TK were such a liars! Worst thing was that my stock brokekout higher intraday when I was chatting with the rep.
anyway, I am switching the broker. Already using Ameritrade and Zecco. I am getting thinkorswim.
Hi, I would like to know what is it like to close account at TradeKing, is it simple or do they require a lot of steps. Also, what is the process of taking the money out of TradeKing?
Thank you!
I have been a trader at Tradeking now for 60 days. I am an active trader, mostly in options. I have to say that moving my account to this broker has been a unmitgated, utter disaster. They have blown right through at least 3 stop loss orders, the latest one yesterday. As I sit here right now, I cannot determine if my stop losses have yet been executed because their servers are overloaded and thus the pages take forever to load. I have a highspeed DSL connection, 2 gigs of RAM and one other page open. All other pages outside of TradeKing, are opening fine. I cannot get to my account holdings page in order to execute my trades manually.
I called their customer service yesterday to find out why my most recent stop was blown through and I’m told that my order “is now on the trading floor at the ISE”, but at $2.40 below my stop. “We are sorry”, I’m told. TradeKing is just that, SORRY!
Their chart graphics are a joke. Look like they were drawn by a 1st grader. Seriously, if you do technical analysis, you will need another charting service, for real!! DO NOT, DO NOT, DO NOT move your account to this broker.
Update: The stop loss order that was blown through yesterday, was just executed at less than half of what the stop order was.
Hindsight..and all that.
Looking back it is clear to see why Tradeking and every other brokerage experienced enormous platform difficulties during what we now know was the “Great Financial Panic”.
Little did we know that the bottom was literally about to fall out from under the market. Most of us using brokerages like TradeKing are simply to insignificant to worry about when the big guys are pushing their orders through.
LESSON LEARNED!! It pays to remember (and find these old blogs) so that when we face it again some of us will recognize the warning signs.
Can any TradeKing user tell me if TradeKing allows you to modify the limit price after you have submitted the order (assuming it hasn’t been executed)?
I was reading up on another discount broker Just2Trade and they require you to cancel the existing order and resubmit another one if you need to change the price.
Just curious:
How many of you guys who trade options also trade the e-mini S&P or other index futures?
Subject: Not allowing me to sell my stock.
A few days ago on 10/31/08 I bought ( MGM ) when the stock started to tumble I tried to sell it, and tradeking sight would not let me. It returned a message saying:( that I was trying to sell a stock that not yet settled ). This cost me, I lost over a dollar a share so I called and I was told that I had to have a margin account in order to buy and sell up to 3 stocks in a 5 day period of time. so I opened a margin account and waited. After about 2.5 days I got a letter saying my margin account was now open, So tried to sell ( MGM ) and there sight let me. The next day I bought (s) and (GNBT). I held it for 2 days and then tried to sell it. Again there site would not let me. I got a message that said the account was restricted. So I called trade king and ask why. First I was told I bought more shares of (MGM) then I had money so the account was restricted for 90 days. I told trade king I did not buy to many shares that after I bought my shares that I had money left over. Then I was told that I sold MGM to soon. Well after I opened a margin account 2.5 days latter, I told tradeking there site let me sell (MGM) so I assumed that everything was alright because the only thing that will over ride there site, is if a person calls in and tell them to sell it. Which I did not. Trade king told me that they sent a letter saying that I was restricted, which they did not. ( I told tradeking check there sent mail and you will see that they did not send me a letter ) and even if I was restricted why did trade king allow me to buy more stock after I was restricted? And if I was restricted I told tradeking they need to reimburse me for the difference. The money I lost on the stock after I was restricted since I was not allowed to sell it. It seem to me a person can buy stock at Tradeking but they can not sell it. So I got fed up and called and asked trade king to sell all my stock, (S) (SIRI) and (GNBT) I had to argue with them for over 30 min. before you sold my stocks for me and it was falling in price.
Sincerely, Judy Matthews
Tradeking has changed the ACH holding time to 60 business days.
