October 5, 2018

Firstrade Review: Is It Good?

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In a perfect world, investors look for low commissions, a clean user interface, and plentiful research. Oftentimes you have to give up one of these features to have another, but not with Firstrade. This online discount broker offers a variety of benefits for new and established investors.

Firstrade has been in business for the last 30 years - they are not your fly-by-night company trying to take a stab at the latest discount broker craze. Firstrade has gone through a plethora of changes, aka platform facelifts, to provide clients with today's user-friendly and research-rich platform.

Keep reading to see if Firstrade might be a good fit for you.

How Does Firstrade Work?

First, you should know your investments with Firstrade are self-directed. That's how discount brokers work. You benefit from the lower commissions, but you have to do the work yourself. By work, we mean the research, inputting the trade, and deciding when to sell. You won't have a human broker whispering in your ear, giving you advice - it's all up to you.

At Firstrade, you can trade the following investments:

  • Stocks
  • Options
  • ETFs
  • Mutual Funds
  • Bonds
  • CDs

You can trade these securities in a variety of accounts, including individual or joint taxable accounts, custodial accounts, as well as a variety of retirement accounts, including traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs. Firstrade also offers international accounts for investors abroad who want to invest in the US market.

Is Firstrade Safe? Firstrade doesn't guarantee returns on your investments with them, but they are a member of the SIPC, which provides protection should Firstrade go out of business. If this happens, your investments are protected up to $500,000, with up to $250,000 coverage for cash balances. They also offer additional insurance through Lloyd's of London. This supplemental insurance provides protection up to $37.5 million (cash balances up to $900,000).

Neither of these insurance policies is a guarantee against a market decline or bad investment decisions, though.

What Are the Fees?

Living up to its name as a discount broker, Firstrade offers a flat fee for stock trades of $2.95 per trade. Options cost $0.50 per contract in addition to the $2.95 trading fee.

Firstrade also charges $9.95 on transaction fee mutual funds and $19.95 per trade for broker-assisted trades.

How to Reach Customer Service:
Firstrade offers several ways to get in touch with customer service:

  • Live chat: Available Monday - Friday from 8 AM to 6 PM
  • Phone customer service: Available Monday - Friday from 8 AM to 6 PM
  • Email: service@firstrade.com

How Is the App?

Firstrade's mobile app is available in both the Apple and Google Play store. The app allows you to view your dashboard, access advanced charts, see real-time pricing, and even execute trades while on the go. They recently added fingerprint recognition to enhance the safety of the app while giving clients the convenience of constant access to their portfolio.

What Is the Minimum Deposit Required?
Firstrade doesn't require a minimum initial deposit. You can open an account without making a deposit, which could be good for beginners. But in order to start trading, you'll need cleared funds in the account, which makes sense as you need money to make trades.

You should know that funds up to $5,000 take up to 2 business days to clear in your Firstrade account. If you deposit more than $5,000, only the first $5,000 is available after 2 business days. The remainder is available after 4 business days.

Understanding the Free ETFs

Firstrade has a large selection of commission-free ETFs. Today, they have over 700 commission-free ETFs available. Firstrade offers ETFs from Vanguard, ProShares, Wisdom Tree and many more. The ETFs span across 8 asset classes and 40 fund families. More than 500 of the available commission-free ETFs have a Morningstar rating of 3.5 stars and above.

It's important to note, though, if you sell/trade your commission-free ETF within 30 days of its purchase, you will pay the standard trading commission of $2.95.

Covering the Transfer Out Fee: If you are an investor with another broker and want to transfer out to Firstrade, you won't pay any transfer fees with Firstrade.

Sometimes Firstrade offers promotions where they pay for the transfer out fees that your current broker charges. You'll need to provide a statement showing the fees paid in order to get reimbursed.

Reasons We Like Firstrade

  • You can set up customized alerts. Sitting and watching stock tickers all day long is not only unproductive, but also stressful. Firstrade allows you to set up alerts that let you know when a specific stock(s) changes position. This can save you time and stress. Once you receive the alert, you can decide how to proceed.

