I have placed two spread trades with Questrade now. One bull put credit spread and one bear call credit spread...basically an iron condor style trade if taken together as they are both expiring on the same EOM timeline. My execution could have been better timed, although the put spread is where I would want it to be the call spread is a little close due to my just wanting to place a spread trade to try it out.
Unlike a regular trade the spread trades CAN rack up a larger loss if let go if the underlying stock or ETF price goes through the spread to the other side.
I already noted how Questrade calculates the commissions for these. Both side of the spread are treated as one trade therefore the commission is $9.95 plus one dollar per contract. So my 4 contract call trade is $17.95 ($9.95+ 8 x $1).
I expect, but did not ask, if closing the trade costs the same commission. Letting it expire is the best method of retaining as much capital as possible as closing a trade should only be done as a risk management and loss control measure.
I have to place orders through the trade desk, easy enough. The desk brokers are helpful and knowledgeable and quick to pick up the calls. I do not have to pay the additional $25 trade desk fee for these trades...I wasn't sure about that originally.
The latest curiosity has been the closing of one leg of the spread. If I have sold a 110 strike and bought a 112 strike call and I want to control risk by closing the short side, the 110 strike, due to a price move in that direction can I close the short call?
The quick answer is yes, I did not ask how the commissions get calculated though.
I can call the order desk and they will close it for me or I can do it through the platform. If I do it myself my buying power is not adjusted until the end of the day so if I want to place another trade and need the room I would have to call the desk to advise them. No big deal.
All in all I must say that I am pleased with the options trading through Questrade. I thought the order desk was going to be problematic but it appears that I was mistaken.
Next question will be can I place GTC spread trade orders? For some reason I doubt it unless I placed the short option trade order independently in the platform and then just placed the long order after execution...or just let it expire as it may not be worth the commissions or could actually end up ITM...another day.
Jeff.
Questrade, My direct access discount broker.
Showing posts with label Questrade. Show all posts
Showing posts with label Questrade. Show all posts
Thursday, December 10, 2009
Saturday, October 31, 2009
The $400 advantage ... itrade / Questrade
I see that Scotia Bank has absorbed itrade and is up and running, not sure how long they have been. I am a BNS client for mortgage, credit and a couple of accounts including my US dollar account so I thought I might take a look at their trading platform and fees. Perhaps there is an advantage in having everything in one location...perhaps not.
I like Questrade as they are cheap, $4.95 trades (a penny per share with a cap of $9.95), the pro platform needs 25 trades to be "free" and is reasonably flexible and the active account minimum is $250 with no additional fees or tiered commissions.
So looking at the Scotia offering, I was surprised that it did not really compare as I though that it might.
A quick glance shows the tiered commissions. $6.99 per trade looked good but I would have to have 150 trades per quarter. Sounds big, at 50 per month it is substantial. Their is no mention of trade size that I saw but there were a few restrictions based on share pricing and minimum trade size, it was not terribly clear exactly what that entailed though.
Comparing my activity levels I may qualify for the $6.99 trades in some months but I transact 30 plus trades per month, not always 50. Due to my small startup account being less than $50,000 I would typically get nailed for the $19.99 trade commission (2 cents per share after 1000) as I would need to have between 30 and 150 trades per quarter AND $50,000 to qualify for tier two.
Options trades follow the same pricing structure plus $1.25 per contract compared to the $9.99 plus $1 at Questrade. My current volume and account size puts me in the $19.99 plus $1.75 per contract though...and I consider myself pretty active... the second tier is close but, again, no $50,000 or I would see $9.99 plus $1.25, a little pricier yet but not enough to make a real difference.
Now, the real kicker comes in with the platform. The pro level software IS THE SAME SOFTWARE as Questrade uses. I should not be surprised though as this is a common theme with onine trading.
Pricing is a little different though:
For 150 trades per quarter it is free (50 trades per month), 30-149 per quarter it is $99 or greater than $250,000 in assets. The base price is $200 otherwise.
This compares to Questrade's pricing for Pro at 20 trades per month or $30 per month.
I like Questrade's simple commission and platform pricing structure and the fact that it is just plain cheaper overall. I have not had an opportunity to try out Scotia's itrade for customer service as I will not open an account just to test run it...I considered it though but it just didn't make sense to through the money away to satisfy my curiosity.
So, the bare bones comparison for my monthly fees given my account size and activity now is:
Questrade: $4.95 stock and $9.95 options commissions, zero account fees, zero platform fees...zero any other fees except ECN, margin rates and other probably comparable fees. $300 or more due to commissions. Nice.
itrade: $19.99 stock and $19.99 options commissions, $99 platform fee, other fees seem the same. $700 or more due to commissions and platform fees.
So, I will continue to use the $400 advantage of Questrade.
I must mention the one advantage in favour of itrade... which I likely wouldn't use at all anyway... Virtual Trailing Stop Orders. They track the VTSO actively them selves and execute the market order on my behalf. Questrade only uses the orders that are available through the market they are trading in. This may mean that a true stop loss order is also available through itrade as well. This begs the question about execution of these trades though. They explicitly outline that they are not responsible for losses due to failure of software and whatnot. I know that a VTSO or stop loss placed with a market will be honoured and executed, what happens in the case of a volume load and platform problem where the itrade VTSO cannot get through...I am not as comfortable having an order another "step" away from the market.
Having said that I am trading US markets that do support the VTSO and stop loss and I am not using stops, generally, for my option orders so the whole issue may be a moot anyway.
For any interested I have links on this blog for Questrade and the Scotia stuff can be found by just entering "itrade" in the search browser, it will show up near the top of the search.
Jeff.
I like Questrade as they are cheap, $4.95 trades (a penny per share with a cap of $9.95), the pro platform needs 25 trades to be "free" and is reasonably flexible and the active account minimum is $250 with no additional fees or tiered commissions.
So looking at the Scotia offering, I was surprised that it did not really compare as I though that it might.
A quick glance shows the tiered commissions. $6.99 per trade looked good but I would have to have 150 trades per quarter. Sounds big, at 50 per month it is substantial. Their is no mention of trade size that I saw but there were a few restrictions based on share pricing and minimum trade size, it was not terribly clear exactly what that entailed though.
