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SpeedTrader Review

SpeedTrader is an on-line brokerage firm that offers frequent traders attractive commission rates. The more you trade lower the commission. The company offers 3 trading platforms to choose from:

  • SpeedTrader 2.0 – This is the company’s free browser based direct access trading platform.
  • SpeedTrader PRO costs $49 per month. The fee is waived for clients who generate commissions equal to or greater than the total amount of fees incurred that month. With SpeedTrader PRO customers get NASDAQ (level 1), NYSE, and AMEX (level 1) quotes, news headlines, a Hi – Lo Ticker, advanced charting and a free training account.
  • Sterling Trader Pro costs $150 per month. It delivers a whole range of trading tools with reliable, live market data, optimized performance, and a customizable platform covering a broad range of execution and management tools.

The company offers trading in several investment products like stocks, options, futures, futures symbols, no-load mutual funds, FOREX, bonds, and exchange traded funds (ETFs). The commission structure is as follows:

  •  Stocks and ETFs can be traded at $6.95 per trade.
  •  Stocks and ETFs can also be traded on a per share basis for $0.0039 per share, with a minimum of $0.99 per trade.
  •  Electronic futures trades will cost $1.00 per contract (plus exchange and NFA fees).
  •  Options can be traded for $1.00 per contract.
  • Bonds trades cost $50 per ticket.
  • Mutual funds that have no entry and exit loads can be purchased and sold for $50 per order.

Key features:

  • Point and click enabled trading.
  • SpeedTrader Pro helps users set up visual alerts that can be used to automatically alert the user of possible trading opportunities as and when they develop.
  • Sterling Trader Pro software allows users to set up a pre-defined order that executes based on his or her alerts. One can have the software automatically generate a buy, sell or short order on any stock as soon as their alert is triggered.
  • Sterling Trader Pro allows placing both a stop loss order and a target price order simultaneously. This way one can cover their downside with a stop order and take profits with a target order.

Advantages:

  • Low commissions for frequent traders, who trade several times during the month.
  • Free streaming live Level I or Level II quotes from major exchanges such as the NYSE, NASDAQ and AMEX.
  • Professional trading platform with several enhanced features.
  • Free intra-day charting on several stocks and ETFs.
  • Virtual trading for users, wherein traders can test their strategies before they execute real-time.

Drawbacks:

  • There is a $30 quarterly inactivity fee if less than 15 trades are placed.
  • The software provided is expensive and has steep fees associated with it.
  • Mutual funds commissions are extremely high.
  • There is a $35 annual IRA fee and a $25 IRA fee is incurred for opening an IRA.
  • To exercise options a fee of $30 is charged for each assignment.

Peer Comparison:

When compared to the leading player in the industry Charles Schwab (NYSE:SCHW) Stockbrokers.com rates SpeedTrader favorably only on the commissions incurred by the end user. SpeedTrader ranks below Charles Schwab in several key areas such as the range of investment offerings provided, the available research tools, customer service, the ease of use, education of its users and mobile trading facilities.

When compared to E Trade Financial Corporation (NASDAQ:ETFC) SpeedTrader fell behind in all the above areas rating favorably only in terms of the commission it charges its end users.

When compared to smaller rival ShareBuilder SpeedTrader ranks favorably on the commissions charged, the customer service provided and on the range of investment offerings provided.  SpeedTrader however ranks lower on its mobile trading platform. Both companies rate equally in other areas such as the available research and education tools and the ease of use.

SpeedTrader ranks below its rival Scottrade when rated on the basis of its investment offerings, ease of use and investment research capability. It matches Scottrade in the customer service provided and the commission rates charged

Summary:

SpeedTrader is an on-line brokerage firm that targets predominantly very active traders who are in and out of the market several times in a month. The company’s offerings are definitely not the right choice for new investors who have a longer time horizon. Given the high annual IRA maintenance and set-up fees charged it is also not a good fit for an individual retirement account. There are far better IRA companies that don’t charge retirement account and inactivity fees.

SpeedTrader’s trading platform is reasonably fast and efficient but their research tools such as charts and investment analysis tools remain largely poor. The platform comes at a price of $49 per month which is on the higher side. Users, however, could simply trade with their browser-based system for free. The firm also offers free virtual trading that helps customers practice trading and test various trading strategies without risking real money.

The biggest disadvantage of SpeedTrader is that you need to make a minimum of 15 trades per quarter.  Otherwise users will end up paying $120 a year to maintain their account at SpeedTrader. The fee rises to $155 a year for an IRA. If the end user is an investor and not an active trader, he or she is much better off with the likes of a Charles Schwab or an ETrade as opposed to SpeedTrader.

Any broker without a long term strategy is not bound to be successful in a highly competitive industry with predatory pricing. Low commissions may just prove to be a marketing gimmick to lure new customers. Building a stable base of customers requires a serious upgrade to SpeedTrader’s existing platform.

Customer service must be significantly improved, the software provided must be cost effective and an enhanced platform of research must be made available to its clients. Only this will ensure that those virtual traders using SpeedTrader will eventually morph into real customers of SpeedTrader.

 

 

 

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