I don’t want to leave a link here in case it is seen as spam. But, anyone interested should be able to locate my post by Google using the following in the search box:
Tradeking changes its ACH holding time to 60 business days
if you purchase say 100 shares of xyz, for $5 per share, this should cost you $500 + $4.95(commission). Total $504.95. Your average cost should be $5. However Tradeking will include the commission in the average cost(504.95/100 )making your average cost $5.05. Each time the price of each share goes up you will be losing .05 and tradeking will be making an extra .05. Why not just charge you that $4.95 for conducting the trade making your average $5 instead of $5.05. This is the normal principle for other online brokers.
HUH???
” imal Says:
June 2nd, 2009 at 9:47 pm
if you purchase say 100 shares of xyz, for $5 per share, this should cost you $500 + $4.95(commission). Total $504.95. Your average cost should be $5. However Tradeking will include the commission in the average cost(504.95/100 )making your average cost $5.05. Each time the price of each share goes up you will be losing .05 and tradeking will be making an extra .05. Why not just charge you that $4.95 for conducting the trade making your average $5 instead of $5.05. This is the normal principle for other online brokers.
“
I was reading up on another discount broker Just2Trade and they require you to cancel the existing order and resubmit another one if you need to change the price.
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!
Trade King has changed clearing firms from Legent to Penson and my expeience with Trade King since the conversion has been miserable. After 2 weeks their back office systems are still not properly reflecting the cash positions and buying power in my account. They have improperly charged some fees, which I have disputed, and they have made no response. I have frequently had trouble entering orders through their online system and have had to trade via phone. I will be leaving trade king soon.
April 2011
Lately there has been much praise for TradeKing from low commissions to good service. Well I transferred part of the fund from TDAmeritrade to Tradeking. Note here: This is a review by someone who trades mostly OTM puts (with uptrending top companies)
Yes it was fast with wiring deposit, and quick response with e-mails.
1. I can’t do naked put or naked call which they didn’t tell me when I filled up the info to open the account -though I included speculation in my choice. May be I should have said I have 15-20 years of option experience (I am guessing if that would qualify me) I was told I didn’t have enough option experience by putting down 1-2 years (which is the truth) & 12 years of investment experience.
2. When I have no choice but to do spread I double the number of contracts. With lower commission, I double the contracts per time versus what I would have used put/call alone in TDA. So I end up paying about the same.
3. Have you looked at the spread deal? Before you closed the deal, you only know the spread debit/credit. Well when you closed the vertical spread, you are not exactly receiving the best deal. Unless you let the spread expire worthless, you will find they will mark up the one with BTC and mark down the one STC. (I am sure other brokers probably do the same)
Having said this I am moving back my fund back to TDA and be happy with what I have been doing there.
Tradeking has been by far the worst brokerage I’ve had to deal with in my life. Had a very similar experience to David… They let me sign up and transfer money into the account, then they decided to close my account because they could not verify the address, which was right on my bank statement. They then said this decision was irrevocable and would transfer my money back. Then, apparently there was a problem with my bank not being able to find my account, so they charged me $30, even though the money was transferred back. All in all it took me about 8 hours of going back and forth and sending documents to get screwed $30. Horrible customer service, looks like they’re not doing well and need to charge every little fee they can.
Like David, I wired funds from my broker to TradeKing. Simple? Absolutely Not! TK said it was a 3rd Party wire. Same name on sending & receiving acct, how is it 3rd party??? I called TK to find out what the problem was. They said the incoming wire did not have my name on it but had the brokerage name. Said all they needed was something from the sending broker with my name & acct #. My old brokerage faxed to TK the information requested. TK sent an email saying they had what they needed & would process. Next day, TK sent an email saying they didn’t have what they needed because it should have been on letterhead. Who does that?! It came directly from the broker’s cashiering dept! TK returned the wire and deducted $30. My old broker says TK must have new people in the cashiering dept because real brokerages know how wires come over from other brokerages. After going back & forth with TK trying to find out what the problem was if they knew my brokerage sent the fax, I gave up. Maybe it’s a blessing in disguise. If they can’t handle a simple incoming wire…good grief!