ChoiceTrade is a U.S.-based brokerage firm that has been in business since 2000. The company caters to active, self-directed traders and offers several trading platforms—each geared toward a specific trading style. In its annual report filed with the SEC in late 2020, the company stated, "ChoiceTrade is now in the process of transforming its business model from just offering low priced commissions on publicly-traded stocks, ETFs and options to providing other investment solutions to its clients." This could be a good move for the company and allow it to cast a wider net.
Still, ChoiceTrade is playing catch-up in an industry where competitors have steadily gotten larger in size, broader in offerings, and more competitive in pricing. With a small line-up of trading products and limited research amenities, the broker may be best suited for options traders who want to take advantage of $0 commissions and a $50-per-month cap on fees. We’ll look at how ChoiceTrade stacks up in terms of features, costs, and resources to help you decide if it could be a good fit for your trading style.
- ChoiceTrade has been in business for 21 years and has a clean regulatory record.
- The broker's range of offerings is limited to U.S. stocks, ETFs, and options. There's no fixed income, mutual fund, futures, forex, cryptocurrency, or international trading.
- Customers can subscribe to newsletters that generate trading recommendations, which appear on a staged orders page. The orders are not sent to the market unless you click the TradeNow button.
- Despite ambitions to expand both its market and offerings, ChoiceTrade remains a niche player aimed at options traders.
Who ChoiceTrade Is For
ChoiceTrade is showing signs of wanting to expand its market. In addition to the statement in the annual report about transforming its business model, the company announced the start of an equity crowdfunding campaign to fund the development of a "new app to enable billions of global citizens to invest as little as $10.” These ambitions aside, ChoiceTrade remains best suited for higher volume options traders who can benefit from the $50-per-month cap on options fees. Options trades are $0 per trade (i.e., commission-free) plus $0.40 per contract. So, once you trade 125 contracts (125 x $0.40 = $50), any other trades within that month won't trigger the $0.40 per contract fee.
It is important to note that regulatory fees, exchange fees, and cash-settled options surcharges are extra. All in all, ChoiceTrade’s pitch is quite simple. If you want to trade a lot of options, then ChoiceTrade is cost competitive with options oriented tools to support you.
Low costs for frequent options traders
The ChoiceTrade Elite platform is easy to customize
Newsletter subscribers can receive trading alerts staged for easy execution
Small line-up of trading products
News and research amenities are limited
High platform fees
- Options fees are capped at $50 per month, so higher volume traders can control their costs. If you trade 125 contracts per month, you'll hit the $50 cap and the rest of your trades won't incur the $0.40 per contract fee. The more you trade beyond that cap, the higher your relative savings with ChoiceTrade.
- You can customize the ChoiceTrade Elite platform, a browser-based streaming site, by dragging and dropping widgets around to create your preferred layout. You can also customize the displays for options chains.
- The Auto Staging tool (aka ChoiceTrade Convenience Tool) gives you control over your newsletter subscription trade triggers without having to enter them manually. Trades recommended by newsletters are set up in the tool so you can review them and choose which ones to send to the market.
- ChoiceTrade supports U.S. equities, ETFs, and options. Customers don't have access to other trading products, including mutual funds, fixed income, futures, futures options, commodities, forex, or cryptocurrencies.
- ChoiceTrade's only news feeds come from Yahoo Finance. This is sparse compared to larger rivals, so traders may have to tap into other sources for fuller coverage of the financial markets. You can add real-time streaming news from Benzinga for $99 per month.
- The only platform you can access for free is the ChoiceTrade standard web platform, which is outdated and has limited functionality. To use the Elite platform, you must have at least $30,000 in your account or pay a $29.95 per month access fee.
ChoiceTrade's account opening process is straightforward. You can open an account online, request a new account packet by mail, or download the forms from the website. Opening your account online is quite easy. To get started, you simply enter your citizenship status (U.S. citizen, resident alien, or non-resident) and then select the type of account you want to open—either individual, joint, custodial, or specialty (i.e., corporate, non-profit, investment club, LLC, partnership, or trust). It takes about two days to get the account up and running. The account minimums are $100 for cash accounts, $2,000 for margin accounts, and $25,000 for day trading accounts.
