Monday, February 20, 2006

Seek And It Shall Find

IF YOU WANT SOMETHING DONE RIGHT, do it yourself: That credo led Pete Stolcers, formerly with Terra Nova Trading and now a professional trader, to come up with an interesting Website called OneOption (http://www.oneoption.com). Frustrated with existing investment-search technology, he hired a few programmers and created his own. He found that his technology generated too many trading ideas for one person to trade, so he decided to share it.

The site appears to be very simple to use, displaying the results of his searches in long lists of ticker symbols. His target user is a self-directed trader who is in the market at least twice a month and is willing to spend 15 to 30 minutes a day checking out opportunities. Stolcers uses this technology to trade 50 to 80 stock orders a day, and 2,000 options contracts.

The site presents the results of proprietary searches, which are designed to find short-term trading opportunities. The searches are organized according to four types: bullish versus bearish; time horizon of a day versus a week; price pattern displaying continuation or reversal; and confirmed-trade triggers versus early triggers. These patterns are combined into 16 different trading classes, such as Bullish-Weekly-Continuation-Confirmed (or BWCC).

Clicking on a symbol brings up a one-week chart; the user can pick a one-month or one-year chart if desired. The graphs, which are quickly displayed in a small box that overlays your main screen, are generated by Yahoo!.

The site is free through the end of February; in March, a charge of $7.95 to $12.95 per month will go into effect—depending on the level of service. The higher-priced versions include newsletters and additional search tools. OneOption provides some intriguing trading ideas for the day- or swing-trader; check it out.

WHILE THE DOLLAR’S STRENGTH CONTINUES to befuddle the experts, more currency-trading sites keep cropping up. The most recent to hit our radar is FX Solutions (http://www.fxsol.com), which has developed an automated trading system that maintains the spread between bid and ask at 3 pips (hundredths of a percentage point.)

What differentiates FX Solutions from many forex houses is that it doesn’t take the opposite side of its customer’s trade, a fairly common practice in the industry. Michael Cairns, FX Solutions’ head of trading, says, “Automation is a huge differentiator in the business, so customers can make sure brokers aren’t ripping off their customers. Most forex brokers trade against the customer since there’s no central book, like you’d find in equities trading.”

FX Solutions customers can define the size of the order they’ll place, and the amount of leverage they’ll use. Forex trading has become very popular with traders who are comfortable with a lot of risk, since they can trade up to 400 times the amount they’ve deposited. Risk management is a huge part of forex trading; and FX Solutions provides its customers tools that let them exit a position quickly if it’s turning against them.

As of early February, FX Solutions was allowing its customers to trade 20 currency pairs, 24 hours a day. The main screen displays the currency pairs available; entering a trade involves clicking on the side of the trade you want after predefining your standard order size. You can enter up to five stops to exit a trade—and in forex, it’s almost mandatory to set a stop-loss order when you enter a trade.

The platform includes technical charting and real-time data feeds. You can open an account with $250, or use the demo platform to get comfortable with the process before you start using real money.

FOLLOWING UP ON our tax-software column of last week, several TurboTax users let us know that the program has a limitation that affects very active traders. TurboTax can’t handle your Schedule D if the sum of all your transactions is $10,000,000 or more. There are also limitations to filing electronically if you have more than 200 transactions on your Schedule D.

WE’RE STILL BEING SWAMPED by e-mails about the Harrisdirect/E*Trade conversion problems. I’ve taken these complaints personally because most of the readers who wrote in hold me partially responsible for their experience. Back in 1999, DLJ Direct was the top broker in our annual roundup, and numerous readers opened accounts there as a result. When DLJ Direct became Harrisdirect, the changes were slight, and the transfer of accounts went smoothly.

Now they’re E*Trade customers, and they’re not very happy about it. Your intrepid columnist has spent a large chunk of the past month running down issues surrounding the conversion, many of which have been reported here. Our mailbox is still stuffed with complaints from former Harris customers who can’t figure out how to get a reasonable rate of return on their cash balances.

When I’ve shared those concerns with E*Trade officials, they’ve claimed that the new customers can get better rates of return on their cash and implied that the former Harrisdirect customers can’t easily figure that out. We apparently have a failure to communicate. Watch this space for updates.

Posted by twcarey on 02/20 at 05:48 PM
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