Updated June 12, 2015

TradeKing vs E-Trade

A comparison of old and new online broker for stocks
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Discount brokers are game changers. They allow individual investors to be self-reliant.

Once, it was mainly financial professionals who analyzed and researched the markets, developed investment strategies and executed trades. Now, with the rise of discount brokers, the individual investor can do those things too. And, perhaps most importantly, individuals can do it at a fraction of the cost of using a full-service broker.

ETrade vs. TradeKing

All discount brokers can make a similar claim – that they are cheaper than traditional full-service brokerage firms.

But that doesn't mean all discount brokers are the same. To illustrate this point, we look at ETrade, a well-established company founded in 1982, and compare it to TradeKing, which came on the scene in 2005.

The two companies have many similarities. They both allow stock and bond trading. They have retirement account options, facilitate mobile trading and tend to run promotions to lure new clientele. Yet, if you dig deeper, you find the companies are quite different and may be best suited for different types of investors.

5/8/2017 Update: TradeKing is now Ally Invest. Read our in-depth Ally Invest review.

Opening an Account:

Cash Accounts:
The companies' differences begin with their account requirements. ETrade requires at least $500 to open a cash account, but TradeKing (now Ally Invest) doesn't have an account minimum, making it available to more people.

Margin Accounts:
Both companies require $2,000 to open a margin account, but their margin rates vary. ETrade offers lower rates (as of June 24, 2014) for accounts with a balance under $5,000 or over $1 million, but TradeKing has the lower margin rates for the broad range of balances in-between.

Winner: TradeKing
Ally Invest

Platform and Tools:

Opening an account is one thing; using a company's service is another.

TradeKing
Overall, TradeKing's user experience gets positive ratings. While security is important, some investors do complain that security features are annoying when logging into the platform.

TradeKing has responded with TradeKing Live, a platform in-the-making that's supposed to be faster, more flexible and user-friendly than the basic platform. Current features include a customizable dashboard, live streaming data and intraday charts. But the company hopes to continue improving TradeKing Live by adding features like market stats, options tools and news feeds.

What does it take to get TradeKing Live?
Investors get free access to TradeKing Live if they make one trade per year or maintain a $2,500 balance.

ETrade
ETrade offers superior platforms, with better features, research and tools. ETrade is considered one of the best all-around trading platforms out there. The dashboard is innovative, easy use and simple to customize. Users can select from an array of features and do everything on a single page, like watch streaming quotes, make trades and review their accounts.

ETrade Pro is an even more powerful platform designed for active traders. It offers features such as extended trading hours, strategy scanners, options analytics and streaming news from CNBC.

What does it take to go ETrade Pro?
To get and keep free access to ETrade Pro, investors must conduct at least 30 trades per quarter. Otherwise, access costs $99.95 per month.

Mobile Trading: Trading on the go

Yes, both companies have mobile platforms. But ETrade is considered a trailblazer in mobile trading and its powerful mobile platform, which includes features such as voice recognition and bar code scanning, reflects this leading position.

Winner: ETrade
E*TRADE

Stock Trading:

ETrade charges $6.95 for stock and ETF trading. The rate drops to $4.95 if investors make over 30 trades in a quarter.

Still, TradeKing's flat rate of $4.95 is simpler.

Want to trade penny stocks?
Both companies allow trading of OTC and pink sheet stocks. ETrade charges investors its standard rate.

TradeKing loses its price advantage for penny stock trading. Not only does the company require a $100 minimum investment, it also adds a penny to each share of stocks that cost less than $2. The penny-per-share fee is capped at 5% of the trade amount, but a minimum commission of $4.95 applies.

Winner: TradeKing
Ally Invest

Trading Mutual Funds:

Both companies offer thousands of mutual funds, including a list of no-load funds. The major difference lies in the trading fees.

ETrade doesn't charge a fee on no-load funds, but will slap investors with a $49.99 early redemption fee if the funds aren't held at least 90 days. And ETrade charges $19.99 to trade other mutual funds.