The ChoiceTrade web platform is simple to set up—there are only a few defaults and customization options—but it's clunky and outdated. ChoiceTrade Elite (provided by iVest) is the broker's newest platform. ChoiceTrade Elite web-based, easy to navigate, and more functional than the website version. The Elite platform provides better charting capabilities, and you can drag and drop widgets to customize your trading workflow. ChoiceTrade Elite platform costs $29.95 a month, but ChoiceTrade waives the fee if you have at least $30,000 in your account. The company offers two other trading platforms—QuoteStream ($24.95/month) and Direct Pro ($135/month)—but we focused on the web, Elite, and mobile app platforms for this review.
The ChoiceTrade mobile app is available for Android and iOS. You can trade the same products (stocks, ETFs, and options) on the web-based and mobile platforms. Likewise, all the order types available on the web platforms can also be used on the mobile app. You can create watchlists through the app, but you better know your ticker symbols. There's no way to search by company name even though there's a button for "SEARCH COMPANY". The app doesn't offer streaming real-time news or quotes, and it has limited charting, news, and research capabilities.
ChoiceTrade's standard web platform is clunky and difficult to navigate. The quotes are delayed, and the charting is rudimentary compared to newer, intuitively designed platforms from competing brokers. Still, you can choose your preferred chart type (line, area, OHLC, candlestick, or hollow candle) and a timeframe from one minute to ten years. There are a limited number of technical indicators, but they aren't available on the quick charts.
The Elite platform is more functional and easier to use, with streaming data and widgets that let you design your preferred workflow. The auto staging tool, called the ChoiceTrade Convenience Tool, sets up trades recommended by newsletters for you to verify and submit. The order ticket is basic, and there's no direct-from-chart trading feature.
You can set up a default order type (limit or market) for both stocks and options and set a default number of shares or contracts. The trading defaults you create on the web platform extend to the Elite platform and mobile app, as well.
Mobile Trade Experience
The ChoiceTrade mobile app is suitable for the most basic trading needs while you are away from a larger screen. It is best used for placing trades you're already planning to make rather than researching or analyzing potential ones. Experienced traders who have used robust apps from some of ChoiceTrade's competitors will be disappointed with the overall lack of functionality on the mobile platform.
It's worth noting that much of the font on the mobile app is quite small. It can be difficult to read on smaller mobile devices, and you can't zoom in for a closer look. On the plus side, the app now offers the option to sign in using facial recognition, a security feature that was missing in previous reviews.
Range of Offerings
ChoiceTrade customers can trade U.S. stocks, ETFs, and options. The company doesn't support mutual funds, fixed income, futures, futures options, commodities, international assets, currencies, or cryptocurrencies. The primary reason traders pick ChoiceTrade is to trade lots of options contracts, so the limited offering is understandable—but it's still a limitation. With ChoiceTrade, you can trade:
- Stocks long and short (about 3,000 on the easy-to-borrow list for short sales, which is slightly below average)
- OTCBB (penny stocks)
- Simple and multi-leg options
As with other areas, ChoiceTrade’s order types are functional but limited. You can enter market, limit, stop limit, and trailing stop orders on all ChoiceTrade platforms. There are no conditional orders. The mobile app supports fewer order types: buy, buy to cover, and sell orders. There's no option to select a tax lot when closing a position and the default is first-in-first-out.
ChoiceTrade's order router prioritizes speed of execution instead of price improvement. The firm does not report any price improvement on customer orders, but it does accept payment for order flow. For stocks, the payment for order flow accepted is on the high side—almost $0.01 per share according to information the company shared in 2020, the most recent data available. ChoiceTrade accepts an average rate of payment for order flow for options trades of about $0.37 per contract.
You can't set up or automate a trading system on ChoiceTrade, but you can use its trading simulator to test basic strategies.
