In 2005 TradeKing arrived in the marketplace and began its highly-visible ascent into the top tier of online trading. They’ve positioned themselves as a low-cost provider with a solid offering of tools and support for trading stocks, options, ETFs, mutual funds and bonds. They’ve captured the interest and portfolios of self-directed investors by offering flat fees for trading, no account minimums and simple, easy-to-understand per share prices for options trading. Recently, they’ve embraced social networking with their online trader community aptly named Trader Network which includes Certified Trades and Trade Notes that show what traders are doing and provide a narrative that other customers can learn from. The latest innovation includes the Leaderboard which tracks top-performing traders and lets customers follow their transactions and understand how the featured traders manage their portfolios. TradeKing believes that they’ve set themselves apart from other online brokers by combining low-cost trading along with powerful tools, a variety of investment and account types and knowledge sharing and education.

Key Points to Consider

Do you trade stocks only or options, futures and international stocks?
What type of trader are you? A novice, experienced or professional?
Would you integrate your personal banking with trading and portfolio management
Should you trade your own retirement accounts – 401k or IRA?
Can you actually realize savings from premium-priced services?
How comfortable are you with online trading technology and security?

Features

The TradeKing trading platform has four main features – Account Management, Trading, Quotes + Research and Tools. These four groups provide the backbone of the platform with a simple, but effective means of organizing your accounts, developing your strategy, executing your trades and monitoring your performance. The quality of the elements in the offering is high and is fairly consistent throughout the platform. Some features or functionality appear limited compared to competitors, but overall the organization and presentation of what is offered is accessible and complete.

Account Management includes account summary, balances, positions and holdings, options holdings and positions, historical activity, and order status. The balances reflect the value of cash, securities and margin buying. Holdings display your options, stocks, ETFs, mutual funds and bonds. The purchase cost is compared against market value to show performance to date. A unique feature called Power Button will allow the user to jump from holdings to the trading screens, option chains, or news and charts for quick action. A separate holdings option view details your option transactions and holdings for quick reference of each option leg, implied volatility, and analysis using the Greeks – delta, gamma, theta, or vega. Reviewing historical activity is easy and comprehensive – you’re able to view all trading activity, account funding and balances, and paid dividends. More detailed history can be recalled using the search tool. Orders can be searched by date, open or filled, price and ticker symbol. You can modify an order by clicking the Power Button – you may change the price, number of shares or cancel it entirely.

The Trading menu includes options, stocks, ETFs, mutual funds, fixed income, auto-trading and extended hours trading. The options trading menu choice provides access to 19 option chains and includes 14 pre-programmed trades so that you can easily trade one strategy with a pre-populated order ticket. This will remove a lot of the anxiety that some traders feel when they trade options and are not fully aware of how to structure a trade properly. The trading menu for stocks, ETFs and mutual funds is focused and efficiently laid out. It features dynamic functionality that enables traders to set up their trades, enter orders and execute those trades quickly. TradeKing says that they take care to ensure quality fills and observes the National Best Bid or Offer price and attempts to improve price when possible. On the TradeKing platform there is a separate menu for trading bonds – not only trading – research, analyzing and executing your trade. The fixed income offering comes with dedicated support from the help desk which is staffed with experts.

An interesting feature on the platform is AutoTrade which allows users to link their investment newsletter subscriptions to TradeKing and with the proper authorization to trade the newsletter’s recommendations. While TradeKing does not endorse any specific newsletter or publisher, they make available this convenient feature so that investors who follow a specific strategy or analyst can have their trades executed with no intervention by the client. Clearly, the customer needs to set certain criteria or limits for the execution of recommendations – but for the time-deprived investor who does have confidence in a newsletter – having AutoTrade may reduce stress and improve portfolio performance. The last feature of trading is the ability to trade in the extended-hours sessions which run from 8am ET to 9:30 am ET, when the regular day session begins and runs until 4pm ET. The after-hours session runs from 4pm ET until 5pm ET. Any orders that are not filled in either extended session will cancel at the end of their respective session.

Quotes + Research include market and company overview, watchlist, quotes, research, and interactive charting. The most useful and informative reports are on the market and specific companies. You can get market snapshots and stats, selected news, a detailed company profiles, financial reports, analyst earnings forecast, the consensus of recommendations from analysts covering the security and alerts for SEC forms 3, 4, or 5 filed by company insiders when buying, selling or transferring their own company stock. After you’ve done your research you can choose to create a watchlist of the securities that you feel may be worthy of following and eventually buying or shorting. The quote feed streams price data in real-time and links to news or company announcements or events. Fundamental research is available from MarketGrader and an earnings calendar compliments the news and company events information as well. The last research tool is the interactive charts feature which lets you compare current prices vs. historical prices and against market indicators or competitors.