Comparing my activity levels I may qualify for the $6.99 trades in some months but I transact 30 plus trades per month, not always 50. Due to my small startup account being less than $50,000 I would typically get nailed for the $19.99 trade commission (2 cents per share after 1000) as I would need to have between 30 and 150 trades per quarter AND $50,000 to qualify for tier two.
Options trades follow the same pricing structure plus $1.25 per contract compared to the $9.99 plus $1 at Questrade. My current volume and account size puts me in the $19.99 plus $1.75 per contract though...and I consider myself pretty active... the second tier is close but, again, no $50,000 or I would see $9.99 plus $1.25, a little pricier yet but not enough to make a real difference.
Now, the real kicker comes in with the platform. The pro level software IS THE SAME SOFTWARE as Questrade uses. I should not be surprised though as this is a common theme with onine trading.
Pricing is a little different though:
For 150 trades per quarter it is free (50 trades per month), 30-149 per quarter it is $99 or greater than $250,000 in assets. The base price is $200 otherwise.
This compares to Questrade's pricing for Pro at 20 trades per month or $30 per month.
I like Questrade's simple commission and platform pricing structure and the fact that it is just plain cheaper overall. I have not had an opportunity to try out Scotia's itrade for customer service as I will not open an account just to test run it...I considered it though but it just didn't make sense to through the money away to satisfy my curiosity.
So, the bare bones comparison for my monthly fees given my account size and activity now is:
Questrade: $4.95 stock and $9.95 options commissions, zero account fees, zero platform fees...zero any other fees except ECN, margin rates and other probably comparable fees. $300 or more due to commissions. Nice.
itrade: $19.99 stock and $19.99 options commissions, $99 platform fee, other fees seem the same. $700 or more due to commissions and platform fees.
So, I will continue to use the $400 advantage of Questrade.
I must mention the one advantage in favour of itrade... which I likely wouldn't use at all anyway... Virtual Trailing Stop Orders. They track the VTSO actively them selves and execute the market order on my behalf. Questrade only uses the orders that are available through the market they are trading in. This may mean that a true stop loss order is also available through itrade as well. This begs the question about execution of these trades though. They explicitly outline that they are not responsible for losses due to failure of software and whatnot. I know that a VTSO or stop loss placed with a market will be honoured and executed, what happens in the case of a volume load and platform problem where the itrade VTSO cannot get through...I am not as comfortable having an order another "step" away from the market.
Having said that I am trading US markets that do support the VTSO and stop loss and I am not using stops, generally, for my option orders so the whole issue may be a moot anyway.
For any interested I have links on this blog for Questrade and the Scotia stuff can be found by just entering "itrade" in the search browser, it will show up near the top of the search.
Jeff.
Wednesday, September 16, 2009
RRSP, TFSA, Margin and option strategies.
I decided that I want to start selling option contracts so I figured that I better know what I can and cannot do within my various accounts.
MARGIN ACCOUNT:
I can do pretty much anything although the complexity of some of the strategies somewhat restricts my activities only due to the platform being not as options strategy friendly as it could be. I might review the Elite platform and see how it fairs compared to the Pro package.
Level 1
I can buy options with a $1000 account startup and can continue to do so as long as the net worth of the account remains above $250.
Level 2
I can sell covered calls as long as the account balance is $2500. For this I have to already hold the underlying stock so it is a bit of a cash creation strategy only based on a core position. The difference between 2 and 3 are slight but are delineated for the purpose of taxation and registered accounts.
Level 3
Spreads and straddles are allowed, although I can trade a straddle without being "authorized" as it is really just two long trades. I think that perhaps the trades are somehow tied together when done as an official "straddle" as it specifies the simultaneous call and put at the same strike price.
The Spread is buying one option and selling another against it. Buy the 20 strike call and sell the 15 strike put for example. The call is a long position that is the same as holding the stock so that if the put is exercised and you are forced to buy the stock, my call is also exercised to cover this as I buy the stock at the call strike price. In that case the premium I made selling the put goes against the loss off being put the stock and executing the option at the higher strike, creating a loss. The spread is a limited risk scenario without holding stocks as even if the stock hit zero my total loss is fixed.
Level 4
$25,000 minimum account size.
Uncovered writing. Basically I can sell calls and puts without any safety net as I may have them exercised at whatever the going prices are. This is a very risky trade plan and not something I would even consider unless I wanted to sell puts and I didn't care if I ended up owning the stock. Selling naked calls is just plain dumb, in my opinion, as if a call gets exercised I don't end up with anything other than a an uncontrolled loss.
Now, in a registered account, RRSP or TFSA, I know I cannot short stocks so I would expect that level 4 is not an option, uncovered writing. Level 3 might not be because the option trades are setup as a money making venture as opposed to a position protection measure. This I was not certain of but I have confirmed it.
Registered accounts can only trade level 1 or 2.
OK, this puts me at a disadvantage in my plans going forward. I would like to be able to trade a variety of strategies that are not allowed in a tax sheltered account so I will have to accommodate the eventual taxation of a portion of my trading activities.
Jeff.
MARGIN ACCOUNT:
I can do pretty much anything although the complexity of some of the strategies somewhat restricts my activities only due to the platform being not as options strategy friendly as it could be. I might review the Elite platform and see how it fairs compared to the Pro package.
Level 1
I can buy options with a $1000 account startup and can continue to do so as long as the net worth of the account remains above $250.
Level 2
I can sell covered calls as long as the account balance is $2500. For this I have to already hold the underlying stock so it is a bit of a cash creation strategy only based on a core position. The difference between 2 and 3 are slight but are delineated for the purpose of taxation and registered accounts.
Level 3
Spreads and straddles are allowed, although I can trade a straddle without being "authorized" as it is really just two long trades. I think that perhaps the trades are somehow tied together when done as an official "straddle" as it specifies the simultaneous call and put at the same strike price.
