Is Firstrade Legitimate?
If you have heard of all the excellent tools and services offered at Firstrade, you might be asking yourself if the broker is any good. You might also want to know if Firstrade is a safe place to invest your money.
Firstrade is a safe broker, and its services are surprisingly good. Keep reading to learn more about Firstrade and whether it would be a good place to invest your time, energy, and money.
Firstrade is a decades-old company that has been through many changes. Over the years, Firstrade has done a great job keeping up with industry trends and keeping its customer base happy.
Currently, you’ll see features like free options and penny stock trading, low-cost mutual funds, a range of account types, and several educational resources. Firstrade also offers a capable mobile application and several tools for advanced options trading.
Before getting into the details of why we like Firstrade, let’s answer some critical questions.
Is Firstrade a Scam?
Firstrade is not a scam.
Firstrade is registered with the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority). To maintain its status and licensure in the brokerage industry, the broker must adhere to all the rules and regulations administered by these oversight organizations.
In addition to keeping its business practices above board for industry regulators, Firstrade also follows the guidance of its insurers (SIPC) and clearing firms (Apex Clearing). Without doing so, Firstrade would not be able to stay in business.
Is Firstrade SIPC/FDIC Insured?
In terms of securing customer accounts and the funds within them, Firstrade and its clearing firm
provide two different levels of SIPC insurance.
Firstrade’s membership with SIPC comes with $500,000 worth of coverage, half of which can be used for cash claims.
Apex Clearing provides ‘Excess SIPC’ covering up to $37.5 million worth of coverage, $900,000 of which can be used for cash claims.
Excess SIPC kicks in after the first ‘layer’ of insurance has been depleted.
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Is Firstrade Secure?
As mentioned, Firstrade is obliged to keep customer data and trading activity safe. As a result, Firstrade’s servers, network connections, and on-sight storage are all subject to regular audits to ensure protection against emerging threats.
Firstrade BBB Rating
One place to look for evidence of a broker being ‘good’ is the Better Business Bureau’s website. The
BBB rates companies based on how they interact with customers and respond to complaints. While the
rating is not an exact science (customer interaction must take place on the BBB’s website), the rating
can provide clues.
Firstrade’s current rating is A-.
It should be noted that the A- rating is based on customer complaints, but there are a very low number of complaints. Only four issues have been reported over the past few years.
You’ll notice that Firstrade is currently not accredited by the BBB. That is not really a surprise, however. The BBB charges a fee for accreditation, and there is a lengthy approval process, as well.
The fact that Firstrade is not accredited simply means the broker has not gone through the trouble to achieve it.
Firstrade BBB Reviews
BBB reviews are usually an excellent place to get information about the customer experience. Unfortunately, that is not the case with Firstrade. There is only one review on the BBB for Firstrade, and it does not provide any helpful information. Apparently, the customer who wrote the review is having issues contacting the help desk and closing an account.
From our experience, Firstrade’s customer service is quite good. This issue has likely already been resolved.
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Is Firstrade a Good Firm?
Is Firstrade a good firm? Yes, we certainly think so.
Besides being a fully regulated and insured brokerage, Firstrade also offers one of the
lowest-cost investment experiences available today. It is also helpful that investors have access to securities like pink sheet stocks and foreign stocks.
If you are looking for even more to like, Firstrade’s stock lending program, generous promotional offers, and no-fee options trading are worth a look.
Keep reading for a more detailed review of Firstrade.
Available Securities
One thing we like about Firstrade is that it offers several different ways to interact with the markets.
Stocks/ETFs
Firstrade provides access to a large number of stocks and ETFs. You’ll find all the U.S. exchange-listed stocks, and some international products trading on the OTC market. Investors can also access penny stocks (Pink Sheet), ADRs, and more.
Firstrade’s commission-free approach makes trading at the broker simple and cost-effective.
Firstrade stands out (compared to other brokers) because OTC trades and options contracts are free. Other brokers charge as much as $6.95 per OTC trade and $0.65 per options contract.
Fixed Income, CDs, and Bonds
Firstrade’s maturity as a broker is quite evident in how it handles fixed-income securities.
There is a long list of fixed-income products to choose from, and investors do not need to worry about how to choose the right one.
Firstrade has a handy tool that allows you to create filters for all the criteria that are important to you. And, if you don’t know how to choose the correct criteria, there is also a ‘Fixed Income Guide’ to help you understand better.
Whether you are looking for Treasury products, municipal bonds, corporate bonds, Primary CDs, Secondary CDs, or any of the other available fixed-income products, Firstrade has you covered.
Forex, Futures, & Commodities
Firstrade does not offer forex or futures trading. Numerous ETFs and Indices are available that track the same equities and commodities. However, if you are looking for a futures broker, you must look elsewhere.
Account Types
If you are looking for a range of account types to choose from, Firstrade has many good options.
