TradeMonster Review

Trading at a discount

TradeMonster are one of the larger discount brokers in the options trading market. Founded by Pete and Jon Najarian in 2006, they have made their name offering high quality, detailed trading data without attaching excessive premiums to their product. Under the guidance of their parent company, optionMonster, they have also branched out into spread betting and individual stock trades, in addition to setting up their head office in Chicago — the historical home of options trading.

Self directed investors will feel the most benefit from TradeMonster due to the comprehensiveness of their product, however they also have a respectable list of clients who trade tens of millions of dollars each and every year. This confirms our initial opinion of TradeMonster; a cheap, dependable and reputable broker which will be more than adequate for any trader, large or small.

If you’re going to be trading a bit of volume, or if you are working on low margins, then the cost of dealing is going to be important to you.  TradeMonster’s commissions are among the lowest in the industry. In fact, moving your trading to them could save you as much as 30% on your dealing commission: and that’s a sizeable slice of encouragement to open an account. But traders know that it’s not all about commissions. Here I look at other factors you’ll want to consider.

A growing reputation

tradeMONSTER was named in the Best for Options Traders category by Barron’s in 2010, 2011, and 2012. And last year it was also named as the top ‘Web Only Broker’ by the same publication.

It has also spread its wings to cover stocks, bonds, and mutual funds as well as options and futures.

Charges

Okay, so its commissions are among the cheapest in the business, but if you want to trade on margin you’ll be paying between 2.75% and 6.25% over Fed Funds, and that 2.75% rate is for debit balances of $1 million plus.

If you’re trading up to 10,000 contracts per month, the dealing cost is 50 cents per contract with a minimum of $12.50 per trade, or $15 minimum for a spread trade. A trader who is executing at least 100,000 trades per month sees this per contract cost fall to just 10 cents, with respective minimums of $3.50 and $8.00.

There is also a raft of charges for different account operations, from $5 per paper statement to a rather large $50 for internationally wired funds.

Opening an account

Opening an account is done completely online, and takes around 10 minutes. New traders might want to step away from the $2,000 minimum deposit, but if you want to try out the system first then its paperTrade account can be opened with no money. Doing this will help you to see the power of its trading platform.

Trading through tradeMONSTER

As you’d expect from any trading platform, real time quotes are streamed free of charge. Trading is made simple with a number of trader centric tools.

Hot Ticket allows orders to be placed directly to market from the option chain, and option spread trades can be built stress free using available expiration dates and strike prices displayed in drop down prices. Risk on the spread is shown graphically for a number of price changes on the underlying stock. That’s a pretty neat visual tool.

There are also several other trader tools to enhance your experience, including adjustTrade (to help you make changes to an existing strategy), Exit Plan (designed to help minimize losses and lock in profits), and tradeCycle (which really helps a trader to become disciplined in his trading approach, using research tools, strategies, and exit planning).

Other website resources

For those new to options trading, tradeMONSTER has an educational resource aimed at beginners as well as more advanced guides for intermediate experience. You can learn to use the trading platform and its charting and analytical tools through its paperTrade application. This is designed to help those new to tradeMONSTER become familiar with placing orders and monitoring positions, and, just as importantly, allow existing traders to test and perfect strategies.

Summary

tradeMONSTER has a number of tools and applications that experienced traders will appreciate. It makes spread trading easy, and strategies can be built, tested and enhanced, and even auto-traded using third party trading direction. Its graphic and visual indicators and risk management tools and applications will benefit strategy traders and high volume traders alike, though its charting tool, while being workable, is not the best on the market.

Trading through tradeMONSTER is, overall, cost efficient, and seasoned traders will find the platform can add value to their trading. But those new to options may find it a step or two too far.