The Spread is buying one option and selling another against it. Buy the 20 strike call and sell the 15 strike put for example. The call is a long position that is the same as holding the stock so that if the put is exercised and you are forced to buy the stock, my call is also exercised to cover this as I buy the stock at the call strike price. In that case the premium I made selling the put goes against the loss off being put the stock and executing the option at the higher strike, creating a loss. The spread is a limited risk scenario without holding stocks as even if the stock hit zero my total loss is fixed.
Level 4
$25,000 minimum account size.
Uncovered writing. Basically I can sell calls and puts without any safety net as I may have them exercised at whatever the going prices are. This is a very risky trade plan and not something I would even consider unless I wanted to sell puts and I didn't care if I ended up owning the stock. Selling naked calls is just plain dumb, in my opinion, as if a call gets exercised I don't end up with anything other than a an uncontrolled loss.
Now, in a registered account, RRSP or TFSA, I know I cannot short stocks so I would expect that level 4 is not an option, uncovered writing. Level 3 might not be because the option trades are setup as a money making venture as opposed to a position protection measure. This I was not certain of but I have confirmed it.
Registered accounts can only trade level 1 or 2.
OK, this puts me at a disadvantage in my plans going forward. I would like to be able to trade a variety of strategies that are not allowed in a tax sheltered account so I will have to accommodate the eventual taxation of a portion of my trading activities.
Jeff.
Wednesday, March 11, 2009
Questrade, Daylight Savings and Pre-Market Trading
Questrade have a quirk in their QuestraderPro platform, perhaps this exists in the Elite version as well, that it (they) does not acknowledge the new daylight savings time change.
This makes all the charts and quotes appear as if they are one hour late. At 1000h the charts show 0900h.
The only way to get around this is to click on the little clock in the lower right corner of each chart to display the pre and post market trading, otherwise you will not see the fist hour of trading in the morning. It is a little disconcerting at first but manageable. I have not bugged them about it again this year yet though.
The trades happen in real time as the time on the platform does not affect the order process.
This quirk led me to seeing the pre-market activity that I knew was there but was ignoring. I was trying to gauge the opening price based on other markets, which is not necessary but I liked to try to predict where the opening will happen. I do not bad. So I saw yesterday that it was tracking along since 0830h.
ETFs do not appear to be traded pre market, although I thought they were capable there was no activity this morning at all.
Now I am reminded of this additional tool to use to gauge some of the morning activity...right after I pretty much exclude the early morning from my sights in favour of the more established trending patterns of late morning and afternoon trading.
Ultimately this is mostly inconsequential but an interesting exercise that may be useful while managing stops on medium term trades in future.
Jeff.
This makes all the charts and quotes appear as if they are one hour late. At 1000h the charts show 0900h.
The only way to get around this is to click on the little clock in the lower right corner of each chart to display the pre and post market trading, otherwise you will not see the fist hour of trading in the morning. It is a little disconcerting at first but manageable. I have not bugged them about it again this year yet though.
The trades happen in real time as the time on the platform does not affect the order process.
This quirk led me to seeing the pre-market activity that I knew was there but was ignoring. I was trying to gauge the opening price based on other markets, which is not necessary but I liked to try to predict where the opening will happen. I do not bad. So I saw yesterday that it was tracking along since 0830h.
ETFs do not appear to be traded pre market, although I thought they were capable there was no activity this morning at all.
Now I am reminded of this additional tool to use to gauge some of the morning activity...right after I pretty much exclude the early morning from my sights in favour of the more established trending patterns of late morning and afternoon trading.
Ultimately this is mostly inconsequential but an interesting exercise that may be useful while managing stops on medium term trades in future.
Jeff.
Wednesday, February 25, 2009
Questrade and the lack of VTSO
This is an update to the VTSO situation as I realized what was going on this week, mid April.
I found out that the TSX does not support Stop Loss orders other than stop limit orders. Stop loss become market orders upon being triggered. A VTSO is basically a moving stop loss order and therefore I believe that the VTSO and stop loss order are unavailable to all TSX and TSX Venture trades. This has nothing to do with Questrade as this will be the same for all brokers unless they institute some method of providing a stop loss through their own systems.
My fix is to trade the NYSE and AMEX using similar issues. I tested the stop loss and VTSO and they are still available over there. So any that really want to use these features will have to go outside of Canadian markets to do so.
Due to my difficulties with my platform and connection this morning I had opportunity to ask about the VTSO or Virtual Trailing Stop Order.
I won't get into the technicals as far as how these work, that is in my index if you need to check it out.
Questrade has not allowed VTSOs for about three weeks now due to some difficulties with executions and the trading platform. I did not ask about a re-instatement timeline but I will do some followup on this as I am curious.
I used to use VTSOs for exits while I was playing with a medium term strategy a while back and they did not do me any favours, nothing against the executions, they worked fine. It was just the fact that a trailing margin is tough to pick for a low volatility stock let alone for what we are experiencing now. Even manual chart stops, my favorite, would be getting nailed left right and center so I have not used any stops in some time.
In daytrading stops are not as necessary but are still prudent. Today was a case in point. Had I placed stop order I would have been protected had the trade go against me and it would at least serve as a safety or stop loss protection. As it turns out I could not have placed the stop anyway...although the market order did get executed so perhaps a stop might have gone through had I tried.
For the record, i was going to place a 15 cent trailing stop on my HGU position today had I been able to.
I am going to guess that Questrade needs to ramp up their platform and throughput to accommodate the higher volume of traders that they are no doubt seeing of late.
On a sidenote:
They are having a chart tracking issue which is to be resolved by Friday, perhaps the VTSO might be rectified as well. Apparently they were not aware of the chart issue until I pointed it out yesterday. I might suppose that it only appears to affect certain index data and I may be one of the few who might be using the platform in this manner as I use the index to base my trading on primarily.
Should anyone have the case when opening a chart after the market is open it does not display any past intraday history. As long as the chart remains open it tracks fine, just don't close the chart or the platform while trading...it screws up the moving averages.
Jeff.
