For most investors, finding a platform with low commissions is important, however, that usually means you will have to give up other important features such as a good user interface, investor education, and research among others. Therefore, having all those features and low commissions without giving one up may mean you have found the most suitable online discount broker.
The fact that you can access your trading online gives you more control over your portfolio and allows you faster responses when your stock falls or rises. For new investors, online brokers may be a great way to dip your toes into stock markets with minimal investment. However, different brokers offer different services and fees, adding to the confusion of getting the perfect platform.
In this Firstrade 2019 review, we look at one of the first online discount brokers that offer $0 stock and options trading without giving up the most important features. However, you may have to make sacrifices on research and some limited tools.
What is Firstrade?
Firstrade is one of the first online investment brokerages together with Charles Schwab, Robinhood and others, and started its online operations in 1997. At that time, there were less online brokers and most people were on very slow internet and computer speeds. The company was founded in 1985 by the current chairman and CEO, John Liu, as First Flushing Securities in the Flushing neighborhood, Queens New York. At the time, it served the local community’s investment needs and achieved steady and organic growth.
However, the company experienced the most growth when it was renamed to Firstrade Securities and launched Firstrade.com in 1997. The site has since undergone several revamps to keep up with the growing number of users, to add investor tools and technology. In 2010, the company signed an agreement with TSG for cross border securities trading business.
In August 2018, the company eliminated its commissions on trades of stocks, ETFs, options and mutual funds excluding broker-assisted trades. This will help it stay competitive with new platforms such as Robinhood and others that also offer free trades.
The platform offers a wide range of investment options including stocks, options, mutual funds, exchange-traded Funds (ETFs), Bonds, and margin investing. Firstrade also offers dividend reinvestment whereby you can grow your portfolio by putting back your earnings into more investments. The company has a unique securities lending program where investors can earn an extra buck by lending their stocks to other financial institutions.
Your investments with the company are self-directed, meaning the platform offers the tools, calculators, educational resources and trading technology but you have to do all the work by yourself without any advice. This includes research, trade and deciding the right time to buy or sell. The platform also offers trading tools in traditional and simplified Chinese as well as Mandarin and Cantonese toll-free phone support. The company has been in operation for over 34 years meaning it is not just passing by. It had total assets of over $2.3 billion in 2015. Is it the best platform for you? Read on and find out.
Firstrade Pros and Cons
- Free trades – the platform provides $0 cost stock and options trading unless you choose broker assistance
- No minimum deposit – the platform does not require an initial minimum deposit making it more investor-friendly for new investors
- It supports international accounts – while many investment companies restrict their client base to the US, Firstrade accepts investors from several authorized foreign countries who want to invest in US markets
- Interest on free cash balances – however, the interest is just 0.01% and you require a $25,000 in your account
- User-friendly desktop and mobile platforms
- Wide range of trading tools – the platform offers educational resources and tools to make the investment process easier.
- Large number of commission-free ETFs – Firstrade offers more than 700 commission-free ETFs
- Customer support is not available 24/7 – You only get human customer support during working hours. Outside of that, you will have to use a chatbot
- No forex, crypto or futures trading as offered by other platforms, for example, TD Ameritrade
- Their education and research resources are not as extensive as they are in competing platforms. They are also not as diverse
- There are no managed portfolio options for those who would like professional services for their investment portfolio. This makes it only suitable for do-it-yourself investing.
How Firstrade works
Like other discount brokers available, all investments you make with Firstrade are self-directed. The platform gives you the means and you do all the work yourself. It does not offer professional management services so all the investment actions and decision will have to come from you, the investor. The platform allows you to open regular brokerage accounts, custodial accounts and IRA accounts where you can invest in a tax-efficient way.
The platform provides additional resources for learning investors including a dedicated tax center page that provides important data and timelines for investment purposes. It also lets you access common tax forms. You will also get strategy guides that contain information on different investment strategies.
The platform operates under FINRA regulations and is a member of SIPC, which provides investment protection for up to $500,000 including up to $250,000 in cash claims. The platform also has additional protection of up to $150 million via its clearing firm, Apex Clearing that adds to the SPC protection. The platform has premier accounts for investors bringing substantial investment. For $10,000 and above, you qualify for blue account, $50,000 and above you get the gold account, $100,000 and above investments get you platinum account.
Getting started on Firstrade
To take advantage of the commission-free trades on the platform, you will require an account. Click ‘open an account’ on the top menu to access the registration forms. On the first page, you will fill your name and email address if you are an American resident. If not, click the link provided to open an international account. The second step is choosing the type of account you want to open and adding more features to your account. These include extended hours trading, margin trading and options trading privileges. The next step will require you to fill in your personal details.
Enter your employment and financial information, the platform will also ask you your investment experience and objectives in order to determine your risk level. You can also add a trusted contact in this step.
The next step is funding your account, add the bank you will use to fund your account or choose to set up this later in the account. Confirm the information you have provided and set up your account and you will be ready to invest.
Accounts available on Firstrade
The platform offers different types of accounts including
- Individual, joint, custodial brokerage accounts
- Retirement accounts – Rollover IRA, Roth, traditional, simple, SEP IRAs, profit sharing plans, money purchase plans
- Investment club
- Partnership and sole proprietorship accounts
- Education savings (Coverdell ESA)
- Corporate and LLC accounts
For international accounts, you can only open one in China, Taiwan, Hong Kong, Israel, Japan, New Zealand, Macau, Mexico, Singapore and the Republic of South Korea. To open accounts from those countries, you will require a phone number where the platform will send a verification code to.
