Saturday, February 12, 2011
Fidelity Floats on a Cloud
The huge asset manager introduces a new Web-based app for its active trader customers.
Active traders can now access Fidelity Investments via the cloud.
For several years the fund giant has provided a software application that active traders can download onto their own computer systems. Now the firm is offering a Web-based application via its site or through its activetraderpro.com site. It includes a variety of streaming tools, such as quotes and charts, and links to research available on the regular Fidelity site.
"The new platform fills a key gap in terms of what our active-trading clients are asking for. Mac users wanted active-trading tools without having to use Windows emulation software, and people who trade from multiple computers also wanted these streaming tools,” explains James Burton, president of Fidelity Brokerage Services.
Having what some refer to as a “bridge” application that provides the functions of downloadable software available on the Web is a relatively new development for online brokers. TradeMonster and optionsXpress already offer similar applications and more are on the way. These additions will bring more customization and streaming data to more customers.
The Web application, written in-house in Microsoft Silverlight, will eventually be nearly identical to the downloadable platform. Burton says some features are only available on the desktop version simply because it has more processing power, but that the Web release will have some items for traders that the downloaded version does not.
We took a look at the features available by clicking on a link in the Fidelity.com Portfolio page, which opens a window on your desktop. Like the downloadable version, you are presented with a default desktop view that you can customize so the tools you want are where you want them.
The streaming news feature is well designed, showing headlines for symbols in your portfolio, or watch list, or for particular sectors you want to track. You can rearrange the blocks of headlines so that the items on subjects or companies that interest you most are on top. There are more than 20 news providers, including Reuters as well as Barron’s affiliates Dow Jones and MarketWatch; you can filter the feeds to show particular providers if there are some you prefer.
Of utmost importance to frequent traders is real-time data, including how much money you have available to trade and a current price. Your onscreen trade ticket displays this data; you can place the ticket wherever you’d like it to appear. The order-status screen displays working orders placed using any Fidelity application, whether via the Website, your smartphone, or on the phone with a representative. Modifying or canceling an order is easy with the order-status tool. You can trade options.
The streaming chart package includes drawing tools such as trend lines, over 40 technical indicators like moving stock-price averages and a slider bar that lets you define the date range for your study. You can search the indicator list for a specific item, and preview your selected indicator before adding it to the chart. Click on it to add it to the chart, or hit the X in the top right corner of each box to remove it. Once a chart has been customized, you can save the view for future use, no matter where you log in from. The time slider at the bottom gives a visual historical perspective, allowing you to shorten the view or stretch it. As much as 15 years of price history is available.
Activetraderpro.com doesn’t yet offer streaming options chains, which display current quotes for strike prices and expiration dates. However, Jennifer Samalis, vice president of active-trader product development, says Fidelity plans to add those later this year. Most research, and trading for anything besides stocks and options takes you back to the Fidelity Website. The tool is free to qualified Fidelity customers who traded at least 120 times over the previous 12 months and maintain $25,000 in their account. Stock trades are $7.95 per transaction, while options are $7.95 plus 75 cents per contract.
GOING FOR THE GOLD: Interactive Brokers (http://www.interactivebrokers.com) makes it possible to trade two new products through its United Kingdom affiliate. IB Spot Gold gives you access to the London bullion market and IB UK CFDs (Contracts for Difference) let you trade the difference between the current and future price of a share. The latter product attempts to mirror a stock, including its price movements, dividend income, any tax benefits and allows a trader to use additional margin. You can bet for or against the shares.
In order to take advantage of these offerings, you must find out if you are eligible to trade them. U.S. and Canadian residents must complete a questionnaire in the account management screen to see if they qualify.
TAX TIME:I lamented (some would say ranted) last winter about the way publishers of tax-software packages treat options traders—by mostly ignoring them ("Lack of Options in Tax Software,” Electronic Investor, March 1, 2010). Unfortunately, not much has changed this year. TurboTax still doesn’t have a special slot for options, making options traders click all the way through to “Other Investments” if they’re doing manual entry. The omnibus category (stocks and bond merit their own sections) means a lot more key clicks are needed to get the information entered.