I found out that the TSX does not support Stop Loss orders other than stop limit orders. Stop loss become market orders upon being triggered. A VTSO is basically a moving stop loss order and therefore I believe that the VTSO and stop loss order are unavailable to all TSX and TSX Venture trades. This has nothing to do with Questrade as this will be the same for all brokers unless they institute some method of providing a stop loss through their own systems.
My fix is to trade the NYSE and AMEX using similar issues. I tested the stop loss and VTSO and they are still available over there. So any that really want to use these features will have to go outside of Canadian markets to do so.
Due to my difficulties with my platform and connection this morning I had opportunity to ask about the VTSO or Virtual Trailing Stop Order.
I won't get into the technicals as far as how these work, that is in my index if you need to check it out.
Questrade has not allowed VTSOs for about three weeks now due to some difficulties with executions and the trading platform. I did not ask about a re-instatement timeline but I will do some followup on this as I am curious.
I used to use VTSOs for exits while I was playing with a medium term strategy a while back and they did not do me any favours, nothing against the executions, they worked fine. It was just the fact that a trailing margin is tough to pick for a low volatility stock let alone for what we are experiencing now. Even manual chart stops, my favorite, would be getting nailed left right and center so I have not used any stops in some time.
In daytrading stops are not as necessary but are still prudent. Today was a case in point. Had I placed stop order I would have been protected had the trade go against me and it would at least serve as a safety or stop loss protection. As it turns out I could not have placed the stop anyway...although the market order did get executed so perhaps a stop might have gone through had I tried.
For the record, i was going to place a 15 cent trailing stop on my HGU position today had I been able to.
I am going to guess that Questrade needs to ramp up their platform and throughput to accommodate the higher volume of traders that they are no doubt seeing of late.
On a sidenote:
They are having a chart tracking issue which is to be resolved by Friday, perhaps the VTSO might be rectified as well. Apparently they were not aware of the chart issue until I pointed it out yesterday. I might suppose that it only appears to affect certain index data and I may be one of the few who might be using the platform in this manner as I use the index to base my trading on primarily.
Should anyone have the case when opening a chart after the market is open it does not display any past intraday history. As long as the chart remains open it tracks fine, just don't close the chart or the platform while trading...it screws up the moving averages.
Jeff.
Tuesday, February 17, 2009
ECN fees
I have always wondered how the ECN (Electronic Communication Network) fees have been assigned as sometimes I see them and sometimes I don't. They are pretty regular when they do appear $0.0037 per share or 37 cents per lot.
I was reviewing my trades of late and realized that anytime I placed a limit order and was filled there was no fee but yet when I place a market order the fee appears. Even though this fee is not a lot it must be calculated into the cost of trading. I am currently playing with 500 share trades so the commission goes to an even $5 ($4.95 is the minimum with Questrade based on 1 cent per share with a $9.95 maximum) and the ECN for a market order is now $1.85 each way. That makes a total cost of a round trip market order trade $13.70. Still not too much of a concern as commissions where over $20 one way...and still are at many brokers.
Looking a bit deeper into the why I find that an ECN charges a fee for trades that remove liquidity from the market. Basically a market order gets executed as fast as possible at whatever price is next in line, sometimes that price is farther away than anticipated, but that is another story. This does not add to the quotes as an order to be filled at a certain price, which means that I am not adding to the liquidity, I am not placing an order to help fill the basket of orders to choose from.
My next test will be to see if I place a limit order far enough into the quotes that it will just get filled as fast as the inside prices are well under what I am willing to pay...this type of order should get executed as fast as a market order...so I expect to still see a fee, but perhaps not. This still meets my needs of not having to dink around with limit orders and missing the trade rather than having to chase the price.
Jeff.
I was reviewing my trades of late and realized that anytime I placed a limit order and was filled there was no fee but yet when I place a market order the fee appears. Even though this fee is not a lot it must be calculated into the cost of trading. I am currently playing with 500 share trades so the commission goes to an even $5 ($4.95 is the minimum with Questrade based on 1 cent per share with a $9.95 maximum) and the ECN for a market order is now $1.85 each way. That makes a total cost of a round trip market order trade $13.70. Still not too much of a concern as commissions where over $20 one way...and still are at many brokers.
Looking a bit deeper into the why I find that an ECN charges a fee for trades that remove liquidity from the market. Basically a market order gets executed as fast as possible at whatever price is next in line, sometimes that price is farther away than anticipated, but that is another story. This does not add to the quotes as an order to be filled at a certain price, which means that I am not adding to the liquidity, I am not placing an order to help fill the basket of orders to choose from.
My next test will be to see if I place a limit order far enough into the quotes that it will just get filled as fast as the inside prices are well under what I am willing to pay...this type of order should get executed as fast as a market order...so I expect to still see a fee, but perhaps not. This still meets my needs of not having to dink around with limit orders and missing the trade rather than having to chase the price.
Jeff.
Thursday, February 12, 2009
The Questrade Free Transfer Promo.
I put up the new banner for the free transfer promotion but thought I might mention a few things about this.
First, I would not promote something that I either didn't use or didn't think was worthwhile.
Second, while the transfer is free (up to $150...so unless your existing broker gouges you on the way out it is probably free) it does require a $25,000 transfer to qualify.
Third, $50 in free trades is a nice little touch to get started.
I plan on transferring my RRSP account to take advantage of this myself. I had actually planned to do that a year ago and procrastinated. Now that the account is deflated the $150 is hardly a consideration but still is nice to get something for free. I did liquidate about half of the account at it's then peak at least.
If anything I posted here made you think about opening or transferring an account with Questrade I wouldn't mind getting some credit for your decision, just start the process through one of the ads above.
Thanks,
Jeff.
First, I would not promote something that I either didn't use or didn't think was worthwhile.
Second, while the transfer is free (up to $150...so unless your existing broker gouges you on the way out it is probably free) it does require a $25,000 transfer to qualify.
Third, $50 in free trades is a nice little touch to get started.
I plan on transferring my RRSP account to take advantage of this myself. I had actually planned to do that a year ago and procrastinated. Now that the account is deflated the $150 is hardly a consideration but still is nice to get something for free. I did liquidate about half of the account at it's then peak at least.