Extended hours trading – Firstrade allows you to place trades before and after traditional market hours. This enables you to act on news, earnings and research reports that may be released before the market opens or after it closes. However, only limit orders can be placed outside regular intraday trading. You are also allowed to modify your order before it is executed. This includes price changes and cancellations. The available securities include those listed on NYSE, NASDAQ or AMEX. OTC, bonds, stocks, funds, options and other securities can only be traded during regular market hours. The premarket hours are 8:00 AM – 9:25 AM and aftermarket hours are 4:05 PM – 8:00 PM
Account protection – Firstrade is a member of the Securities Investor Protection Corporation that protects your investments up to $500,000 including $250,000 in cash claims. The platform’s clearing firm, Apex Clearing has an additional insurance policy that becomes available in the event SIPC limits are exhausted. It provides protection up to an aggregate limit of $150 million.
Free Dividend Reinvestment plan (DRIP) – Firstrade allows you to automatically accumulate your positions every time you receive a dividend. This feature allows you to compound returns without having to place an order.
- Eligible stocks must be above $4.00 per share whether domestic or the selected foreign securities.
- The reinvested shares are purchased at the market price on the dividend payment date
- Fractional shares will be received if the dividend amount is not sufficient to buy one share.
You can enroll or opt out of the free Dividend Reinvestment plan any time.
Upcoming IPO list – Firstrade provides a list of the upcoming IPOs every month to help you maintain a diversified portfolio or just be prepared. The list includes the company name, Symbol, the market it will trade in, price, share amount and the offer amount.
Firstrade Financial Planning Calculators – the platforms provides several calculators to help you plan your investing activities. These include current net worth calculator, college savings calculator, becoming a millionaire calculator among others.
Firstrade Platforms and tools
This is the trading platform for advanced traders that require in-depth analysis and more advanced features such as charting and technical analysis. With the Firstrade navigator, you can manage and trade from one screen. Stream real-time account and market data, customize widgets by adding and dragging. The platform also provides advanced technical charting and has an adjustable layout so you can customize your experience. Navigator is available to all iPad users. To get it on desktop, you have to email customer service.
Firstrade Options Wizard
Firstrade offers the options wizard as a primary offering on the platform. It provides you with instant feedback on the value and likelihood of success of any option that you are considering using sophisticated analytics. This helps you formulate the best options strategies.
These tools allow you to narrow your investment choices using predefined criteria. The screeners allow you to pick from dozens of criteria using tick boxes. The screeners are integrated with the Order Entry Bar to make screening and subsequent buying easier. You can also save your criteria choices for future reference. The platform provides 3 screeners.
- Stock Screener – enables you screen stocks by market capitalization, sector, revenue and Morningstar rating
- ETF screener – enables you to screen stocks with criteria including fund family, size, Morningstar rating and performance history
- Mutual Fund Screener – helps you filter over 10,000 mutual funds by fund family, minimum purchase returns, etc.
Research and education
Firstrade provides enhanced research tools to help you make informed portfolio decisions. This includes free access to Morningstar stock reports and video commentary, instructional videos, articles and guides and even podcasts.
The platform provides free online trades in stocks, ETFs, options and mutual funds. For fixed income, treasury bills, municipal and agency bonds, zeros, stripes, and secondary market CDs are on a net yield basis where they will be subject to a markup or markdown. Primary Market CDs have a $30 charge. For broker-assisted orders on stocks and ETFs, the fee is $19.95, for options, it is $19.95 + $0.50 per contract.
Is Firstrade for you?
The platform is appropriate for small self-directed investors who are comfortable trading online or those looking to trade without fees.
Firstrade review 2019: Verdict
Firstrade is an excellent platform for DIY investors who just need the means and tools to invest. Like TD Ameritrade, Firstrade offers a wide range of investments, a friendly user interface and all the necessary tools and resources. The platform is beginner-friendly, as it does not require a minimum account balance and the free trades it offers. However, the platform may not be suitable for you if you prefer hands-off investing or professional investment management. Other than that, the platform is worth a shot.
The company claims it has highspeed backup connections and excess capacity to handle unexpected increase of activity. They also have a fully functional redundant backup location in case of emergency Yes, although the funds must be deposited in USD and you must have the required tax and identification documents No, currently the Firstrade services are not available in Canada Yes, eligible free credit balances in your account earn interest. The interest is calculated on the entire daily balance and credited to your account monthly. Firstrade accepts most common types of orders including market, limit, stop and stop-limit, along with qualifiers such as good for 90 days, all or none, and many more. You can place an order through their registered brokers at a $19.95 fees No, there are no fees associated with that.
The company claims it has highspeed backup connections and excess capacity to handle unexpected increase of activity. They also have a fully functional redundant backup location in case of emergency
Yes, although the funds must be deposited in USD and you must have the required tax and identification documents
No, currently the Firstrade services are not available in Canada
Yes, eligible free credit balances in your account earn interest. The interest is calculated on the entire daily balance and credited to your account monthly.
Firstrade accepts most common types of orders including market, limit, stop and stop-limit, along with qualifiers such as good for 90 days, all or none, and many more.
You can place an order through their registered brokers at a $19.95 fees
No, there are no fees associated with that.