Saturday, July 28, 2012

A Neat SocialTrade

New site offers ways to organize and share your trading ideas and tools. And DittoTrade goes mobile.

If you like exchanging ideas with other traders online, a new site, SocialTrade, helps foster such communication. Founded by Tim Knight—the West Coast correspondent for a video service offering the stock-market commentary tastytrade, and creator of online-trading tool maker Prophet Financial Systems—this new site features a slick way to share charts, ideas, and articles.

Knight based SocialTrade’s (socialtrade.com) features on a commenting system he created for his mostly bearish blog, Slope of Hope (slopeofhope.com), because existing software didn’t meet his needs. Similarly, existing trader networks didn’t allow Knight to organize the gems he finds around the Internet in a sensible way. “If Pinterest was the right tool, I’d have gone there,” he says, citing a more general-interest site (pinterest.com) where members can collect and organize images of home and hobby items found on the Web. So he created his own tool, which you can see in action at socialtrade.com/help/video.

Knight is building an engaged community on his site, which was launched June 1. You can browse stacks without becoming a member, although membership is free. To clip an item from either a Website or your own charting software, install a browser plug-in called a bookmarklet, which appears in the heading bar of your browser. If you find something of interest, click on the bookmarklet, and then you can choose the stack into which that page will be stored.

Stacks are organized in a variety of ways, from stock-ticker symbols to trading instruments. So if you’re looking for some ideas about trading options, you’d choose the trading-instruments stacks, and then click on options. The most recently added item is on top; you can scroll through a stack and go to the source if you want more information. You also can check out the items that are most popular with the membership of SocialTrade.

Peruse stacks or follow other traders’ moves, and you’ll be rewarded with many ideas, although you may have to sort through a few items that look like ads for newsletters or trading services. When you bookmark an item to store in a stack, you can make it public for all the other members to see, or create your own private stack. Social traders use the site as a customized news feed, a reference library, a source of actionable ideas, and a personal archive of financial clippings.

Maybe some day there will be an Electronic Investor stack to follow.

ALWAYS CONNECTED. Ditto Trade, an online broker that launched in late 2010, now has a mobile app. This brokerage allows you to connect to a trusted fellow trader, or possibly an advisor, family member, or newsletter, and follow the trades they place. If you’d like, you can automatically participate in trades made by your lead trader—or become a lead trader yourself, and generate transactions for friends, family members, or subscribers ("Day Trade and Keep Your Day Job,” Barron’s, May 9, 2011).

The new app, which went live in June, extends the Ditto Trade dashboard to your mobile device. You’ll get alerts about transactions placed on your behalf, or you can set it up to get an alert when your master trader places a trade. Upon receipt of the alert, you can decide whether to participate. The mobile app is nicely integrated with the data on the Website (dittotrade.com).

Ditto Trade CEO Joe Fox says that initially he thought there would be more master traders such as newsletter editors on the site generating trades for their followers. What he’s seen instead is trading groups made up of friends and family. “We have a lot of leaders with just one or two other customers connected,” Fox notes. “We thought people would look for traders and newsletters, but it turns out they are more interested in following people with whom they already have relationships.”

Published in Barron’s, July 21, 2012. 

Posted by twcarey on 07/28 at 12:32 PM
Published in Barron's • (0) CommentsPermalink

Saturday, July 14, 2012

optionsXtravaganza

If you’re interested in trading options, but haven’t been able to find an approach that suits you, give the Idea Hub a try. The Electronic Investor just got a sneak peek at this new tool from optionsXpress prior to its public launch.

Charles Schwab (ticker: SCHW; schwab.com) purchased optionsXpress last year, and Idea Hub is clearly a way for the big discount broker to persuade its customers to become more active options traders. It combines screening results from a variety of tools that have been available on optionsXpress (optionsxpress.com) for years, and suggests potential trades. The database of ideas is updated every 15 minutes during the trading day, based on real-time data, as well after the close of the market so you can put on some trades for the next open.

The Idea Hub groups trading ideas into two main categories: What’s Hot and Income. Within What’s Hot, there are two tools: Big Movers, and Earnings plays. Income includes its own twosome, Premium Harvesting and Covered Calls. The Big Movers category usually has the largest number of ideas, which are based on changes in open interest, volatility, money flows, or the number of shares of the underlying stock traded. The ideas within each category are further broken down into bullish, bearish, or neutral strategies. When we checked out the Idea Hub last week, there were over 300 Big Movers, just eight under Earnings, and approximately 40 in each of the Premium Harvesting and Covered Calls groupings.

You can browse through each idea group by using a drop-down menu to choose the type of screen. Under Big Movers, the drop-down even lets you separate stocks from ETFs and indexes, which is a nice touch. Next to the drop-down selector, you’ll see two slider bars that permit you to move from bullish ("Trade") to bearish ("Fade"), or shift the way the list of ideas is presented from a gallery view, in which the details of each potential trade are displayed in a box, to a list. The gallery view is more aesthetically pleasing, though you can sort the resulting ideas in the List view by clicking on a column heading.

The statistics displayed in each box—or pod, as optionsXpress calls them—vary according to the type of screen you’ve selected. For instance, if you select Premium Harvesting, the pods are displayed in descending order of return on risk. The top suggestion when we dug into the Idea Hub in this category was an iron condor (a four-legged options trade in which each leg has a different strike price); the trade was in Apple (AAPL), expiring in August and carrying a 19% return on risk. Covered calls are listed by their static return if unassigned, though you can easily change the display using the drop-down menus.

If you’re looking at an idea in the gallery view, you can hover your mouse over the particular box containing the idea and view the trade details and check out a profit-and-loss chart and probability analysis for that particular strategy. Clicking on “Trade” generates a trade ticket, which defaults to a market order; you can change that to a limit order and enter the price.

We found the Idea Hub engaging and educational. Schwab has a long-term goal of integrating the optionsXpress platform into its own technology; it recently launched a single sign-on process for customers who have accounts at both firms. In early May, Schwab also launched the Instant Money Move, which allows these customers to shift cash from one firm to the other. OptionsXpress CEO Joseph Vietri says, “We are still talking to our clients frequently, and their feedback feeds into our innovations.”

WE WERE ABLE TO VISIT briefly with optionsXpress’s co-founder and former CEO David Kalt on a recent visit to Chicago. He has moved his talents to the music business, having taken over the Chicago Music Exchange (chicagomusicexchange.com) in 2010. If you have any interest in vintage guitars, it’s worth a look. CME’s Fender specialist, Alex Chadwick, provides a walk through 100 rock ‘n’ roll riffs in a 12-minute video on the Website. It starts with Chet Atkins’s Mr. Sandman, from 1953, and wends its way to Cruel by St. Vincent, from 2011. It’s a most enjoyable rock ‘n’ roll history lesson.

Posted by twcarey on 07/14 at 12:31 PM
Published in Barron's • (0) CommentsPermalink