If anything I posted here made you think about opening or transferring an account with Questrade I wouldn't mind getting some credit for your decision, just start the process through one of the ads above.
Thanks,
Jeff.
Monday, February 2, 2009
Forex, Questrade and huge margin
Over the weekend I opened a trial forex account with Questrade.
I must admit that I was surprised to get a call today from a representative offering his services should I have any questions. My "tele-marketer" radar blinked on for just a moment but was quickly dispelled once I realized who was calling.
One thing that he was sure to point out was the huge margin allowances, up to 200 times...not 200% but 20,000%. This is needed as lots are in the 100,000 not the 100 I am used to with stocks.
So today I logged in to do some playing. Not quite as intuitive as I thought it might be but I think that may just be the strangeness of the currency trading environment. The charts can be easily set up to emulate my stock charts, moving averages, colours...not much else is really needed. I have not checked my account in the last hour but I watched as the profit/loss jumped up to $500 then back to the red in a minute or two. Very fast due to the leverage involved.
The Java based platform works well. There is a PC version that can be downloaded but it will be easier for me to stick with the online version due to my moving from computer to computer.
An interesting twist is the 24 hour trading environment. 1700h Sunday until 1700h Friday. I thought this would make a nice seamless charting experience but it is strange to not have a beginning for each new day...then again, sitting down for an hour in the evening is possible, if not necessarily prudent. I am sure this could be addicting.
I will investigate this further but I am not sure that it is for me at this point, I need to play with it some more. Unlike stocks I would not suggest anyone try this on for size with your own real cash off the start as it could be lost very quickly. Carefully traded, with tight loss allowances, I am sure that it can be lucrative and could be a small portion of a trading portfolio.
Like anything else, due diligence is in order big time here. Getting to know a bit about currencies and choosing currency pairs that you can trade regularly will be important.
All in all it looks like a hoot and I am looking forward to at least some further playing, if not some active forex trading.
Jeff.
I must admit that I was surprised to get a call today from a representative offering his services should I have any questions. My "tele-marketer" radar blinked on for just a moment but was quickly dispelled once I realized who was calling.
One thing that he was sure to point out was the huge margin allowances, up to 200 times...not 200% but 20,000%. This is needed as lots are in the 100,000 not the 100 I am used to with stocks.
So today I logged in to do some playing. Not quite as intuitive as I thought it might be but I think that may just be the strangeness of the currency trading environment. The charts can be easily set up to emulate my stock charts, moving averages, colours...not much else is really needed. I have not checked my account in the last hour but I watched as the profit/loss jumped up to $500 then back to the red in a minute or two. Very fast due to the leverage involved.
The Java based platform works well. There is a PC version that can be downloaded but it will be easier for me to stick with the online version due to my moving from computer to computer.
An interesting twist is the 24 hour trading environment. 1700h Sunday until 1700h Friday. I thought this would make a nice seamless charting experience but it is strange to not have a beginning for each new day...then again, sitting down for an hour in the evening is possible, if not necessarily prudent. I am sure this could be addicting.
I will investigate this further but I am not sure that it is for me at this point, I need to play with it some more. Unlike stocks I would not suggest anyone try this on for size with your own real cash off the start as it could be lost very quickly. Carefully traded, with tight loss allowances, I am sure that it can be lucrative and could be a small portion of a trading portfolio.
Like anything else, due diligence is in order big time here. Getting to know a bit about currencies and choosing currency pairs that you can trade regularly will be important.
All in all it looks like a hoot and I am looking forward to at least some further playing, if not some active forex trading.
Jeff.
Friday, January 23, 2009
Questrade, a little plugging I suppose...
I popped some Questrade advertising on my blog as I am sure anyone reading now has noticed. I figure that I use them and am satisfied with their service that perhaps others that are just starting out might want to give them a try...and take advantage of the $50 in free trades to boot. Perhaps some might be looking for a more cost effective method to trade when they do not require the hand holding that is supposed to go along with their current full service broker.
I was at a meeting of my local share club (DRIP club) and the topic of brokers came up. The discussion was in reference to the TFSA mainly as there are administration fees and withdrawal fees for these as well at other brokers, primarily bank brokerages, but the discussion headed to fees and practises in general. I was surprised at some of the fees and policies that there are in place at some "full service" brokers. I even hear of certain types of orders costing more in commissions than others...limit orders specifically, maybe VTSOs as well. Perhaps these are phone orders as opposed to online or direct access orders but it certainly puts a splash of cold water on a trading plan to have capital eaten up this way.
I know when I started looking for a broker I did not look too far. I checked my bank and was shocked at the fees so I checked a few online brokers and did a straight cost comparison based on my needs and expectations. Considering that I really did not have any idea where my trading might end up I do feel that they have been a good fit for all of the trading that I have been doing so far...and I have tried a lot of different styles, methods and trade types.
I have not gotten into options yet. Maybe sometime but I do have them available in the accounts should I decide to.
I have mentioned most of this somewhere in my blog already but I thought it worth mentioning again as more and more people are looking to get into some level of trading or investing.
It is not normally my style to come across as trying to pitch a product or service so I just call'em like I see'em, nothing more, nothing less. This is a "not for everyone broker" but will serve quite well for those traders/investors who like to look after their own.
Jeff.
I was at a meeting of my local share club (DRIP club) and the topic of brokers came up. The discussion was in reference to the TFSA mainly as there are administration fees and withdrawal fees for these as well at other brokers, primarily bank brokerages, but the discussion headed to fees and practises in general. I was surprised at some of the fees and policies that there are in place at some "full service" brokers. I even hear of certain types of orders costing more in commissions than others...limit orders specifically, maybe VTSOs as well. Perhaps these are phone orders as opposed to online or direct access orders but it certainly puts a splash of cold water on a trading plan to have capital eaten up this way.
I know when I started looking for a broker I did not look too far. I checked my bank and was shocked at the fees so I checked a few online brokers and did a straight cost comparison based on my needs and expectations. Considering that I really did not have any idea where my trading might end up I do feel that they have been a good fit for all of the trading that I have been doing so far...and I have tried a lot of different styles, methods and trade types.
