TradeKing Review 2017

Brokers, Investing

Don’t be fooled by TradeKing’s low $4.95 commissions and lack of widespread brand awareness outside active investing circles. Over the years, the quality, breadth and depth of the firm’s investment offerings has evolved to the point where this deep-discount broker resembles its more well-known — and higher-priced — competition.

Its expansion into forex trading, automated portfolio management (TradeKing Advisors) and acquisition in 2016 by Ally Financial likely will earn TradeKing a place in the mainstream financial services spotlight.



TradeKing

Dayana Yochim
January 6, 2017
4.0


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Quick facts

  • Commissions: $4.95
  • Account minimum: $0
  • Up to $1,000 in free trade commissions for new clients, depending on account balances
Get started on TradeKing's secure site
Get started on TradeKing's secure site

TradeKing is best for:

  • Active traders
  • Options traders
  • Forex traders
Overall

Winner of NerdWallet's award for best low-cost broker.
Stock trading costs$4.95
Account fees (annual, transfer, closing, inactivity)$50 annual inactivity fee for customers who have not placed at least one commission-based trade during the previous 12 months and whose combined household balance is less than $2,500; $50 full outgoing transfer fee and $50 IRA closing fee.
Trading platformBrowser-based platform with free screening tools, customizable charting, research and real-time data.
Commission-free ETFsNone
Research and dataFree
Tradable securities• Stocks
• Bonds
• Mutual funds
• ETFs
• Options
• Forex

Where TradeKing shines

Commissions: Only a few online brokers can compete with TradeKing’s low commission of $4.95 on trading of stocks and exchange-traded funds. (OptionsHouse is one of them.) TradeKing’s options trading contracts are similarly low at $4.95 plus 65 cents per contract with only one base charge per spread. Mutual fund investors will be disappointed that there are no transaction-fee-free funds available. However, TradeKing’s $9.95 commission for no-load mutual funds is far from onerous when compared with the $20 to $50 (and more) charged by other discount brokers. Even TradeKing’s $20 fee (plus regular commission) for broker-assisted trades and its low margin rates are hard to beat.

Account minimum: TradeKing’s $0 account balance minimum means there’s no roadblock to getting started. But it comes with a caveat: Every 12 months, each account is reviewed and a $50 inactivity fee is charged if the customer’s combined account balances are less than $2,500 and if no commission-charged trades have been made in the previous year. The easy way to avoid paying the fee is to either place a commission-charged trade once a year or make sure your brokerage balance stays above $2,500.

Trading platform: TradeKing’s browser-based platform — called TradeKing LIVE — offers quick trading capabilities, real-time streaming quotes and data, a customizable dashboard, and access to all of the broker’s tools. Customers who frequently trade from various computers — home and work, for example — will appreciate this web-based platform, which doesn’t require any downloads. TradeKing LIVE has also advanced the ability for customers to trade via mobile devices with the company’s apps, or to use a smartphone to access the web-based platform. (See our in-depth review of TradeKing LIVE for more details.)

tktrading

 

In 2015, TradeKing acquired MB Trading, which enabled the broker to add forex trading to its lineup of investing tools. With TradeKing Forex, the company’s commitment to low prices is evident. Instead of commissions, transaction costs are based on spread markups, and accounts that have at least one trade within the past 90 days get access to free data.

Investing research and tools: TradeKing has built a suite of investing tools that exceed expectations for a deep-discount broker. Its options trading tools are particularly strong and include an options pricing calculator to compare current bid/ask prices to forecast theoretical values, and a strategy scanner that identifies and executes option strategies based on criteria you choose.

tk-live-options-chains

Technical traders can dive into a suite of free tools powered by Recognia. Other free tools include a profit-and-loss calculator, a probability calculator (that uses implied volatility to determine your likelihood of hitting your targets) and the Maxit Tax Manager, which identifies tax implications of trading decisions (e.g., as short- and long-term gains and losses, wash sales) for planning purposes and generates on-demand 1099 forms.

Side note about data: Standard quotes are free to all customers, but free, real-time streaming data is available only to investors who trade more than 10 times per month.

Where TradeKing falls short

Commission-free ETFs: In short, TadeKing has no commission-free ETFs, making the company a poor option for investors who want to gradually build up their position in ETFs because even the low $4.95 commission can add up and pare investment returns.

Mutual funds: The company offers more than 12,000 mutual funds, but unfortunately none of them are free of transaction fees. TradeKing’s commission for no-load funds is $9.95 (one of the lowest among brokerage firms), but investors would be better off using one of the other deep-discount online brokers — such as E-Trade, Merrill Edge or Interactive Brokers — which offer thousands of funds with no transaction fees. (See our roundup of the best brokers for mutual fund investors of all types.)

Annual account inactivity fee: This red flag (covered earlier) is not a deal breaker for most people, but it’s worth reminding readers about TradeKing’s $0 account minimum requirement: Accounts without any commission-generating trades in the past 12 months and a combined household value of less than $2,500 are subject to a $50 inactivity fee (one per year). This applies to IRAs and taxable accounts. 

How TradeKing stacks up

TradeKing is one of our top low-cost options. Its robust trading platform and lineup of free research, data and analysis tools put it at the level of some of its better-known competitors in the active trading space, at a lower price.
TradeKing vs. similar brokers

"TradeKing offers trading tools and service comparable to higher-cost, high-minimum platforms."
Arielle O'Shea, NerdWallet Investing
Trade Fee
$4.95
$4.95
Account Minimum
$0
$0
Promotion
$1,000
$1,000
in free trades with qualifying deposist
Trade Fee
$6.95
$6.95
Account Minimum
$0
$0
Promotion
$600
$600
in cash bonus with qualifying deposit
Trade Fee
$6.95
$6.95
Account Minimum
$500
$500
Promotion
60 days
60 days
of free trades with qualifying deposit

The bottom line

Cost-conscious active traders may be surprised by how much they can get for so little at TradeKing. Rock-bottom commissions, top-notch research and trading tools, and constant upgrades to the platform make this deep-discount provider a worthy contender among much pricier, high-minimum brokers. Although TradeKing’s overall score took a hit because of its lack of trading-fee-free mutual funds and ETFs, these shortcomings aren’t likely to matter much to the majority of the broker’s target clientele of active investors.

Dayana Yochim is a staff writer at NerdWallet, a personal finance website.  Email: dyochim@nerdwallet.com. Twitter: @dayanayochim.

Updated Jan. 6, 2017.