While talking with executives from both Intuit’s Turbo Tax (http://www.turbotax.com) and H&R Block (http://www.hrblock.com), I was surprised to learn that there aren’t any options traders advising on product development. Turbo Tax did a good job of automatically importing options transactions from three different online brokers into our test return. But if your financial institution isn’t on their list of providers, you’re stuck in the “Other Investment” category.
If you’re going to do your taxes yourself, TurboTax will make data entry easier due to its extensive links to financial institutions, aided by its acquisition of Mint.com. Still, it’s much more expensive than other personal tax packages, because investors have to buy either the Premium ($49.95 federal) or Home and Business ($74.95 federal) versions. State programs are an additional $36.95.
H&R Block will work well, and at a much lower price, for those of you who primarily trade stocks and mutual funds. You’ll have to buy either the Deluxe version ($29.95 federal) or Premium ($49.95 federal), and lay out an additional $34.95 per state. Both firms allow you one federal e-file per program; if you file multiple returns from the same program, you’ll have to pay extra.
Some day tax software publishers will discover options trading. I’m not holding my breath, though.
Published in Barron’s, February 7, 2011.
Saturday, January 29, 2011
Better Trading Site, Same Low Price
Discount broker Just2Trade has improved its platform without raising its rates.
Just2Trade has improved its trading platform without raising its dirt-cheap commission rates. That’s no mean feat. We’ve criticized the discount broker’s site in the past because it didn’t provide portfolio positions and account balances in real time, and we’re happy to report that’s no longer the case.
It’s all part of a continuing process to clean up and improve the site, says Just2Trade CEO Fuad Ahmed. It may be just because the firm has maintained its low fee of $2.50 a stock trade, “there is a perception of quality [issues],” Ahmed explains. “Customers will think something’s got to give, or that features are missing,” but they’re not. Since all Just2Trade programming takes place in-house—many low-cost brokers simply license software and put their logo on it—Ahmed believes that he and his staff have greater control over the resulting design.
Among the updated features, which make Just2Trade’s site (http://www.just2trade.com) comparable with brokers in the $7-to-$15 per-transaction category, are the ability to cancel or modify open orders. You can also set up trailing stops by either a specific dollar amount or percentage loss. Another plus: Just2Trade has included stops for options orders. You can also customize some features of your home page, including displaying balances, positions, news and open orders.
The redesign does have some shortcomings. Just2Trade splits the display of a customer’s balances across three different tabs, forcing you to click each to see your account value, cash available for trading and cash available to withdraw. Most online brokers show all three figures on the same page; splitting up the displays seems inefficient.
To enter an order, you hit the “Get Quote” button after the ticker is entered, and that brings up a real-time quote. However, it doesn’t refresh automatically as prices change, a feature the firm plans to add. At present, you have to click refresh to get an update.
Mobile technology is another item on Just2Trade’s drawing board, says Ahmed. In this case, the designers aim for a summertime release. Multileg options trading should also be available at that time.
Just2Trade does have some capabilities others lack. For instance, it gives you fractional shares of a stock after reinvesting your dividends. Most brokers will only purchase whole shares of stock, then stash any left-over money in your cash balance.
Morningstar research has been integrated into the site, and all content is free to customers. Customizable charts, which will also be free, are to arrive shortly. There are other deep-discount brokers that charge their customers for many of these services, which include Scivantage’s Maxit for capital-gains accounting. “No gimmicks, that is very important to us,” says Ahmed.
You can open an account with Just2-Trade online and start trading quickly. Ahmed says the fastest way to fund your account is via a wire transfer, but you can also establish an automatic clearing house (ACH) connection so you can transfer funds from a bank account.
Just2Trade has packed a fair amount of punch into its site for its low price. What I also like is that what you see is what you get. You aren’t enticed by promises of “free” trades, and then told you have to pay to get real-time quotes or cost-basis tax reporting. You can get more bells and whistles elsewhere, but if you’re looking for a clean interface and no-frills research at a discount price, check out Just2Trade.
