To access my current posts, click the following link:Notes From a Cyber Trader___________________________________________________________________________________________________________________________________________
I'm learning as I go along. (Hard lessons at that.)
I have a basket of stocks that turn in a healthy dose of dollars as I channel trade them.
The challenge with these are that low volume means - S L O W
I occasionally pick up a new favorite to add to the basket.But I want more!
I've tried my hand at "abnormal" high volume trading stocks on the venture.
In particular the recent interest in the "Ring of Fire" companies.
Only to find out that due to the delay in posting my bids and asks (especially the bids) by my discount broker I've lost $$$ and missed great entry points.
I've expressed my frustrations with my broker only to receive scripted messages of "We reserve the right to review all trades before they are released." - The killer is - is that its done manually.
So if they are short staffed or overworked on active days they get to your order when they get to it? So you're SOL!
Just as we are entering the era of HFT - High Frequency Trading by the major brokers.
Talk about giving it to the "at home trader/laptop trader" who can only trade stocks through discount brokers or worst yet calling one up to place an order - where does that put you in the queue? Always on the losing end!
From my searches I got an "aha" moment.
A retail broker is a brokerage firm that caters to the average investor or, in other words, the retail sector of investors - as opposed to the institutional sector of investors.
Both discount and full-service firms are retail brokers. The majority of brokers who advertise on TV are retail brokers.
Low-cost brokers are generally less expensive for an investor who invests in small amounts (say, fixed dollar amounts) and who is not particular that the stock trade must happen in real time.
Direct access trading
Direct access trading is a technology which allows stock traders to trade directly with market makers or specialists, rather than trading through stock brokers.
Direct access trading systems use front-end trading software and high-speed computer links to stock exchanges and the various Electronic Communications Networks.Direct access trading system transactions are executed in a fraction of a second and their confirmations are instantly displayed on the trader's computer screen. This is in contrast to a typical conventional online trader who requires seconds or minutes to execute a trade.
Direct access brokerages VS online retail brokerages
1. Speedy execution: It allows very fast execution, measured in terms of milliseconds
2. Cost reduction: Transaction costs are lower for trade executed with a direct access brokerage. Transaction costs are generally per share (ex. 0.004$ per share) where as retail brokerage forms charge on a per transaction basis (ex. 5$ per trade).
3. Slippage: Slippage is controlled at a minimal. Also it has a higher chance to execute at a better price when the market suddenly moves rapidly
4. Control over order routing: With most direct access firms, a trader may choose to send his orders to any specific market maker, specialist, or Electronic Communications Network
5. Liquidity rebates: Traditional online brokerages usually have a simple and flat commission fee per trade because they sell order flows. Direct-access brokerages do not sell order flows and get rebates They earn money from serving their customers. An active trader can gain what traditional online brokerages gain
1. Volume Requirement: Some firms charge inactivity fees if a minimum monthly trading volume has not been met. For example Interactive Brokers charges a 10 USD per month inactivity fee on accounts generating less than 10 USD a month in commissions. Many firms will deduct transaction fees and commission paid each month from that month's inactivity fee. Hence an activity fee often serves as a minimum monthly commission which is paid to the brokerage.
However not all direct access brokerages have minimum monthly trading volume requirements.
My ongoing communication with RBC Direct Investing over their delays in posting my orders.
My recent email sent August 11, 2009 to the message centre
"Pending" status on buy orders
You're service as a discount provider is the worst ever.
Again today you have cost me a trade because of the delay in putting my order through.
If ever we have a sell off again its safe to say RBC Direct will cost their client traders untold loses because of the delay in putting orders through.
I would not recommend RBC direct Investing to any active traders.
Don't bother responding. Eventually you will chase all your best paying customers away.
But they did reply August 13, 2009
Thank you for writing to RBC Direct Investing. My name is ---------- and I'll be further assisting you.
I sincerely apologize for the frustration and inconvenience these occurrences have caused. On August 6th, the delay that was experienced with the order status update was a result of a street wide issue with a vendor
that affected the majority of discount brokerages across Canada including RBC Direct Investing.
With respect to any type of trade/order processing delays you have encountered, please note we do not provide direct access to the markets and reserve the right to review any or all trades
. Given you're able to successfully submit your orders online, this clearly indicates the online web site is functioning as it should and the delays encountered are a result of back end processing and not technical in nature
With regards to increasing the number of decimal places on a watchlist, our web development team has implemented a fix that should now allow you to view up to three decimal places for penny stocks. Mr. ---------, we have been upgrading and further enhancing our web site with the intent to enhance overall client experience.
If you have any questions or concerns, please reply back or call our helpdesk at 1 800 769 2560 | Option 5 (7AM 8PM Eastern Standard Time, Monday to Friday).
My response August 14, 2009
The three decimal point is still not working on your Watchlist Streaming tab. The "Last" column next to "Bid Size" only shows 2 decimal points. Now that you have disabled the "Multiple Quotes" page there is no accurate Live streaming quotes for stocks under 50 cents as it is still rounded up to two decimal points. So I dont know what your team fixed??
And bid orders now take minutes to get approved instead of a few seconds like it did before. I have been an active trader for three years with RBC Direct and have never experienced this consistant delaying of posting bids. This is the stock market and speed is of essence. RBC Direct recently found a way to delay this.
I expect basic service from my provider and the above two items do not meet them.
I challenge you to be honest and print in your advertised documents that traders can expect delays in posting orders. AS this is a crucial element to active trading.
Thanks for checking out my page. Red Mars