ChoiceTrade offers commission-free stock, ETF, and options trading (options still have a per-contract fee of $0.40). The $0 commission stock trades apply to NYSE, Nasdaq, and AMEX stocks and ETFs executed at $1 or more per share. Stocks and ETFs that trade below $1 cost $12 plus surcharges to trade. Pre-market and post-market trades also incur a $0.005/share fee. The main selling point of ChoiceTrade is its $50-per-month cap on options fees, which can mean substantial cost savings for high-volume options traders.
Here's a rundown of ChoiceTrade's commissions and fees:
- $0 commission for most equities and ETFs
- OTCBB/penny stocks are $12 per transaction
- Options base commission is $0 per leg
- Options per contract fee is $0.40
- Monthly options fees are capped at $50 (125 contracts)
- Fee for 50 options contracts (single leg) is $20
- Covered call trade of 500 shares plus five contracts is $2
- Margin interest is the Fed Funds rate plus six points
- $10 monthly account fee for non-U.S. accounts
- $40 inactivity fee per quarter if you place fewer than five trades per calendar quarter
- Account closure fee is $25
- Account transfer fee is $75 for a full transfer and $35 for a partial one
- Exercise and assignment fee is $5
- Voluntary reorganization fee is $50
- Wire fees are $35 for outgoing domestic wires, $60 for international
- ChoiceTrade does not issue paper checks, so there are no fees
- Paper trade confirmations are $1 per trade (with a $5 minimum per month)
- Paper statements are $10 per statement
- Clearing and exchange fees, typically a fraction of a penny per share, are passed through to customers.
- Software fees depend on the platform; ChoiceTrade Elite is $24.99 per month if your account balance is less than $30,000.
- Live broker fee is an additional $30 per transaction
How This Broker Makes Money From You and for You
With fewer brokerages charging commissions these days, it's less obvious how they stay in business. Here are some behind-the-scenes ways ChoiceTrade makes money from you. While some brokers offer ways to enhance your returns through stock lending programs and uninvested cash sweeps, ChoiceTrade offers neither.
- Interest on uninvested cash: Like many brokerages, ChoiceTrade earns interest on its customers' cash balances. Unlike most firms, however, ChoiceTrade doesn't pay interest on customers' cash balances. The information about interest on the ChoiceTrade website is confusing, however, as some text indicates the company pays interest, but there are no details. When we asked management directly, they said they paid no interest on cash balances.
- Stock loan programs: ChoiceTrade earns revenue by loaning stocks in your account for short sales. It does not share any portion of that revenue with customers.
- Payment for order flow: Some brokers earn money by accepting payments from market makers for directing equity and options orders to them—a practice called payment for order flow (PFOF). ChoiceTrade receives payment for order flow for equity and options trades, but it did not disclose its current PFOF statistics.
- Price Improvement: ChoiceTrade's order router does not seek out price improvement.
- Portfolio margining: Portfolio margining computes real-time margin for stock and options trades based on risk instead of fixed percentages. ChoiceTrade does not offer portfolio margining, which is a bit surprising considering it is an options-focused broker.
Account and Research Amenities
ChoiceTrade is missing some of the account and research amenities you would expect from large brokers. It offers a limited suite of research tools, including screeners, a trading idea generator, and basic charting.
ChoiceTrade offers a basic screener on the web platform. The screener on the ChoiceTrade Elite platform provides streaming real-time data and several customization options. You can add screener results to your existing watchlists or create a new one.
ETF and Mutual Fund Screener
ChoiceTrade does not have ETF or mutual fund-specific screeners. While there is no ETF specific screener, ETFs can show up in the stock screener results.
Several tools for generating options trading ideas are available in the Elite platform under the “Find” tab. Candidates for trades are identified based on your market outlook.
Fixed Income Screener
ChoiceTrade does not have a fixed income screener.
Tools and Calculators
ChoiceTrade does not have any investing, retirement, or life planning tools/calculators. On each stock's research page, you can click on the options tab to launch a trade ticket and conduct some basic trade analysis. You can also add a note to the trade for a journal entry. The ChoiceTrade Elite platform provides a well-designed heat map under the research heading.