E*TRADE CUSTOMERS LOOKING FOR some extra hand-holding can get it at the firm’s recently launched Unified Managed Account (UMA). The account, offered through the firm’s E*Trade Capital Management unit, gives investors access to investment professionals the way a full-service brokerage would. The idea is to offer a more comprehensive approach to asset allocation, specific investments and portfolio and tax management.
Michael Curcio, president and CEO of E*Trade Capital Management, notes that nearly 30% of E*Trade’s (http://www.etrade.com) brokerage accounts are in retirement products such as traditional and Roth IRAs. “We believe our offering is especially well suited for customers and prospects who want help investing to reach their retirement goals,” he says. The UMA is available for portfolios of $250,000 or more with holdings composed of individual stocks, ETFs and mutual funds.
Management fees range from 1.25% of the portfolio value (up to $1 million) to 0.95% (over $5 million).
Fidelity (http://www.fidelity.com) also offers managed accounts of three different types. All three—Portfolio Advisory Services (minimum $50,000 including all retirement accounts), Personalized Portfolios (nonretirement accounts over $200,000) and Personal Trust (trust funds over $200,000)—invest primarily in stock and bond mutual funds, as well as ETFs. Fees range from 0.25% to 1.7% of portfolio value, depending on the particular service you choose and the size of your account.
TRADEKING (http://www.tradeking.com) joins the group of brokers launching iPhone apps, following up on the firm’s popular BlackBerry application. It also works on an iPad; a dedicated iPad app will launch in the next few weeks. The iPhone version can be downloaded free from Apple’s App Store.
BROKER WISH LISTS: We’ve been querying readers in recent weeks about their online broker experiences—and they’ve been responding enthusiastically. One clear concern is the reporting of capital gains, and the ability to specify a tax lot (usually choosing to sell the portion that’s most advantageous for tax purposes) when selling a part of a position. Quite a few brokers do not allow their customers to choose a tax lot—it’s simply first in, first out, or cost average. Some others make their clients phone a broker to sell a specific lot. With new capital-gains reporting rules going into effect for stocks and ETFs purchased after Jan. 1, 2011, it’s important that investors be allowed to choose the tax lots themselves.
Barron’s readers also want more ways to look at their portfolios’ performance to assess what works—and what doesn’t. One astute respondent would like to be able to generate yearly investment performance, net of deposits and withdrawals. Another worry: the security of trading via mobile devices, a subject we plan to address shortly. Keep those cards and letters coming.
Published in Barron’s, January 24, 2011.
Saturday, January 08, 2011
New for iPhones, iPads and Androids
Schwab, Firstrade and Fidelity are all introducing new apps for the “smart” investor. Here’s what’s new.
Online brokers are racing to keep pace with the investment possibilities enabled by iPhone, iPad and Android. In recent weeks, Schwab and Firstrade introduced iPhone applications, Fidelity added an Android app, and Schwab’s magazine, On Investing, became available free on the iPad.
Firstrade’s (firstrade.com) iPhone app, which arrived just before Christmas, provides a simple way to get real-time quotes, check your balances and place stock and straightforward options trades. The app, like Firstrade’s Website, offers an interface in English or simplified Chinese.
The opening screen shows the value of the Dow Jones Industrial Average, the Nasdaq, and the Standard & Poor’s 500. A recent news headline is displayed; you can access additional information by tapping the More button. The app’s Menu button brings up six choices that give you access to your accounts, open positions, balances, order status, a market overview and your settings. Hitting the Trade button summons a stock-order entry screen; you can switch to options with another tap.
Once you enter a ticker symbol or pick an item from your positions, the app displays a real-time quote. You have to scroll down to place the order, but then you’re shown a summary of the order, including the total cost—but not including the commission to be charged, which is $6.95 for stock orders. If you want to close a current position, you have to remember the quantity you own.
Though it’s easy to use, there are some issues with this new Firstrade app. We ran into problems while placing options orders. The app crashed several times, and to get back in, we had to enter the user ID, password, and PIN repeatedly. Graphs are accessed from a stock-quote page, and only go back as far as six months. Finally, there’s no access to watchlists for keeping tabs on quotes of favorite stocks, and the ability to do any kind of research is extremely limited.