I have not gotten into options yet. Maybe sometime but I do have them available in the accounts should I decide to.
I have mentioned most of this somewhere in my blog already but I thought it worth mentioning again as more and more people are looking to get into some level of trading or investing.
It is not normally my style to come across as trying to pitch a product or service so I just call'em like I see'em, nothing more, nothing less. This is a "not for everyone broker" but will serve quite well for those traders/investors who like to look after their own.
Jeff.
Friday, January 9, 2009
More Questrade TFTA TFSA updates
I received my passwords today for my new account.
In the interest of be sure that fees are kept to a minimum I went online to try chatting to find out how to do this but no operators were avaiable and I was not going to wait for an email response.
So I picked up the phone and called.
5 mins 35 seconds from start to finish and the CSR had pulled up my account and linked my accounts so I will not have to change passwords or use two instances of the trading platform. I should be able to trade Monday...or at least by Tuesday.
I have heard others gripe about their customer service but I have yet to experience any real problem or hassle. My expectations are not that high, I will admit, but I pretty much get what I expect...and then some in most cases.
All in all, very helpful and in good time too.
Jeff.
In the interest of be sure that fees are kept to a minimum I went online to try chatting to find out how to do this but no operators were avaiable and I was not going to wait for an email response.
So I picked up the phone and called.
5 mins 35 seconds from start to finish and the CSR had pulled up my account and linked my accounts so I will not have to change passwords or use two instances of the trading platform. I should be able to trade Monday...or at least by Tuesday.
I have heard others gripe about their customer service but I have yet to experience any real problem or hassle. My expectations are not that high, I will admit, but I pretty much get what I expect...and then some in most cases.
All in all, very helpful and in good time too.
Jeff.
TFTA, TFSA and Questrade
I applied for and have my new TFTA account and I am now just waiting for a password to start trading.
The process went smoothly except I tried faxing in my photo ID and it was too dark, I should have scanned and emailed it so I have about a two day delay that I caused.
I was able to use e-signatures to send everything in without having to mail paperwork, used a transfer from my margin trading account to initially fund the account and sent an EFT from my bank account to add some more capital to start with.
The only thing that I have not had cleared up for me is exactly how two trading accounts will work. I am sure that the trading platform handles multiple accounts, the manual states that it does but gives no details. I am sure it is just a tab selection to switch between the two so I am not really concerned about the functionality.
What I am not sure about is how to get the two onto the one platform...or how to switch the platform to TFTA exclusively. I just am trying not to incur any additional data fees or at least keep any potential data fees outside of the TFTA.
Having said that, my plan is to do no margin trading so I could just transfer the whole works. Being a discount broker I did not want to get too complicated with my setup so I will wait and see how it meshs...I have an email in to have this questions answered but I don't expect a quick answer. Right now they are up to their eyeballs in people inquiring about TFSA stuff. I see that their online help, which is usually very timely, is now running 20 people deep and 30 minutes or more behind the estimated handling time.
Don't be in a hurry if you are looking for answers from Questrade right now. Perhaps they underestimated the flurry of applications and questions that go with that.
The end run is that I expect that once I have my password and access to the TFTA I will have to call and have a CSR do some keypunching to get me set up the way that I want. I registered the account under the free platform package for now...I should have suspended my Pro package for January but I would have had to register the request in December and I would have lost my realtime feed to do any more testing... I need my feed.
All in all we shall see how this goes.
Jeff.
The process went smoothly except I tried faxing in my photo ID and it was too dark, I should have scanned and emailed it so I have about a two day delay that I caused.
I was able to use e-signatures to send everything in without having to mail paperwork, used a transfer from my margin trading account to initially fund the account and sent an EFT from my bank account to add some more capital to start with.
The only thing that I have not had cleared up for me is exactly how two trading accounts will work. I am sure that the trading platform handles multiple accounts, the manual states that it does but gives no details. I am sure it is just a tab selection to switch between the two so I am not really concerned about the functionality.
What I am not sure about is how to get the two onto the one platform...or how to switch the platform to TFTA exclusively. I just am trying not to incur any additional data fees or at least keep any potential data fees outside of the TFTA.
Having said that, my plan is to do no margin trading so I could just transfer the whole works. Being a discount broker I did not want to get too complicated with my setup so I will wait and see how it meshs...I have an email in to have this questions answered but I don't expect a quick answer. Right now they are up to their eyeballs in people inquiring about TFSA stuff. I see that their online help, which is usually very timely, is now running 20 people deep and 30 minutes or more behind the estimated handling time.
Don't be in a hurry if you are looking for answers from Questrade right now. Perhaps they underestimated the flurry of applications and questions that go with that.
The end run is that I expect that once I have my password and access to the TFTA I will have to call and have a CSR do some keypunching to get me set up the way that I want. I registered the account under the free platform package for now...I should have suspended my Pro package for January but I would have had to register the request in December and I would have lost my realtime feed to do any more testing... I need my feed.
All in all we shall see how this goes.
Jeff.
Saturday, January 3, 2009
Questrade, TFTA, a change of rules, mine
This whole last few months I've been going on about the Tax Free Savings (Trading) Account (TFTA) and how I was going to use it for all of my trading. Yesterday I filled out the application and forwarded it to Questrade. They have a method of e-signing the forms, which may be only available to existing customers, that sped up the whole process. All I have to do is fax them a copy of my driver's license, EFT some cash and I should be ready to go in short order. Pretty simple and quick.
So, in reading the details I ran across the phrase "capital gains" when referring to what can grow tax free within the account. It occurred to me that the profit from short selling stocks is not, technically, capital gains and if push comes to shove with the government they are treated as regular income for tax purposes...again, not capital gains.
I used the online help feature and had my answer in a minute. No, shorting is not allowed in a TFTA. I actually should have known this as I knew that shorting was not allowed in an RRSP account either. I was blinded by the fact that I could short in a margin account and the gains looked really promising...my research was lacking.
