Saturday, May 07, 2011
Hot Tools for TD Clients
TD Ameritrade creates a “bridge” between the sophisticated trading site it acquired and its own, more mainstream site. Barron’s sneak peek.
When TD Ameritrade bought innovative, tool-laden thinkorswim two years ago, we wondered how its technology would find its way into the big broker’s traditional site. The initial link-up was straightforward: TD Ameritrade clients could just plug into the entire thinkorswim platform, lock, stock and barrel.
But many mainstream TD Ameritrade customers were overwhelmed by the intense experience offered by the sophisticated thinkorswim platform (http://www.thinkorswim.com). Just getting started on the site, which won Barron’s annual ranking of online brokers a number of times, can be intimidating for a newcomer. (For more on corporate acquisitions of our perennial favorites, you’ll have to read to the bottom of this column). We were given a preview of a “bridge” application, Trade Architect, during our most recent review ("Making the Right Connection,” March 14), and, last week, we were given a more in-depth look at TD Ameritrade’s attempt to bring together the two sites. Trade Architect will have its official launch this week, after recently giving select customers a chance to try out the application.
TD Ameritrade Vice President Steve Quirk explains that the firm is trying to meet clients’ interest in “boiling down” the “wealth of information” that was being provided to make a trading decision.
The combination offers a terrific mix of the fundamental analysis that’s a staple of the TD Ameritrade platform, as well as the vast array of technical tools thinkorswim has featured. Trade Architect can be customized to client needs pretty easily, and should go a long way toward introducing less-experienced electronic investors to more dazzling analytical techniques.
Trade Architect is a Flash-based application, so it will run on any computer (including Macs). The application won’t yet run on an iPad, thanks to Apple’s long tiff with Flash publisher Adobe, but Quirk assures us that it looks great on a Motorola Xoom. You can trade stocks, options, exchange-traded funds and mutual funds on Trade Architect.
There is nothing to download as long as you have the latest Flash plug-in on your computer, and best of all, unlike Schwab and Fidelity’s frequent-trader applications, no hoops to jump through to qualify to use Trade Architect. Anyone with a TD Ameritrade account will be able to use the platform as soon as it’s enabled for their account, at no additional fee. What’s more, all of your watch lists and positions are consistent among the various Websites and applications, so if you create one on any of the various TD Ameritrade platforms, including mobile, it will be there when you use Trade Architect, too.
The default opening screen—to which you can return at any time by clicking on the “Today” box on the menu bar—brings you real-time video from CNBC, a snapshot of your account balances, your watch lists, the “Heat Map” (a graphical representation of market moves and volumes), quote detail and real-time news. You can scroll through additional layouts or create your own by clicking on the “Setup” tab. When you set up your own, you are prompted to name it, and that name then displays on the menu bar, making it easy to find.
Fundamental data, such as earnings and various key financial ratios, are integrated throughout, so you don’t have to switch back to TD Ameritrade’s familiar green-border site to find something. If a symbol on your watch list has a number in parentheses next to it, then you know that there is current news pending for that company.
Any layout with quote detail is also festooned with relatively large “Buy” and “Sell” buttons that are impossible to miss. Clicking on the “Buy” opens an order-entry ticket at the bottom of the screen, which is prefilled with the ticker symbol, your default order size, and the asking price entered as a limit order; clicking on “Sell” enters the bid price. The trade ticket’s design is consistent across platforms, so there’s no shock when placing your first order on Trade Architect.
If you enter an options order, a chart displaying the last six months’ price movement appears. The historical area of the price chart that would have proved profitable for this order over time is shaded in green, which gives you a quick view of the strategy you’re considering. There are many more in-depth options-trading tools on the thinkorswim platform, of course, but Trade Architect contains some good basics that should get you comfortable with the more complex capabilities of the thinkorswim package, should you decide to use it someday.
As in most 1.0 versions of trading platforms, there are some missing pieces. PaperMoney, thinkorswim’s trading simulator, is not yet available in Trade Architect, but it should be soon. The charting application, while easy to use, only has about 10% of the 350-plus technical indicators found on the thinkorswim platform. In addition, futures- and foreign-exchange-trading integration will not happen until the firm completes a conversion of its securities clearing operation over the summer. More research tools will be added to the platform as it matures.
AS WE NOTED AT THE OUTSET, the purchase of an innovative company like thinkorswim by a big, established online broker is more the rule than the exception these days.
In late March, Schwab picked up optionsxpress (http://www.optionsXpress.com), which had gotten multiple awards from us in its specialty, dating back to the early part of the last decade. Although we’ve been assured that optionsXpress will continue to operate as a separate broker-dealer, we expect to see much of its technology find its way onto the Schwab platform.
And just a couple of weeks ago, Tokyo’s Monex Group announced that it will buy this year’s Barron’s victor, TradeStation (http://www.tradestation.com).
Monex’s CEO, Oki Matsumoto, noted in the firm’s news release that the Japanese online broker was buying “an award-winning platform” in TradeStation. The deal is expected to close in the third quarter. In this case, we expect to see the U.S. firm continue to operate independently, but anticipate more international trading opportunities will arise on its site before long.
In the meantime, you might want to pay attention to Barron’s list of 2011 online-brokerage winners, coming out next March. They will not only offer excellent trading platforms, but possibly a good pre-acquisition trade as well.
Published in Barron’s, May 2, 2011