  • Firstrade offers an Options Wizard to make options trading a little easier. No matter which way you slice it, trading options can be confusing. Firstrade's Options Wizard provides feedback on the trades you want to make. You can use this feedback on your chosen strategies to help you decide if you should move forward with the transaction or change your strategy.

  • Clients have access to quality research. Firstrade provides access to Morningstar research right on its platform. You'll receive access to the daily updated reports from Morningstar so you have objective information that can help determine your decision for stock trades.

  • Firstrade offers detailed educational opportunities that could help the beginning or experienced investor. Their website offers "crash courses" on stocks, options, ETFs, and mutual funds. They also offer a section titled "Upcoming IPOs," helping you to decide if you want to jump on a new up-and-coming offering.

  • You can customize your dashboard. You have the ability to make the dashboard that works for you. You can customize the columns and data streams so you see the information you want and will use. Once you customize your dashboard, it will remain that way every time you log into your account.

  • You can access Order Entry from any screen. The "Quick Bar," which is the Order Entry dashboard on Firstrade, is located at the bottom of any screen you click on in your account. This gives you one-click access to orders if you need to make them fast.

  • Firstrade offers extended hours trading. You may have access to pre-market (8:00 AM - 9:25 AM) or aftermarket (4:05 PM - 0 8:00 PM) trading. This gives you the ability to take advantage of new earnings or research released prior to market opening or after the market closes.

  • The platform is easy to use. Firstrade's platform has gone through many facelifts, which has created today's easy-to-navigate platform. Everything is labeled clearly, easy to follow, and provides instant access to orders, research, and account overviews.

  • Large investors can have access to a dedicated financial representative. If you have more than $50,000 invested with Firstrade, you get access to a dedicated financial professional. All other investors with less than $50,000 invested receive standard customer service.

  • Firstrade offers a 0.1-second guarantee. This guarantee promises that your qualifying S&P 500 market order will take less than 0.1 seconds to execute. If it takes longer, you may be eligible for a commission-free transaction.

Does Firstrade Charge a Transfer Out Fee?
Firstrade does charge a $75 fee to transfer out your full account balance to another broker. If you do a partial transfer out, Firstrade charges $55.

Reasons You May Want to Look Elsewhere

  • If you need customer service outside of the normal business hours, you have to resort to a "bot." The Chabot Sammi is available 24/7, but this is not a live person, which means you get predetermined answers based on the keywords in your questions.

  • You must manage your investments. Firstrade doesn't have a robo-advisor or fully managed portfolio option. You can pay for broker-assisted trades, but you must still manage your portfolio. There is no option for hands-off investing.

  • The stocks screener offers only a few options. If you like to narrow down your stock choices to certain criteria, you may find the filters on Firstrade lacking compared to other discount brokers today.

How it Compares

Robinhood: Robinhood offers commission-free trades on stocks, ETFs, and options. But they don't offer mutual funds, whereas Firstrade offers more than 12,000 mutual funds. Neither Robinhood nor Firstrade requires a minimum deposit to open an account.

E*TRADE: E*TRADE charges higher commission fees than Firstrade and doesn't have as many commission-free ETFs available (200 vs 700). One feature E*TRADE offers that Firstrade doesn't is futures trading. All other things considered, E*TRADE and Firstrade are good competitors except for the higher fees E*TRADE charges.

Ally Invest: Ally Invest offers stocks, options, mutual funds, forex, and futures trading. Just like Firstrade, though, Ally Invest doesn't have a minimum investment requirement.

Bottom Line

Firstrade is a solid option for beginning investors thanks to their robust education and research opportunities. With no iminium deposit required and low commission fees, Firstrade seems to be a fierce competitor for many other discount brokers available today. As you shop around for a broker, make sure you read the fine print regarding all services you would need/use to help you make your decision.


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