TradeKing allows free trading of loaded mutual funds but charges $9.95 for no-load funds.

Winner: It’s a tie (depends on your preferences)

Options Trading:

ETrade charges $6.95 plus 75 cents per options contract, and the company reduces the base rate to $4.95 plus 50 cents per options contract for those who trade over 30 contracts in a quarter.

TradeKing charges a $4.95 base rate plus 65 cents per contract. TradeKing's fees for exercising and assigning options is much cheaper than ETrade's fees of $19.95 for those transactions.

Winner: TradeKing

Bond Trading:

Bond trading is cheaper at ETrade, where U.S Treasury transactions are free and bond trading costs $1 per bond with a $10 minimum.

TradeKing charges $4.95 per bond with a transaction minimum of $14.95, and charges $ 24.95 for U.S. Treasury transactions.

Winner: ETrade

Broker Assisted Trading:

Sometimes investors need a little help. If you're an ETrade customer, broker assisted trades are $25 a pop.

TradeKing cuts its clients a little slack, charging $20 for the service.

Winner: TradeKing

Customer Service:

Both companies receive credit for great customer service. When Kiplinger declared ETrade best online broker in 2012, the award included a five-star rating for customer service. But TradeKing customer service gets even more accolades, including a five-star rating from Smart Money every year from 2008 to 2012.

Still, when it comes to customer service, availability is a major factor, and here's how the two compare:

  • Chat Support: Both
  • Email Support: Both
  • Telephone Support: Both
  • Branch Locations: ETrade Only

ETrade has 30 branches where clients can get face-to-face assistance and attend seminars and other events. That counts for a lot.

Winner: ETrade
E*TRADE

Extra Goodies:

ETrade:

  • Futures Trading gives investors the ability to trade gold, energy or other commodities.

  • Banking gives investors access to services such as checking accounts with free bill pay, debit cards and fee-free ATM withdrawals.

TradeKing:

  • Trader Network gives investors access to a first-rate social experience. Investors can join groups and forums, discuss trades, toss around investment ideas and monitor trading activity on the platform or within the network. Investors can also read a variety of blogs written by market gurus and TradeKing staff.

  • Virtual Trading Platform allows beginners and investors with new strategies to practice with paper money first.

Who TradeKing is Best For

Being cheaper than competitors is a central part of TradeKing's business strategy. But the extra savings mean investors get a more basic service. Even without the extra frills, TradeKing is more than suitable for the average individual investor, and is the better choice for people who want to keep costs as low as possible. With its virtual trading platform and engaging Trader Network, TradeKing is especially ideal for new investors who have the opportunity to interact with more seasoned traders and test their investment strategies before putting their money at risk.

Read the Full TradeKing Review

Who ETrade is Best For

ETrade clients pay more and get more. The company's powerful platforms, extensive tools and tendency to lead in innovation make it a prime choice for savvy investors. It's the better option for investors who focus primarily on bonds, and its tiered pricing model and attractive rates on +$1 million margin accounts suggest the company aims to cater to highly active and heavyweight traders. ETrade is also the best choice for investors looking for the broadest range of services from a single provider.

Read the Full ETrade Review

    E*TRADE

    E*TRADE: Get 60 Days of Commission-Free Stocks and Options Trade

    Open a new account by 12/31/2017 and fund within 60 days of account opening with a minimum deposit or transfer of $10,000 to $24,999. No cash compensation for any unused free trade commissions. Terms apply. See E*TRADE website for details.

    Expires 12/31/2017

Michelle Smith is a contributing writer at CreditDonkey, a stock broker comparison and financial education website. Write to Michelle Smith at michelles@creditdonkey.com. Our data-driven analysis has been recognized by major news outlets across the country and has helped young adults make savvy financial and lifestyle decisions. (read more)

Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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Ally Invest Review


E*TRADE Review


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