Friday, December 24, 2010

A Peek at Schwab's New Trading Site

The giant broker is about to unveil an updated site for active traders. So how is it?

With close to eight million brokerage clients and $1.5 trillion in total customer assets, Charles Schwab is a huge online brokerage. Smaller firms can be nimbler, and focus on a niche, updating their electronic platforms almost constantly. It’s not that easy at Schwab, which has to meet a wide range of electronic-client needs. That’s why the Electronic Investor was pleased to get an exclusive sneak peek at the firm’s update, which should be available to its clients shortly.

The new trading platform is called StreetSmart Edge. Kelli Keough, vice president of Schwab’s Active Investor group, says the new setup will be the foundation of the firm’s continuing investment in this area. The application was created in-house using Windows Presentation Foundation, a programming model for developers. Once it’s released, it can be downloaded from the Schwab Website (http://www.schwab.com)—the beta version we tested was 28 megabytes—that runs on personal computes powered by Windows XP or newer operating systems, and Macs with the appropriate conversion software.

StreetSmart Edge carries over many of the real-time tools built into Street-Smart Pro, Schwab’s long-time frequent- trader site, but is a much more elegant and approachable design. Like many newer frequent-trader applications, the program allows you to build your own lineup of tools. There are several layouts built in, but it’s simple to move the windows around, spread them across multiple monitors, and customize the view extensively. The gamelike feel of the previous version is gone, replaced by one that’s all business. Tools are more accessible, and you aren’t dumped into a browser for tasks such as checking balances or realized gains or losses.

An application for frequent traders has to have real-time data available so that they can see exactly what’s going on in the market and what’s happening to their own portfolios. It also requires an order ticket that can be accessed from anywhere, allowing you to place orders no matter which tools you’re using. Street-Smart Edge fulfills these needs with a bar at the top of the screen displaying current balances (which can be quickly hidden if necessary), plus an order ticket built into the Symbol Hub, one of the key components of the platform.

The Symbol Hub displays a customizable chart of prices and volumes for specific stocks, Level II quotes indicating the depth of the market at various bid and offer prices and current news for the ticker symbol you’ve chosen. You can switch tickers quickly from a watch list or your open positions. The platform currently allows you to trade stocks and exchange-traded funds and options; Schwab plans to add a Web browser tool to the program next year that will link to an upcoming futures-trading application.

If you’re viewing a particular ticker, say Apple (ticker: AAPL), and you have a position open, you’ll see a small tile with a P on it. If you have an order open, you’ll see a small O. These little bits of information are very helpful for frequent traders.

Erik Cottrell, director of product management and business development for Schwab’s Active Investor unit, says the aim is consistency throughout the application, so that no matter which window you have open, the commands work the same. For instance, clicking on an “Actions” button opens a menu, and clicking on the down arrow expands the line of data (such as an options chain) that you’re looking at.

The whole charting function is a big improvement over StreetSmart Pro. You can view any range of dates using the slider bar at the bottom of the chart, and overlay the charts with a wide variety of technical tools and trend lines. One new feature we find extremely useful is the ability to extend a trend line into the future.

There are built-in screeners that help you select the stocks and options meeting your trading criteria; however, they were limited in the beta test that we used. You will be able to save the output of a screen to a watch list, and scroll through those symbols in the Symbol Hub for further review.

Options traders will be able to look at either basic or theoretical options chains, and can flip between the two with a mouse click. Adjustments to a stock, like, say, the recent spinoff of AOL (AOL) from Time Warner (TWX) would be displayed in advance. All expire dates, including weekly and quarterly options, are also available.

The order-entry ticket lets you flip between stock/ETF selections to options and contingent orders. We entered a variety of orders, from simple exchange-traded fund trades to covered calls to four-legged spreads, and found the order-entry screen informative. When we made mistakes on purpose to test it out, it flagged them immediately.

Certain tools, including Recognia, which lets you do extensive technical analysis and back-testing of trading strategies, will be available via a built-in browser once the platform goes live. We weren’t able to test that capability in the beta form.

Schwab is clearly on the right development track, although it’s still in its toddler stage. We’ll be interested in seeing how it looks as the firm continues to add to its capabilities. It’s not a flashy, constant light parade, like thinkorswim’s applications. However, it compares favorably in ease of use to Interactive Brokers and TradeStation platforms. Certain functions—like futures trading, once it’s available—will happen in an integrated browser window, rather than in Street-Smart Edge, which I think is a drawback.

I would like to see some of the features in StreetSmart Edge, especially the enhanced charting and customizable real-time portfolio analysis, find their way into Schwab’s Web platform in the not-too-distant future.

AS WE DRAW CLOSER TO Barron’s 2011 online-brokerage review in March (our 16th annual update), 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 exchange-traded fund 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, December 20, 2010. 

Posted by twcarey on 12/24 at 12:43 PM
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