Overall we found this to be an adequate first-time app, but one that has lots of room to improve.
Schwab (schwab.com) has released an elegant and surprisingly deep iPhone app. You can trade stocks, options and mutual funds, and get real-time quotes on both your positions and your watchlist. Options quotes show both calls and puts on the same screen, which is a little busy on an iPhone, but looks great on an iPad, where it’s also available.
Account information is displayed on a screen that lets you choose from current balances, open positions or transaction history. If you have multiple Schwab accounts, you can flip from one to another easily.
Order entry is very simple; if you want to close an existing position, you can have the order ticket prefilled with the correct quantity. Graphs are limited to current-day price movements, though. It would be helpful to be able to view additional history.
Schwab’s “On Investing” on the iPad is an excellent magazine-reading experience that takes full advantage of the device’s capabilities. You can flip from one article to the next by swiping from right to left, and then read the chosen article by scrolling down. The display is crisp and looks exactly like the magazine. If you’ve got an iPad, download this free application and check it out. The Winter 2010 edition includes articles about tax-efficient investing, the charitable activities of an array of Schwab customers, and a Q&A about investing in exchange-traded funds.
With Fidelity’s (fidelity.com) new Android app, investors can access real-time market data, streaming news headlines, full news stories with graphical content, real-time quotes, interactive charting and links to the firm’s Twitter and Facebook pages. These features also are available on its iPhone and iPad apps. Clients who log in can see details of all their personal and work-related Fidelity accounts. They can also launch a prepopulated trade ticket from several locations within the app, including the quotes and portfolio-positions screens, watchlists and in news stories where a stock symbol is highlighted.
LIGHTSPEED TRADING, A broker that courts high-frequency traders, recently integrated a new tool from the online research outfit Recognia into its platform. The two firms collaborated on the Intraday Trader, and Lightspeed (lightspeed.com) is the first broker to offer it to clients.
Very active traders typically focus on just a handful of carefully selected stocks, but Intraday Trader is designed to keep tabs on a larger universe of shares that also meet your criteria. It aims to let you home in on such opportunities faster by automatically recognizing the price patterns and many other technical factors that need to exist to pull off a successful trade. It then alerts you to them.
To get started, you create a custom watchlist by cutting and pasting stock symbols into the application, or picking from a predefined list of symbols such as Large Cap or DJ Industrials. There are also lists available that change daily, such as Volume Leaders Daily by Exchange, or Worst Rated by Quant Rating.
Once you have a watchlist, you go to the Event Setup Library, which is essentially a repository of preconditions that you want in place before you make a specific trade. For example, you might want to hunt for stocks approaching a so-called head-and-shoulders formation, usually a tip-off the price is going to fall. You can sort them by category (bars, candlesticks, oscillators, etc.) or patterns (bearish, bullish, etc.) Recognia (recognia.com) has built quite a few into the application, but you can also create your own.
After you select the criteria you want, name them and define whether they comprise a long- or short-term strategy. At this point, you can tell Intraday Trader to scan the watchlist for the events you’ve selected.
Click “On My Radar,” and stocks that fit your trading criteria will be displayed at 15-minute intervals. The Opportunities link will show the time the trigger went off, the symbol, the exchange, the price that hit the trigger and an expected target price.
Each strategy has a Commentary link that helps those just getting started with technical analysis. It can expand a chart, then provide commentary on the data that defined the pattern. For newcomers or those who want to understand why a particular stock’s price pattern triggered an alert, the commentary is very helpful.
AS WE DRAW CLOSER TO Barron’s 2011 online-brokerage review in March, we’re interested in hearing how your trading habits have changed in the last couple of years. What features are important to you now? Are you part of the growth in futures, foreign currency or ETF markets? Do you have any concerns about the new cost-basis regulations from the Internal Revenue Service? What broker price structure works best for you? Let us know your thoughts at electronicinvestor@yahoo.com .
Published in Barron’s, January 3, 2011.