Trading Idea Generators
There are a few options idea generators on the Elite platform, including covered calls, bullish options strategies, and others, but they direct you to a stock information page. From there, you can click on the options tab to get a pre-loaded trade ticket. You can do some light analysis on the suggested trade and use a slider to change the order price.
The built-in news feed is limited to Yahoo Finance on the web platform. On the Elite platform, you'll find a news feed for individual stocks on each stock information page plus StockTwits posts. You can add Benzinga real-time news for $99 per month.
There's not much in the way of third-party research across ChoiceTrade platforms. There are Hammerstone market reports with price targets, which are available on a few stocks.
The charting on ChoiceTrade's standard web platform is extremely basic. The Elite platform has a more robust charting package that includes numerous options studies and ways to evaluate the probability of profit on a particular strategy. If you're looking for advanced technical analysis, this is not the platform for you.
ChoiceTrade does not offer cash sweeps of uninvested funds.
Dividend Reinvestment Program (DRIP)
ChoiceTrade does not offer a dividend reinvestment program.
SRI/ESG Research Amenities
ChoiceTrade does not support screening based on socially responsible investing (SRI) or environmental, social, and governance (ESG) factors.
The ChoiceTrade Elite platform has an intriguing portfolio analysis tool called Trade Journal, where you can examine your trading results, including inspecting them visually on charts. Buying power and margin calculations display in real-time, which is a plus for active traders. The portfolio analysis feature calculates a time value index, which is a time-weighted rate of return figure.
ChoiceTrade's education offerings are minimal. There are videos for platform walkthroughs on the Elite platform and a "How to use this page" link on most pages. Beyond that, there is little trading-specific education, although you will find links on the help and learning page to Options Industry Council content. One helpful feature ChoiceTrade offers is demo accounts that customers and potential customers can use to learn the platform and practice placing trades.
- Phone support is available Monday-Friday, 9 am to 5 pm (Eastern time). In general, the phones are answered very quickly.
- There's no online chat for current or prospective clients.
- Live brokers are available when the phone lines are open.
- Non-U.S. customers can open accounts, but the website doesn't provide details about which countries it supports.
- The website is available in about 100 languages.
ChoiceTrade has made some recent improvements, but it still has some work to do to offer its clients better security.
- No two-factor authentication.
- Mobile app users can now log in using biometric (face) recognition.
- No excess Securities Investor Protection Corporation (SIPC) insurance.
- The company did not provide information about any recent platform outages.
- The Identity Theft Research Center reported no significant data breaches during 2020.
ChoiceTrade is upfront about its commissions and fees, which are described clearly on its website. Interestingly, one of the company's biggest commission-related selling points, its $50-per-month cap on options fees, is not mentioned anywhere on its website. We contacted customer service to confirm this feature was still available.
While the initial and maintenance margin requirements for various positions are described briefly on the website, there's no mention of the margin interest rate you'll pay, other than "our margin rate is Fed Funds plus 6 points." Some customers may be eligible for lower margin rates, but you have to contact the company for details.
Many of ChoiceTrade's competitors have grown and invested heavily in the features and capabilities of their platforms. In comparison, ChoiceTrade has a less robust platform, a limited range of offerings, and minimal educational/research content. Although the company can be attractive to certain types of options traders, there is little here for most other traders and investors. This may change if the company moves forward with its plans to enhance its products and offerings. As it stands now, however, there is simply too little that ChoiceTrade can offer investors outside the subset of heavy options traders.
Given the strengths of other brokers covered in our 2021 broker reviews and ratings, we find it difficult to recommend opening an account with ChoiceTrade at present. The three types of traders who might find an account useful are non-U.S. customers who can't open an account at another broker, options traders who can make use of the $50 monthly cap on options fees, and newsletter subscribers who want the ability to stage recommended trades. If ChoiceTrade wants to expand outside that limited market, it must improve its platform and offerings to attract a broader customer base.
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