Many online brokerage firms have emerged to help facilitate investing online. Due to high competition in this industry, these firms are constantly innovating their services. The question for each investor is which online brokerage firm fits his or her particular needs. In this article, two of the most well-known brokerage companies will be compared: TradeKing and TradeStation. Several key components of the offering of each company will be discussed, including pricing, technology, research and technical analysis tools, among others. (For general guidelines on how to choose an online broker, see article: 10 Tips For Choosing An Online Broker)

Pricing

TradeKing: Stock and ETF trades are priced at a flat rate of $4.95 per trade, and options trades are priced at $0.65 per contract plus a base rate of $4.95 per trade. Regardless of whether it is a single-leg or multi-leg trade, there is only one base charge per spread. TradeKing adds $0.01 per share for stocks priced at less than $2.00. The minimum commission it charges is $4.95 and the commission per order does not surpass 5% of the trade value. 

TradeKing’s margin rates range from 8.75% for trades of less than $5,000 to 4.00% for $500,000 or more. A minimum of $2,000 in equity is required for all margin accounts. No-load mutual funds trade at a fee of $9.95, and while there is no fee for load mutual funds, these are subject to charges from the mutual fund. Fixed income bonds, on the other hand, cost $1.00 per bond for bonds ranging between a minimum of $10 and a maximum of $250.

TradeStation: For stock and ETF trades TradeStation offers three commission plans, each catering to a specific trading style of individual investors. Per-Share pricing features a charge of $0.01 per share for the first 500 shares and $0.006 per share, subsequently, with a minimum of $1 per order. Per-Trade (Flat-Fee) pricing starts at $4.99 per trade. Successively, each share trades at $0.004. Unbundled pricing has a base rate starting at $0.01 per share for less than 100,000 shares, with a minimum of $1, and the lowest rate is $0.002 for 5 million shares or more, with a minimum of $0.50. The ladder is advantageous for liquidity purposes when a minimum amount of trades is maintained. For option trades, TradeStation provides two plans. Per-Contract pricing is $1.00 per contract with a minimum of 1 contract and no base or ticket charge. Per-Trade (Flat-Fee) pricing ranges from $9.99 per trade, plus $0.70 per contract for 1 to 9 trades a month to $4.99 per trade plus $0.20 per contract for 200 or more trades a month. (For related reading, see article: Brokers And Online Trading: The Costs.)

TradeStation’s margin rates range from 8.50% for less than $25,000 to 6.25% for $10 million or more. Mutual funds have a fee of $14.95 per trade, while futures range from $0.25 per contract for more than 20,000 contracts to $1.20 per contract for 300 or less contracts.

Overall, TradeKing is best for margin positions due to its lower margin rates, especially when investing large quantities. On the other hand, TradeStation is more convenient when trading derivatives because of the variety of its offerings, such as futures and flexible commission plans adapted to different investor needs. (See video: What Is A Derivative?)

Technology

TradeKing has an interface that is simple and easy to manage regardless of the complexity of a particular trade. This allows the trader to focus on what trades he or she needs to place, instead of how to place them. Also, the dashboard is customizable to the trader's liking. It has the Maxit Tax Manager, which helps the trader keep track of tax obligations. Also, TradeKing LIVE is a real-time trading platform, which includes intraday and historical charts, interactive option chains, streaming stocks and option quotes, and order status tracking, among other features. Additionally, all accounts are protected by Securities Investor Protection Corporation (SIPC) and additional insurance, which ensures safety and privacy.

TradeStation, on the other hand, is known for its state-of-the-art technology. It is always updating its trading platform to maintain its reputation. These updates include chart trading, enhancements to OptionStation Pro, forex trading enhancements, enhancements to the Walk-Forward Optimizer and expansion of the EasyLanguage Class Library (ECL), among others. Like TradeKing, TradeStation provides real-time streaming quotes. Daily Chart Pattern Alert newsletters, which help readers to find potential trading opportunities, are provided daily by Recognia. Also, the chart pattern recognition feature allows traders to make informed decisions by providing detailed and actionable information. 

Research and technical analysis tools

TradeKing provides company standard and real-time streaming quotes, as well as stock and ETF updates, company profiles, financials, earnings forecasts, market snapshots, briefings and statistics. It obtains research reports through MarketGarder. TradeKing also offers free technical analysis tools such as full educational support, chart pattern recognition, S&P stock reports and price forecasting acquired from Recognia. While TradeStation does not offer the vast, in-depth research information that TradeKing makes available, it still includes features such as the stock and bond Radar Screen, Portfolio Maestro back-testing, Matrix, options strategy scanner, Walk-Forward Optimizer, real-time stock and option quotes, volatility data and S&P stock reports.

Additional Services

Tradeking Forex allows the diversification of investments by facilitating trading in foreign currencies, as well as silver and gold in real time with advanced tools and  24-hr customer support. This is done through the MetaTrader platform. TradeKing advisors, powered by Ibbotson from Morningstar, are professionals that help create diversified portfolios customized to the investor’s needs. There are no per-trade fees and advisor fees are not charged during the first year of use of the service. TradeStation also provides forex trading, as well as additional services such as a stock loan program.

Offers & Promotions

TradeKing offers $1,000 in free trade commissions to those opening a new account, as well as a refund of $150 in transfer fees. It also has a “Refer a Friend” program: if the person referred opens a new account with at least $3,000 and executes three trades, both that person and the person who referred him or her will receive a $50 deposit. In addition, if an initial deposit of $5,000 or more is made, there is a reimbursement of $25 in wire transfer fees. TradeStation also offers trading commission-free for 90 days when an account is opened and up to $500 in commission rebates.

Competitive Edge

TradeKing offers competitive pricing, but also provides a greater variety and quantity of research and educational content. It offers an overall robust and versatile package that is  easier to use due to its intuitive, less complex interface. TradeKing Live and TradeKing Advisors create a great foundation and tough competition for other brokers. In addition, TradeKing does not require an account minimum nor IRA annual fees, while TradeStation has a minimum account requirement of $5,000 and an annual IRA fee of $35. TradeStation, on the other hand, is more tech-based, with a more advanced trading platform, which makes it one of the top brokers in trader technology. It has a stronger online trader community, live seminars and futures trading, unlike TradeKing. Another advantage for TradeStation is that it does not charge an inactivity fee, while TradeKing charges $50.00 per year if there are no trades placed or if an account has a balance of less than $2,500.

Suitability

TradeKing is a better match for frequent, short-term investors. It is also suited for price-sensitive traders due to its low commission and fees. This broker is also perfect for not only those wanting to trade, but also those seeking to share ideas and discuss the market. TradeStation, on the contrary, caters more to professional, active traders who can meet the monthly minimum account requirements, as well as those investors who trade in bulk in order to take advantage of the price value.

The Bottom Line

Both brokerage firms have strengths and meet the needs of different investors and traders. Those who are more frequent, short-term traders, specifically in stocks and options, would probably opt for TradeKing due to its focus on these products, which it offers at the lowest competitive prices. In addition, TradeKing is a good fit for traders with less experience because of its intuitive, easy to use platform, as well as its quality education, advisors, and vast research. In contrast, TradeStation may be a better option for more professional investors who are seeking more long-term investments in not only stocks and options, but in other instruments such as futures and forex. It also has a more complex platform with more high-end technology. Each particular online brokerage firm might be suitable for a certain type of investor, depending on that investor's particular needs. (For related reading, see article: Brokers And Online Trading: Choosing A Broker.)

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