Online Brokers Spruce Up for Spring

THE CROCUSES HAVEN’T BLOOMED YET, BUT IT’S SPRINGTIME for online brokers. We’ve seen and heard that many updates and improvements are popping up on their Websites, a phenomenon we’ve noted before in the weeks before Barron’s does its annual review of the electronic dealers in March. Here’s a quick look at some of the newly sprouted tools.

Fidelity ( took a serious look at WealthLab Pro, its tool for extremely active traders, and made many of the features easier to use and more efficient. The core of the WealthLab package is backtesting, which allows investors to test their theoretical strategies using historical data, thereby increasing their chances of future success.

In addition, Fidelity makes some of these same backtesting tools available on free of charge to site visitors. The site tells you in some detail what backtesting is and offers a lot of specifics on what it can do for the trader. Among the queries it answers: What kind of information will you get when you run a backtest? What is a trading signal, and how does it work? You’ll also find a description of the advantages and disadvantages of this approach.

Jim Burton, Fidelity’s senior vice president in charge of retail brokerages, says “We want people to understand backtesting concepts going in. We don’t want to just hang a tool out there and invite people to have at it without giving them an idea of whether they should use it.”

The tools are categorized by strategy into six generic technical buckets; Fidelity plans to add more over the next year. Within each category, you’ll find educational content that provides sample charts and explanations and discusses related benefits and risks. Burton says, “We want people to be prepared going in for possibilities of winners and losers.”

FOLLOWING THE FINAL INTEGRATION of the TD Waterhouse site into Ameritrade’s suite of tools, the recently relaunched TD Ameritrade Website ( features numerous new bells and redesigned whistles. The firm acquired options trade-analysis toolmaker Market Gear last year, and has launched Options 360, a tool designed to help traders and investors locate added market opportunities and better manage risk.

Options 360 is a graphically intense tool that lets the user see the impact of a variety of factors—time decay and stock- price volatility among them—on the performance of a particular option. It also allows the investor to perform a range of “what-if” analyses on a portfolio, assessing hypothetical changes.

You can also use this feature to look for trends and seek out trading opportunities by analyzing the volatility history of stocks and options. Options 360 lets you save and test trading strategies, and provides a probability-based evaluation of outcomes.

, TD Ameritrade has launched Wealth Ruler, which is designed to let customers create an investing plan. Developed in-house, Wealth Ruler gives the user a disciplined planning process. The tool currently lets you include stock and bond holdings, but will expand over the next few months to bring in mutual funds and options.

The tool evaluates your portfolio and then, based on your stated goal, walks you through the steps to arrive at a new target allocation. Toward the end, you can hit a button and it will create a series of orders that will rebalance your portfolio.

Another useful new tool for TD Ameritrade customers is Bond Wizard, which was designed to demystify fixed-income investing. Through a partnership with one of the larger bond clearinghouses, ValueBond, the program helps clients create an online bond ladder. The ladder tool lets you see potential bond cash flows and maturities, picking and choosing from the available inventory to suit your needs.

Interactive Brokers ( has made serious strides in filling some of the gaps in its offering this year. One cool new tool, the Risk Navigator, lets customers slice and dice their portfolios to determine value at risk, profit-and-loss potential, and the various Greek calculations. The Risk Navigator lets you view your portfolio by industry, and combines a profit-and-loss graph with a table showing how changes in the market affect your individual positions as well as your overall portfolio. It’s an intriguing innovation, and implemented in a way we’ve not seen in a free tool before.

complaints about ease of use by redesigning its Traders Workstation (TWS) with an easier look and feel. The redesign includes an Order Wizard that categorizes order types and shows you why you’d use them. TWS now allows you to place over 40 order types, such as basket trades (a group of individual orders that are saved in a single file and submitted as a package), icebergs (which allow you to submit an order, generally a big one, while publicly disclosing only a portion of it), or market-if-touched. (This last is an order to buy or sell an asset below or above the market; this order is held in the system until the trigger price is touched, then submitted as a market order).

The account window within TWS also has been redone and can be customized.

A new Contract and Securities Search feature, available from IB’s Website (rather than from within TWS), is a streamlined display of all available futures and options contracts and securities, making these asset classes easier to find. All these additions make the whole site much easier to navigate. Barron’s gives its awards to promote just such changes.

Posted by on 02/02 at 07:58 AM






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