(Update 1 July 2023: This foreign broker is not recommended anymore. Read more here.)
Recently, I found a new foreign broker which is open to Malaysians and allows commission-free trading. In this Gotrade review, I will share my experience of using it to trade US stocks.
Why Gotrade?
I have two foreign brokers (Firstrade and ToledoTrade) before opening an account with Gotrade. Firstrade is my preferred broker among the two due to its $0 commission while ToledoTrade charges a minimum of $1.95 per trade.
I chose Gotrade as it allows fractional shares trading. Besides that, it is a commission-free brokerage too.
Is Gotrade safe?
Gotrade is relatively new, being established in 2019. It is licensed by the Labuan Financial Services Authority. Alpaca Securities LLC is Gotrade’s appointed clearing broker and custodian. This is where the funds and stocks are held. Alpaca is a member of FINRA/SIPC. According to Gotrade website, every account is protected by the SIPC for up to $500,000. Thus, I assume that it is safe.
Gotrade features
Gotrade is a mobile brokerage that allows people from over 150 countries to invest in fractions of US shares from just $1. It is available in apps and can be downloaded from App Store and Google Play, but not available on desktop.
Account opening process
The account opening process is straightforward. You just have to follow the instruction. The document required is just your national identification card or driving licence. You also need to take a selfie.
Funding the account
To fund the account, we can use Wise or wire transfer. However, I think Wise is a better option as its charges are lower than wire transfer. Furthermore, the exchange rate of Wise is also more favourable than the banks.
My experience of using Wise to fund the account was quite positive. You will have to open a Wise account and link it to Gotrade. Just follow the instruction on Gotrade to link your Wise account. Although the app mentions that it takes up to 6 business days for the money to go through, it took only 2 working days to fund my Gotrade account. This speed is almost the same as wire transfer. Besides that, the transaction on Wise can be performed during non-working hours, unlike the banks.
Drawbacks
Like the other brokers, Gotrade also charges withdrawal fee. Nonetheless, its withdrawal fee of $12 is not as exorbitant as Fristrade ($25 – it has reduced from $35!). As I do not withdraw frequently, this is not a dealbreaker.
Gotrade only executes market order, meaning an order will be executed at the best available price(s) as quickly as possible. We cannot use limit order. Besides that, the exchange traded funds (ETFs) available on this platform are quite limited. It also does not have every stock in the US market but the major and popular stocks are available.
Conclusion
I have made some transactions on Gotrade and the experience is great. The execution is fast and it allows trading from as low as $1. My only gripe is the limited number of ETFs on Gotrade. Other than this, Gotrade is a good trading platform to use. Nonetheless, Gotrade is just my secondary foreign trading platform. My primary broker is still Firstrade.
Referral link
If you are interested in opening an account with Wise, perhaps you can use my referral link below. You will get a fee-free transfer of up to RM 2,500. Otherwise, you can google Wise and open an account with this foreign exchange company.
Disclosure: If you click on the link above to open an account with Wise, I might get a reward if certain conditions are met.
(Update 1 July 2023: This foreign broker is not recommended anymore. Read more here.)
Comments
Hi Leckas, appreciate for your review on foreign brokers which is not very known to common public. However, there are more established US based broker such as Interactive Brokers which offer fractional trading. Also it offers not only US markets to trade on. It has low min US$0.35 per trade. Wondering why you didn’t consider such broker.
Author
Hi, Marc.
I have considered IBKR a long time ago but was deterred by its inactivity fee and high commission. However, I have rechecked its fees after reading your comment. It has removed its inactivity fee and also lowered its commission.
How does the minimum $0.35 commission per trade work? The maximum per order is 1% per trade, right? Let’s say if my trading value is $100, does IBKR charge $1 or the minimum $0.35? Do you mind to share your experience?
As I am testing a new trading system that involves daily rebalancing, I have to find a commission-free broker, otherwise the system might not work. Since my total capital committed to this system is small, I have to use a broker that allows fractional shares trading. Thus, I chose Gotrade. Nonetheless, the majority of my US portfolio still stays in Firstrade.
Hope to hear from you soon.
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hi as of my experience with ib when you choose tired commission instead of fixed you only charged 0.35 per trade ,i think interactive is the complete package
Author
Hi Mo.
Thanks for the information. As my trade can be as low as $1, the commission of IB is still quite high for me. But I do agree that IB is a good broker to be used to trade US stocks.
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