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So trading platforms matter? want an example?

lets talk real estate,the kind on your monitor.Ever see those pictures of the trading room at Goldman Sachs?where each desk has 5-10 monitors all flashing data?.

Apparently many online brokers feel that there customers should have similar set ups,despite the likely hood that the average customer has a single 17 inch monitor.

Lets say you are interested in several  stocks,so you pull up chart windows of the two on your screen,now you want to see if there is any news on these stocks,so you open up a news window.

You see something that makes you want to put in a buy order,now you open up a order window by typing in the stock symbol..or do you?.Looking up the stock symbol or worse the alphabet soup option symbols wastes valuable time,and can cost you hundreds or thousands of dollars as the price moves away from you while you manually enter the price and the symbol(or look it up)the best platforms will automatically load the stock in question into a trading window or order entry window with a single click on the stock symbol anywhere on the screen.

The best platforms will have easy manipulation of the price you want to pay.One crappy platform I used didn’t have the ability to scroll the price up or down!!!!!.Yup $10.5,10.51,10.52,10.53.One click, one penny each click.That cost big losses.THAT ONE BAD DESIGN ELEMENT.

Back to the order;you decide you want to see the level two quotes,many platforms require you to open yet another window to see the level two quotes,and yet another “order window’ to place the order,then comes the”confirmation window”,you know;that pop-up window” are you sure you would like to buy 100 shares of goog?”,finally you click yes and now the order gets routed.

Good idea to check if the order reached the broker so now you open up the “open order” window on your screen.What about if the order fills?now you need to open up a “filled order”window on some systems.What about the “messages” window(tells you if there was a problem with the entered order”).

Are you beginning to see the problem?Using many trading platforms rapidly uses up every inch of your monitor and forces you into a maddening shuffling of windows trying to see the three basics”what do i own,what did I pay,how much did I make/lose”.

Believe me ,it gets much worse if you are trading multiple positions and GREATLY INCREASES THE CHANCE OF ERRORS ENTERING ORDERS THAT YOU WILL BE RESPONSIBLE FOR IF LOSSES OCCUR.

But what can be done about this?One solution would be a 100 inch monitor of course!.I actually have a 17 and a 22 inch monitor and the 22 inch monitor helps somewhat.The main issue is bad design.

I have yet to find anything that I am 100% happy with.There always seems to be one major flaw ,they left in.The platforms should be designed to show the most data, use the least space and still be easy to use,and function quickly.

It is very difficult to find these flaws without actually using them as a customer unfortunately,however many brokers do have a way for you to “test drive” the platform before you sign up.

Remember it’s these little defects that can really cause problems.One broker I will describe later has a fairly nice trading platform but It has a flaw which is causing me problems;limited font adjustments.

I can’t see the symbols and prices easily and the platform has no way to make the  fonts any bigger.I have already  made errors entering orders because of this.

Sure i could get glasses and take them on an off.Now i do need reading glasses for fine print,They aren’t needed looking at other web pages; I don’t intent to put my face 2 inches away from the monitor,because they couldn’t be bothered with putting a font adjustment.

Obviously someone with poor eye sight would not be able to use this platform at all.


Position checking…This system makes online trading possible; but the way your brokers system is set up has big effects on what you can and can’t do.

What is it?It is a complicated program that keeps track of the balances and customer trading level(whether the customer is a day trader,has a margin account,has approval to trade options etc.)on a ongoing basis..I was going to say second by second basis,but not all work that well.

This “policeman” has the job of deciding if the order you entered on your computer will actually be taken and executed.I mean what if you have $10,000 in the account and you put in an order to buy10 shares of Google,just then the cat walks on your keyboard and steps on the 0 button…oops now it an order to buy 10,000 shares Google!.

If the position checking didn’t instantly calculate that you didn’t have enough money in the account and cancel the order,someone would be on the hook for any losses.

The broker has to have a way to prevent these kind of devastating errors,or he could be at risk.So whats wrong with that?.Well sometimes these systems have flaws that either reduce your buying power,They may allow trades that result in margin calls,or disallow trades that should be allowed according to the published rules(more common).

If you are dealing with a small account you want to be able to use every dollar in your investments not have restrictions and red tape stop your order.

That ‘one that got away” will eat at you for years if you had the required funds but the position checking stopped the order from going in.Ideally the systems will constantly monitor real time prices of the securities in your account and calculate to the penny how much money is available to trade.It doesn’t always work like that!.

Many systems”refresh rate” is slow,what this means is the buying power calculations is based on 5 minutes ago 10 minutes ago prices.The worst ones use data a day old!.

Some instantly calculate trading profits/loses through the day,others don’t add these up till the close or the next day!.

This results in buying power being sucked out of your account all during the day,and a big suprise later(good or bad).One broker I deal with has a policy that IPO stocks have a 100%(instead of30%) margin requirement.

I didn’t know this.

The broker”forgot “to tell position checking that though!.

When the order went through normally I received a margin call the next day.

I let them know what I thought of that !.

Seems like there all in favor of position checking until there not responsible when it screws up.

Tough luck on me.

Another problem is…what price will position checking use?do we base the account value on closing price bid,closing price ask?,last sale?.

This can have a big effect on accounts with thinly traded stocks or especially options.

It is totally normal for an option to have a bid of .10 and an ask of $4.Last sale $3.9.Frequently at the close the specialist moves the bid away to try to “steal” “sell at market” orders.

If the brokers system uses closing bid to check your account balances,and you had 10 of these options,now your short $3900 in buying power going into tomorrow!.

Is .10 cents a realistic appraisal of your holdings at that point in time?.Tough luck.If the same thing happens the next day the buying power will still be “missing”.The only way to get it back would be when you sell it.

The system “understands” cash!.Obviously there is a trade off in trying to value securities,nothing will be perfect,but some are terrible.

Since the broker controls the way the position checking is set up he can set it up to be more or less stringent in enforcing your account privileges.

As you can see by the IPO example allowing a trade that is not allowed gets it done,but can cause problems later.