I quickly went back over all of my previous trades to see how much of my profit would have been from short selling. This was easy enough as I have always kept a long/short profit ratio for all my tracking spreadsheets. Note that this is not a ratio of number of trades, just profit.
Overall I am running about 1:1. So half of my trading profit would not be counted. Seeing as my performance is close to 2% per day I would be just shy of my daily goal if I dropped half of my trades...or my trading profit. I consider that I usually stop at a daily maximum of 6 trades, more often 4. So if I was concentrating on making that many trades and with long only positions I may have been able to make 75% of the trades. So I might have seen 1.5% per day.
My options to adjust my trading plan include:
1) long only trades with the same plan that I have been using, result may be 25% - 50% reduction in profits
2) long in the TFTA, short in margin, result is taxable (max marginal rate) for all short profits so the overall effect would be pretty close to option 1), within 10%
3) variation of option 2) in that all profits at year end for shorts are contributed to my RRSP account whereby the taxation is negated but the downside is that these will be taxed upon withdrawal... perhaps at a lower tax rate at the time
4) variation of option 1) by using only the TFTA, trading my favourite stocks long and shorting the index that they are tracking through the use of a bear Exchange Traded Fund (ETF), result is the same tax free profit potential as I was planning on originally
Well, option 4 becomes the no brainer solution to my dilemma it would appear. In investigating the ETFs I start to wonder if I can trade them exclusively.
This would be easy enough as I just run the bear and corresponding bull ETF side by side with the related index they track and the TSX for the overall market and trade them back and forth. When one is rallying the other will be pulling back which means that one or the other will always be gaining...except in a true sidways market move. The difference in prices will necessitate using different position sizing for each which will look after the scaling according to the size of the move. Roughly a 1% gain in one will yield a 1% drop in the other.
In the interest of keeping it simple I think I will start out with option 1) only and see how it goes. I believe that the stocks I have selected will be seeing some gains over the next while so long positions will be many, I may have to increase my time trading by a bit though. If that does not pan out then I will play with the ETF and see how they work out for trade executions and perhaps mix it up from there.
I will have to wait for my TFTA to get going first as I really want to stay away from any gains in this 2009 tax year.
I should have known it was not going to be such an easy ride and that the testing was not yet complete. Too bad as I would have liked to have had this ironed out earlier. If I do some testing with the expectation of a loss then it will reduce the capital in my account as I cannot just "top it off" after testing is complete. $5K contributed is the limit no matter the trading losses incurred...unless I over-contribute and pay the monthly penalty. Questrade may enforce the maximum as their policy is worded in such a way at that is possible.
Jeff.
So, in reading the details I ran across the phrase "capital gains" when referring to what can grow tax free within the account. It occurred to me that the profit from short selling stocks is not, technically, capital gains and if push comes to shove with the government they are treated as regular income for tax purposes...again, not capital gains.
I used the online help feature and had my answer in a minute. No, shorting is not allowed in a TFTA. I actually should have known this as I knew that shorting was not allowed in an RRSP account either. I was blinded by the fact that I could short in a margin account and the gains looked really promising...my research was lacking.
I quickly went back over all of my previous trades to see how much of my profit would have been from short selling. This was easy enough as I have always kept a long/short profit ratio for all my tracking spreadsheets. Note that this is not a ratio of number of trades, just profit.
Overall I am running about 1:1. So half of my trading profit would not be counted. Seeing as my performance is close to 2% per day I would be just shy of my daily goal if I dropped half of my trades...or my trading profit. I consider that I usually stop at a daily maximum of 6 trades, more often 4. So if I was concentrating on making that many trades and with long only positions I may have been able to make 75% of the trades. So I might have seen 1.5% per day.
My options to adjust my trading plan include:
1) long only trades with the same plan that I have been using, result may be 25% - 50% reduction in profits
2) long in the TFTA, short in margin, result is taxable (max marginal rate) for all short profits so the overall effect would be pretty close to option 1), within 10%
3) variation of option 2) in that all profits at year end for shorts are contributed to my RRSP account whereby the taxation is negated but the downside is that these will be taxed upon withdrawal... perhaps at a lower tax rate at the time
4) variation of option 1) by using only the TFTA, trading my favourite stocks long and shorting the index that they are tracking through the use of a bear Exchange Traded Fund (ETF), result is the same tax free profit potential as I was planning on originally
Well, option 4 becomes the no brainer solution to my dilemma it would appear. In investigating the ETFs I start to wonder if I can trade them exclusively.
This would be easy enough as I just run the bear and corresponding bull ETF side by side with the related index they track and the TSX for the overall market and trade them back and forth. When one is rallying the other will be pulling back which means that one or the other will always be gaining...except in a true sidways market move. The difference in prices will necessitate using different position sizing for each which will look after the scaling according to the size of the move. Roughly a 1% gain in one will yield a 1% drop in the other.
In the interest of keeping it simple I think I will start out with option 1) only and see how it goes. I believe that the stocks I have selected will be seeing some gains over the next while so long positions will be many, I may have to increase my time trading by a bit though. If that does not pan out then I will play with the ETF and see how they work out for trade executions and perhaps mix it up from there.
I will have to wait for my TFTA to get going first as I really want to stay away from any gains in this 2009 tax year.
I should have known it was not going to be such an easy ride and that the testing was not yet complete. Too bad as I would have liked to have had this ironed out earlier. If I do some testing with the expectation of a loss then it will reduce the capital in my account as I cannot just "top it off" after testing is complete. $5K contributed is the limit no matter the trading losses incurred...unless I over-contribute and pay the monthly penalty. Questrade may enforce the maximum as their policy is worded in such a way at that is possible.
Jeff.
Tuesday, December 16, 2008
VTSO and stop order executions
The Stop Order
(In order to keep some of these older posts current I will comment on the VTSO and stop loss orders here. I have found out that the stop loss and VTSO are no longer available on the TSX market, this has nothing to do with the broker as the exchange just does not support these orders. I had, in the past, placed and had VTSOs work fine so I am not sure at what point this changed.)
(from a previous post)
A Stop order is an order to sell a stock when its' price hits a preset price to lock in a profit (profit protection) or to limit a loss (stop loss) when the price drops. The reverse is true for a short position.
