In this Firstrade review, we have determined that in order to compete on price, Firstrade had to make multiple sacrifices in the way of research and software.
Firstrade started in 1985 as First Flushing Securities in Queens, New York, where it is still headquartered. The brokerage house launched its website in 1997 and renamed itself. The broker caters to the Chinese-speaking community and has been awarded several prizes from leading financial publications. In this Firstrade review, we attempt to quantify it’s value to various types of traders.
Stock and ETF transactions are now free at Firstrade. There is no limit to the number of shares that can be traded at this price. Using a live agent to complete a trade over the phone adds an additional $17. The broker-dealer does not offer a per-share commission schedule or discounts for active traders.
Firstrade switched from commissions of $2.95 per trade at the end of 2018, making them a viable alternative to brokers like Robinhood. With these very competitive commissions, it seems that they’re trying to compete with big discount brokers like TD Ameritrade and TradeStation by offering free trading alongside quality trading tools.
Option contracts used to run 50¢ per contract but were switched to $0.00/contract as Firstrade made its shift to free trading.
Firstrade does not charge any on-going fees, such as low-balance, inactivity, or annual charges. An account can be opened with a $0 balance.
Firstrade doesn’t have a desktop platform, or even a browser-based one, so there are no software fees to speak of.
Margin and Leverage
Margin accounts are available at Firstrade. The broker’s margin schedule starts at 8.50% and decreases to 4.5% for debits over a million dollars. Margin requirements are the same as stipulated in Reg T: 50% for initial, and 30% for maintenance.
Because of Firstrade’s bargain basement prices, the brokerage firm does not have the best trading tools around. In fact, there is no desktop software or browser platform. All trading takes place on the Firstrade website, which isn’t saying very much. I found the site to be easy to navigate, but there’s not much sophistication to it, and information is simply pulled from Morningstar.
Firstrade’s order forms are very basic. Real-time quotes are displayed, and these can be refreshed. Bid and ask prices are shown with sizes. Besides limit and market orders, there are stop, stop limit, and trailing stop (both as a percentage and dollar amount).
The duration of an order can be set to day, GTC (there’s a three month maximum), pre-market or after-hours only, and day session plus extended hours.
I was even more disappointed with Firstrade’s charting. As with data, the chart is taken from Morningstar. It cannot be displayed full screen, and it can’t be detached, either. There are only about 30 technical studies available and 5 drawing tools. By comparison, Ally Invest, which is also a low-cost broker, provides 90 technical studies and 10 drawing tools.
What I did like about the charting software was the ability to display price ratios (such as price/book and P/E) beneath a graph. Company events can be overlaid, and a graph can stretch back 35 years.
One tool that I did like was the website’s trade bar. It sits at the bottom of the browsing window and has the ability to place orders quickly for stocks, ETF’s, and options. Vital data, such as volume and last trade price, is displayed for an entered ticker symbol.
The trade bar can show a small graph, security news, and Morningstar’s rating. Option chains can be expanded above the trade bar, and clicking on a bid or ask price populates the tool.
Firstrade’s mobile app offers advanced charting tools, including technical indicators and several graph styles. The aspect that I found very disappointing, however, was the inability to rotate a chart horizontally.
Besides charting, there are option chains, although strategies are absent. The trade ticket is easy to fill out and includes all the website’s order types and duration selections.
The Firstrade website has a learning section called Education Center. There are several articles and videos that cover a range of securities topics. These include the basics of margin accounts and how to use a trailing stop order. Stock analysis from Morningstar is also available.
Firstrade has customer service associates on the phone from 8 o’clock in the morning, EST, until 6 o’clock in the evening, Monday through Friday. The company is closed on the weekend. Besides phone service, there is also on-line chat.
Executions and Routes
Firstrade does not offer direct-access routing. The broker chooses the best venue based on its trading software. The company does have a 0.1 second execution guarantee. If a market order for an S&P 500 stock fails to complete in under a tenth of a second, the trade is commission-free. The number of shares must be between 100 and 500 to qualify.
Firstrade permits short positions on equities, and the broker’s initial margin requirement is 50%. The firm does not usually allow hard-to-borrow stocks to be shorted on-line. Some stocks that aren’t classified as hard-to-borrow could still be charged HTB fees.
Type of Trader Firstrade is Best For
Firstrade is ideal for investors who want the lowest possible per-trade commission without sacrificing too many services. Firstrade’s fee schedule is competitive with Robinhood, especially considering they provide much better trading tools.
- Free trading
- One of the best per-trade commission schedules in the industry.
- Large selection of mutual funds with a low $9.95 transaction fee.
- Firstrade pays interest on free cash balances.
- IRA’s are available with zero fees.
- Dividend Reinvestment Plan is free of charge.
- The lack of trading software is a glaring disappointment, and this will drive many active traders to other firms.
- Firstrade’s list of commission-free ETF’s is much smaller than E*Trade’s.
- No futures and forex, which TD Ameritrade does offer.
- Firstrade only offers equity research from Morningstar. Schwab, by comparison, provides stock reports from more than six analysts
Despite its flaws, Firstrade provides a good value in brokerage services. Traders who buy and sell stocks, ETFs, and options with many shares or contracts per trade will find a good deal here. This Firstrade review should give you enough information to help you determine if you want to go with Firstrade