Thursday, October 18, 2012

My Experience with Online Brokerage Accounts: Part I-- TradeKing

If you skipped my last post and are wondering what a brokerage account is please click here.
So I’ve had experience with two online brokerage firms: Tradeking and TDAmeritrade. Let’s begin with the former.

Tradeking was recommended by the friend that taught me how to get started in the stock market. So this is the irony of life-- Right before I signed up with Tradeking I had already completed an application to another brokerage firm. Funny how life works; I never funded the other account but I had every intention to do so. I had no one guiding me but I wanted to get started so I figured I get the ball rolling (this was before I met my friend!—I have the email to prove it!). Shortly thereafter was when I met my “stock guru” (as I like to call him) and he recommended Tradeking and that’s when I got started (another “law of attraction” experience).
A little detour: The ‘Law of Attraction’ Time line:
05/12/2008 I fill out an application for a different online brokerage account and get the confirmation email (Haven’t met my friend yet)
06/15/2008 Meet my friend a couple days earlier and he recommends Tradeking-- I fill out a Tradeking application and get the confirmation email.
06/17/2008 I fund my TradeKing account and get started in the exciting world of investing.

So why did I go with Tradeking? Mainly because it was recommended by my friend. I also had no clue about how to get started so I decided to listen to someone with experience and who was guiding me. Another huge plus about TradeKing—Only $4.95 per trade!! I opened my account in the summer of 2008 and as I write this it is the fall of 2012 and the price has not changed, which is great. What does 4.95 per trade mean? As noted in my initial tutorial—Whenever I purchase shares of stock they charge me a 4.95 fee. When I sell; they also charge the 4.95 fee for an overall trading fee of only $9.90. Trust me—this is quite the bargain!!! You’ll get to compare prices as I provide information for a few other firms in upcoming posts.

So just to give you an example lets keep it simple; lets say you sell your shares and make $100 profit on a trade; after fees you will be left with $90.10 (this is separate from whatever you initially paid for the stock) which is pretty amazing if you ask me. Maybe if you used a personal broker you’d end up with $50 or maybe even less.  Side Note: We must also remember you’ll be taxed by our beloved IRS (around 15%, more on that on a future post) but we are focusing on the initial fees for now.

My experience with tradeking thus far? I have to say I have no complaints. One of the things I love the most is their customer service. I love their “chat” feature. So pretty much, whenever I am signed on; if I have a question I can just click on chat and a live person will answer me usually immediately. I’ve had the most random questions through the years—from the most basic (sometimes I felt the need to explain I was “new” to investing just to avoid sounding ridiculous) to the most advanced questions, as I learned more. Never did they make me feel dumb or clueless; my questions have always been answered clearly and to the point. I absolutely love it. I also like that I don’t have to spend time calling in or being kept on hold so the chat feature is pretty cool. You also have the option to call in, of course. I just personally prefer the chat.

According to their site (tradeking.com); they know a thing or two about customer service:

“TradeKing was ranked #1 in Customer Service in the SmartMoney June 2008 and June 2010 Broker Survey; awarded the highest five star rating in Customer Service and Trading Tools in the June 2009 and June 2010 Broker Survey; ranked #1 in Customer Service in the June 2011 Broker Survey and June 2012 Broker Survey; named overall #1 Discount Broker in the August 2007 Broker Survey; and overall #1 Discount Broker in the August 2006 Broker Survey. ”


When you initially transfer money in to tradeking it will take about 3 days for the transfer to complete and before you’re able to trade. They might initially give you the option to trade on Margin (DON’T DO THIS!) on a upcoming post I will explain the application process of opening a brokerage account and how to go through the application. Margin trading is something you need to avoid (will explain why later).

Another thing about my experience—they also have a ‘community’ involving other investors were you can ‘peep in’ and also ask questions. I recall asking a tax question once and multiple people answered me with pretty consistent responses and even links within Tradeking where I could find the “official information”. It was pretty cool. You can also see what other investors are doing in terms of what they may be selling or buying, which companies they may be commenting on, etc.

Another tab I love within the Tradeking site is “educational tools”; there, you are able to see tutorials for different kinds of trading instruments and they even have trading courses from basic to advanced. From time to time I also get emails about featured speakers whom give live presentations on the site regarding various investment topics. This is all for FREE. Keep in mind that opening an online brokerage account is free. You should never be charged for opening an account. The only “charges/fees” come in when you sell/buy stocks and in this case is $4.95 per trade as I previously indicated.

Another cool perk: Considering I am already a member, from time to time they have a “friends and family” deal—if I personally refer someone to join and they open and fund an account (taking in to account some specifications); whomever I refer gets $50 and so do I. Pretty sweet deal (if you are interested in this just send me an email (teachmetoinvest@gmail.com) and I’ll see if the deal is available, $50 is no pocket change  ;)

Security— Any money transferred in to TradeKing or any other official online brokerage firm who is member of the Securities Investor Protection Corporation (SIPC),
is insured just like a bank account up to $500,000 including $250,000 in cash claims. What does this mean? No one can "steal" what you have there and the company cannot suddenly disappear with your money. Tradeking also has additional insurance to supplement the SIPC basic coverage.

In term of their security software-- as per their site; they have state of the art technology to protect your money and your identity.


NEXT UP: My experience with TDAmeritrade.

Any questions so far? You know what to do: comment below or email me at teachmetoinvest@gmail.com

For full details regarding TradeKing privacy and security measures click here.
Please Note: I was not compensated by Tradeking or any of its affiliates to write this post. The post is based on my own personal experience with Tradeking and its services and I am only expressing my opinions about the features of Tradeking which I have used since I opened an account and do not encompass everything TK has to offer or doesn’t offer. This post is not an advertisement or formal recommendation. As everything else on this blog; it is based on my own personal experience as an individual investor.