Brokerage Account
If all you want to do is invest in the stock market, the regular brokerage (investing) account should meet your needs. Firstrade provides brokerage accounts with and without margin.
IRA
If you are interested in building your IRA at Firstrade or rolling one in, your account options include a Traditional IRA, a Roth IRA, a Rollover IRA, and a Small business Retirement plan.
International
If you are not a U.S. citizen but still want access to the U.S. financial markets, you can easily create an international account with Firstrade. International accounts are the same as regular brokerage accounts at Firstrade. However, the type of information you need to present during the application process is slightly different.
It is also good to point out that Firstrade only allows international accounts for residents of the following countries:
ESA Education & Custodial
If you want to save for a young person’s future, the ESA Education and Custodial accounts are Firstrade’s response.
The ESA Coverdell account is a tax-deferred account that allows for tax-free growth. However, the account must be used for its intended purpose.
The Custodial account is a brokerage account operated and funded by the custodian. All assets in the account belong to the beneficiary of the account.
Cash Management
Cash management is becoming popular at brokerages, and Firstrade also provides one.
You can apply for the cash management account if you have a minimum account balance of $25,000. Firstrade gives you an ATM/debit card to access your funds from virtually everywhere. The nice thing about Firstrade’s take on cash management is that there is no separate account for it.
The money in your brokerage account can be accessed and spent with your card, and there is no need to transfer funds between internal accounts.
Trading Tools and Platforms
Firstrade provides plenty of trading tools to help traders become informed and make thoughtful decisions.
The website is the main trading portal, and all the expected features are present. You can review data related to the overall market state, individual sectors, and specific securities. You can create watchlists, screen for investment ideas, view charts, and keep up with the news.
The mobile app is also a solid addition to Firstrade’s trading tool lineup. Navigation and trade execution is intuitive and straightforward. In many cases, the app is sufficient for placing and managing trades. However, if you want to take advantage of tools like Firstrade’s Options Wizard or screener, you’ll need to use the website.
If anything is missing, it is a dedicated trading platform. There is no advanced charting option or complex toolset for day traders who require fast, robust software.
Fees and Commissions
One of the more attractive features of Firstrade is its pricing schedule.
Trade Fees
For starters, trades are free. Unlike many other brokers touting zero-commission pricing, Firstrade doesn’t add any contract or management fees to securities that are usually exempt from the zero-commission policy.
That means OTC market securities, options contracts, and mutual funds (load/no load) can be traded at no cost.
Margin Rates
Margin rates are Firstrade are competitive. Rates range by 4%, depending on the account balance:
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Debit Balance
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Firstrade Margin Rates
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above $1,000,000
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9.75%
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$500,000 - $999,999
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11.25%
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$250,000 - $499,999
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12.25%
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$100,000 - $249,999
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12.5%
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$50,000 - $99,999
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13%
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$25,000 - $49,999
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13.5%
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$10,000 - $24,999
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13.75%
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$0 - $9,999
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13.75%
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Bonuses and Special Offers
Firstrade offers several promotional items that we think deserve mention. There are bonus offers for account and wire transfers. There is also a bonus offer for referrals.
Referral Bonus: Free stock for each new referral.
Firstrade’s referral bonus allows you to continue referring friends until the value of your free stock (calculated at the time of transfer to your account) reaches $500 in a single year.
ACAT Transfer Rebate: Firstrade reimburses new customers for ACATS transfer fees charged by the ‘other’ broker. Firstrade will rebate up to $200.
Customer Service
Customer service at Firstrade is good, but it isn’t as fast as some of the competition. Unlike many other brokers, there is no option to chat with an AI or live representative to resolve any issues you have. Instead, you can search through the FAQs to find answers to common questions, send an email, or give them a call. Calling is the quickest way to get the help you need.
Here is how to reach Firstrade’s support center:
Which Investors Does Firstrade Cater To?
Firstrade can be a good choice for many different types of investors.
For anyone looking for a safe, low-cost broker with a long list of investible securities, Firstrade would be a good fit. Firstrade is especially good for OTC market traders (including penny stocks) and anyone interested in trading advanced options strategies with multiple lots. Longer-term investors and those looking to diversify across a range of products and markets will also be right at home.
Firstrade is not the best choice for anyone looking for access to futures or forex. The lack of advanced technical trading tools may also deter traders who depend on charts and technical studies.
Firstrade Advantages and Disadvantages
Firstrade is a strong broker with many positive attributes. Whether you have the same opinion will depend on what you need and expect from your broker.
Here are the pros and cons as we see them.
Awards
Firstrade Pros
- Good variety of investible securities
- Good variety of account types
- Zero commissions on OTC securities
- No options contract fees or commissions
- Options and Mutual funds wizards are helpful
- Cash management option with debit card
- Excess SIPC provides additional protection
Firstrade Cons
- No dedicated trading platform
- No forex
- No futures
- Website may feel dated to some
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Updated on 6/28/2024.
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.
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