A New Broker for Day Trading – My Current Thoughts

December 19th, 2007

As many of you know, I’ve been a satisfied CyberTrader customer for several months.  After the recent clunky migration to Schwab, I’ve been browsing various brokers to see what’s available.  I’ll be keeping some money with Schwab, but I’ll be moving some to a new broker.  It wasn’t until this recent migration that I had even considered splitting up my account between brokers, but I think in many ways it makes sense (in theory better availability of shortable shares, for one).

Since I’ve started looking around at the differences between the various brokers, I’ve noticed a couple things that stick out at me.  Specifically, these two features which I consider to be critical are actually pretty rare among the brokers out there:

  1. Server-held orders/alertswhen (not if, remember?) your network connection goes down, will your orders still fire?  With CyberTrader and Schwab the answer is yes.  I know DownTown Trader was concerned about this (and TradeStation’s orders are stored on the PC).
  2. Trading API – can you write software to make trades and use software to automatically keep a journal?  You use-ta could (an expression we use in the South) with CyberTrader, but no longer.  This was a major reason many left Cyber before the migration.  I’m going to start developing an ATS soon and this will, of course, be necessary.
  3. Ability to see if shares are shortable before attempting to short – I’m amazed that there are SO few brokers that give you this capability.  There are fewer things more frustrating that commiting to a trade, clicking the button to short and getting some cryptic error message that there are no shares to borrow.  Cyber showed you how many shares were available to short, Schwab does not.  That’s a big minus.

There’s only a couple brokers that I know of that offer the above 3 features: MB Trading and Interactive Brokers.  Does anyone know of others?

 

13 Comments

  1. Rob Said,

    December 19, 2007 @ 5:35 pm

    I think Thinkorswim may also do what you need.

  2. Jeff White Said,

    December 19, 2007 @ 9:58 pm

    In speaking with MB Trading, I was made aware that their Plan B commission rate ($9.95/trade plus ECN fees – very high – up to .004/share additional) must be chosen if you want the ability to route your own orders. The other commission plans they offer are smart-orders only, so you cannot route to ECN’s or use cool features like reserve shares & invisible orders. To many of us day traders those are important features, while others might not care.

    Just putting this out there! Thanks for compiling some of the features in common from what you’ve found Dave. I know many of us are seeking the ideal alternative, but like you I get the feeling that accounts held in multiple locations could be the solution, at least for now until something else comes along.

    Jeff

  3. G Said,

    December 20, 2007 @ 5:57 am

    TradeStation orders are not stores on the local PC. Stops, limits, brackets, ect are kept on their servers. Me thinks.

  4. Ken Said,

    December 20, 2007 @ 12:35 pm

    Yes, in TradeStation automated trading systems can send stop-orders to TradeStation servers or the exchange. The following is a snippet from a TradeStation forum post:

    https://www.tradestation.com/Discussions/Topic.aspx?Topic_ID=51166

    EasyLanguage generated stop orders whether issued by using the built-in “SetStopLoss” reserved word or by using a sell order such as the statement “Sell (“long stop”) 1 contracts next bar at (open – stop) point stop;” will be held, by default, locally on the user’s PC until the stop price is met.

    However, in TradeStation 8.1 SP1 there is an automation option to “Send strategy generated stop orders directly to the TradeStation Order Execution Network” which would send the stop order to the TradeStation Order Execution Network or directly to the exchange if the exchange supports stop orders.

  5. Ken Said,

    December 20, 2007 @ 12:43 pm

    With regards to shortable shares in TradeStation, there is no software-based command to get them. You must download the list each day. IB generally has about twice as many listed shortable stocks. Highly liquid ETFs such as EEM and IWM are often not on TradeStation’s list.

    With regards to ATS development, I have accounts with both IB and TradeStation. I am working on a strategy in C++. In TradeStation, you must package it as a DLL and call it from EasyLanguage. IB has a C API though it is much more low-level than TradeStation, so it is a little more work to get an ATS running.

  6. Barry Schneider Said,

    December 20, 2007 @ 8:45 pm

    Hands down….. ThinkOrSwim

    Voted the best “Software” based broker on-line (Barron’s, March 2007). Updates to their platform quaranteed at least once a month.
    Great tools, charting, news (including live feed of CNBC). On line live audio and charting from the ShadowTrader including charts that are live.

    Only one day settlement for retirement accounts (IRA’s etc.). Great customer service.

    I was an active trader with Schwab (Cyber Trading) up to April 2007. After 30+ years I left Schwab for ThinkOrSwim.

    I believe the only real competitor to TOS is TradeStation (for charting and tools). A big weakness of TOS is no back testing. TOS says they’ll have “back testing” by the end of 2007. MBTrading and Interactive both can use Ninja Trading platform, which is a plus.

  7. Dave Said,

    December 21, 2007 @ 2:04 am

    Thanks for the comments, guys.

    @Barry and @Rob: I’ve heard great things about ThinkOrSwim, but their commissions seem awfully high for equities.

    @Jeff: Good point about MB Trading – I wasn’t aware of that. Bummer.

    @Ken: Interesting information about TradeStation and your ATS. The TradeStation rep told me that the orders reside on your PC, but it sounds like you have a choice even when you’re writing an ATS.

  8. Barry Schneider Said,

    December 21, 2007 @ 3:11 am

    When I opened the account TOS offered me their regular commission scheduale or I could pick any of their competitors. If you like everything else… call them and ask.

    Also: TOS right now does not have easy language (as far as I know).
    (I may be wrong here)………………….

  9. Mike Said,

    December 23, 2007 @ 10:24 am

    Have you looked at any prop trading firms?

  10. Dave Said,

    December 23, 2007 @ 4:32 pm

    @Mike: It’s funny you mention this. It never even crossed my mind until I went to the Traders’ Expo in Las Vegas a few weeks ago. I met up with a couple prop firms that I thought were very impressive and were quite appealing. I don’t think I’m trading frequently enough for it to make sense for me yet, but perhaps in 2008 I’ll get to that point.

    Thanks for the comment!

  11. Formerly ADD Trader Said,

    January 3, 2008 @ 9:18 pm

    I can’t believe how badly the transition from CyberTrader to SS Pro has gone. It is as if the SS Pro team did not even look at the functionalities of the CT software. In addition, their customer service stinks. I too will be splittling my account, most of it going to IB, and a token amount in SS Pro (as they provide check writting and debit card services).

    Formerly ADD Trader

  12. Jared Said,

    January 7, 2008 @ 12:22 pm

    Did you make the switch to a different broker and how do you rate them versus what Cybertrader had?

    Also, what prop firms were you impressed with?

    Thanks!

  13. Dave Said,

    January 9, 2008 @ 12:58 pm

    @Jared,

    I have switched to MB Trading and I’m liking it so far. It’s quite a bit different than Cyber, but it’s nice.

    Check out Tuco Trading and World Trade Securities. I’m not really that familiar with the prop trading world, but these seemed like good guys that are worth checking out.

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