Tools include options pricing calculator, probability calculator, profit + loss calculator, options and strategy scanners, stock, ETF and Mutual fund scanners, tax manager, and technical analysis. The Tools menu offers great value and helps build better trading strategies without becoming a programmer or expert analyst. The tools provided have specific uses and help to organize the traders approach to finding investment opportunities – wherever they may be. The calculators, screeners and scanners make it easier to identify potential investments and help to set or manage expectations for the trade outcome. They provide a reference point against which the trader can and should base their trading objective and help set their entry point and exit strategy accordingly. Many investors spend an inordinate amount of time looking for trade opportunities and entering the trade – only to realize that getting out of the position profitably is more difficult than envisioned.
TradeKing offers three calculators – options pricing, probability and profit and loss – which cover the vast majority of what traders need to analyze in order to place informed trades. Each calculator serves a specific purpose and is designed to collect, compute and report the best result based upon the known data. The scanners and screeners serve a similar purpose in identifying which securities fit the criteria entered by the trader and returns a list of candidates that may be suitable and should then be entered into the calculators to determine how the trade can be structured to have a positive outcome. Most online brokers offer a scanner or screener and some calculators – they do this because traders are very often short on ideas to trade on – most scanners, screeners and calculators do a good job of finding securities and calculating risk, probability and return – but very few of them can educate the trader or train the trader to know what to look for.
That’s where the TradeKing Education Center comes into the picture with its tutorials, webinars, and content to help educate and inform customers how to get the most out of trading on TradeKing. The Education Center offers calculators, a glossary, charts, books and guides to help make profitable trades a regular occurrence for customers. The live events serve to educate, but they are also great for community-building and their outreach is not lost on those who do trade in a rather isolated fashion. There are over 150 on-demand videos that provide insights and valuable information on a large number of investment topics. They can be viewed as-needed and can help to bridge the knowledge gap that exists with traders of all levels of experience.

The Trader Network is another community-building effort and offering that helps to share trading knowledge and experience with the TradeKing customer base. Traders share what they’re doing and why and their trades are “certified” as truthful by displaying their actual trade ticket information. The sharing of ideas by like-minded investors is a great way to help those traders who might otherwise trade in obscurity and become too narrowly-focused on their own rationales and execution – benefit from and provide knowledge to others trying to put on the perfect trade. The best elements of the Trader Network are Trade Notes, Forum and Blogs – all of which are hugely important to the mission of empowering the self-directed trader, but just as important to TradeKing as a showcase of how their customers are utilizing the platform and getting results.

TradeKing now offers an invitation-only trading platform called TradeKing LIVE. The new platform is the result of TradeKing Labs where the firm’s innovation efforts are carried out before taking them live, no pun intended. It remains to be seen what exactly is LIVE or different or better – but traders should keep a close eye on any new product from TradeKing to see if it is a good fit for them.

Cost

The TradeKing low-cost pricing schedule attracts a lot of attention, especially on options contracts where the rate per contract rate decreases dramatically for more than eight contracts. Once you get to sixteen or more contracts your incremental cost is the lowest on any retail trading platform. It’s only $4.95 to buy or sell no-load mutual funds and $0 to buy or sell loaded mutual funds (although a fee may be applied by the fund itself). Bonds can be traded for only $4.95, subject to a $14.95 minimum transaction fee and U.S. Treasuries can be transacted for $24.95, while CDs are traded for $24.95. TradeKing’s mantra is “fair and simple” – other online brokers could learn a lot from their simplified approach to pricing and fees.

User Friendly Performance
The user interface for trading stocks, options, ETFs, mutual funds, and bonds is very easy to navigate and works intuitively on many levels. This is due in some part to TradeKing’s “keep it simple and fair” approach, but it goes beyond that. Online brokers often feel that they have to justify their fee structure by displaying a lot of content – some of it useful, some of it distracting or annoying – that many traders will not benefit from. Obviously the user experience is just that – a user experience of one – and trying to design a platform with input from too many users is like trying to hit a moving target at night. The features and functionality of TradeKing appeal to and satisfy a broad group of traders, some of whom are novices while others possess more advanced skills and experience.

Pros
A pleasant trading experience, mostly free of distraction and the need to climb a steep learning curve. Great prices on trades and no charge for broker-assisted trades. Nice tools and some ability to customize your experience, although not as customizable as other brokers platforms. A solid offering with good support and low prices.

Cons
While TradeKing LIVE remains an invitation-only offering it presently appears that there is no platform for active traders. The other brokers offer some bells and whistles and discounted fees based upon trade volume or account balance. TradeKing does neither. Perhaps it’s because their prices are low to begin with – perhaps it’s because they don’t want to design, support and staff an active trader platform at the expense of the 90% of people who are not active traders.

Analysis

TradeKing has a lot to offer most trader profiles and it comes with an attractive fee structure. Although not always the best criteria – picking a broker based upon low cost vs. other features or functionality – it does not always result in a negative outcome. Of course, it all depends upon your own trader profile.

Which trader profile is best served
The best served trader profile is the 90% of investors who trade stocks, some options, a few ETFs, a mutual fund or two and a bond every now and then. These traders will feel very comfortable on the platform and the low fees will not cut into portfolio profits. Although the days of buy and hold are nearly gone – at least for the foreseeable future – having low cost and a solid platform should make for a good trading experience for most traders.

Which trader profile is least served
The only profile not well served is the active trader. Notwithstanding the recent introduction of TradeKing LIVE (by invitation-only, though) the typical active trader would not be enticed by the features and functionality of the trading platform if the fee structure were not made more favorable – which is probably expecting too much given that the current low-cost plan is very competitive with other brokers online offerings. The active trader would be best served by trading on another platform – but keep TradeKing in your sights – someday they may have something to take a closer look at.

Bottom Line

There are a lot of good things to say about TradeKing and not very much that’s bad. It has a nice feel and layout that makes hours of trading a little easier on the eyes and a low-cost flat rate plan that’s easy on the budget. The majority of traders will be well-served by TradeKing and may actually improve their trading skills. TradeKing.com excels by offering competitive rates, a well-executed platform interface and providing good education and support to its growing customer base. The community-building via the Trader Network also demonstrates their willingness to invest and promote the sharing of ideas and knowledge – and you can’t go wrong with that.