Once the order is triggered it becomes a market order which is an order to sell the stock at whatever price it will go for. The only problem with this is that it COULD sell for less than anticipated due to market conditions...I have had it happen once or twice when the difference was more than just a few cents. There are other concerns but they are less of a concern than not setting a stop at all.
While this is true, generally, I will clarify a few things.
Quotes vs price for market orders.
The price a stock has traded at is history as soon as the trade is made. This means that the price you just saw on the chart may not be the price you will trade at. The quotes, on the other hand, indicate what traders are willing to pay (bid), or accept (ask), for the number of shares indicated.
This is the uncertain future.
Any automatic stop order uses the quotes to determine when the order gets triggered, not the price. So a stop order to close a long position set at $34.00 will trigger and become a market order when the bid hits $34.00 or less. The last traded price could still be well above the $34.00 mark but the market order will likely execute at $34.00 or perhaps less.
This is what the stop order does, it goes by the quotes not by the last traded price.
Virtual Trailing Stop Order (VTSO)
This can be a handy device if used properly. I have tried a number of methods to employ the VTSO and really have found none to be very good mainly due to me having a very tight loss stop in mind. Basically, I was not really using then properly even though they worked reasonably well and I was able to make some decent profits with them. I'll mention the profitable uses later.
In the VTSO you set the price difference you are looking for when you place the order and it adjusts the stop based on the last traded price. Other than this ratcheting of the order price it is the same as a stop order.
For example, you are in a long position and the price is at $34.00 and you determine that you want to sell if the price drops 50 cents. In Questrade's Questrader Pro you select the VTSO box and enter 0.50, it will set the stop at $33.50 immediately and you will see the order in the account box to sell at $33.50. The first time I did this I had to call to verify that is how it worked as I did not want to accidentally sell my position for 50 cents, that would have been a real bummer to find out the hard way.
Interestingly the stop order does not appear with the correct price until a trade has occured.
Now when the price moves up to $34.50 the stop price automatically ratchets up to $34.00 and will not go back down. This continues as long as the bids never drop to 50 cents below the highest price since the order was placed.
Keep in mind that the stop is set by the price but triggered by the bids. This can be a problem at the opening of the market, especially now with the volatility that we are seeing. The bids can be way off of the actual first trade price. Today on a stock that is around $50 I saw the bids over $2 higher than the actual open price...it can be lower just as easily and if the market opens and that low bid stands for the first second you will become the first trade of the day as the VTSO is hit, passed and executed at the fastest possible price.
I have had stops and VTSO's in place overnight and had to either cancel or change them to allow for a huge gap between the price and the quotes for fear of having my position closed prematurely.
It is worth noting that pros in the market, big players, will intentionally drive the price down to a point where most safe traders might have placed stops in order to have those stops executed. This is actually a strategy to "clean out the stops" and garners a better price for them from the flood of market orders that get executed as a result. When this is obvious it makes a very good point for a daytrader to jump in with a long position trade to catch the resulting rebound of the price.
There are good technical stop positions that are sort of "traditional" to watch for. I have learned to place a stop then adjust it a bit farther out from where I first considered it as my stops often get nailed to the penny and I miss out on further gains.
For the record, this is partly why I have migrated to daytrading as there is no stop order in place, or at least not one that is likely lto get hit unless I want out of the trade at that price. I should be placing a worst case stop for each trade opened just in case my connection fails but I am lazy as it takes and extra step and I would rather watch the price move along and exit quickly than have another step between me and a clean exit, even though it can only be one click to cancel.
The profitable applications of the VTSO for me were the longer day trades. I have not used them recently though. What I did was forecast a move of a stock price early in the day, place the order to buy then place the VTSO at a certain distance from the price. If my stop was hit then I was wrong and wanted out anyway, if the price moved up then my stop moved along with it. I might use a 20 to 50 cent VTSO for these. I would set these and shut down my platform and go for lunch or do what ever I might do in the afternoon. then check them at the end of the day. Depending on my confidence I might let them go overnight. I got lucky doing that once with a $6 gap up in price the next moring...I actually thought that there was a problem and could not figure out why my account balance jumped so high. As soon as I did I dumped the stock as it should not have been so high, I was right. That was when I realised how easily I could have been on the wrong side of the gap and lost as much as I gained, at least on paper, until I sold.
I now consider these to catch some of the afternoon runs that take hours to resolve,
I have yet to try them again though. One of my primary tenents is to remove emotion from the trade, that was the main reason I used the VTSO, that and time management.
Final Comment:
I don't recall if this option is available in the basic browser platfomr or the Webtrader, it may not be. I do know that they will not allow limit or VTSO's in anything other than even lots of 100 shares...it's been a while but limit orders might also not be allowed for odd lots either. In any case this is something that you should check with your broker about as some even charge different commissions based on the order type.
I will be considering stepping up to the Questrader Elite in February as it gives some more automation and alerts that might be nice to have as well as for different methods of entering trades right form the quotes.
Jeff.
(In order to keep some of these older posts current I will comment on the VTSO and stop loss orders here. I have found out that the stop loss and VTSO are no longer available on the TSX market, this has nothing to do with the broker as the exchange just does not support these orders. I had, in the past, placed and had VTSOs work fine so I am not sure at what point this changed.)
(from a previous post)
A Stop order is an order to sell a stock when its' price hits a preset price to lock in a profit (profit protection) or to limit a loss (stop loss) when the price drops. The reverse is true for a short position.
Once the order is triggered it becomes a market order which is an order to sell the stock at whatever price it will go for. The only problem with this is that it COULD sell for less than anticipated due to market conditions...I have had it happen once or twice when the difference was more than just a few cents. There are other concerns but they are less of a concern than not setting a stop at all.
While this is true, generally, I will clarify a few things.
Quotes vs price for market orders.
The price a stock has traded at is history as soon as the trade is made. This means that the price you just saw on the chart may not be the price you will trade at. The quotes, on the other hand, indicate what traders are willing to pay (bid), or accept (ask), for the number of shares indicated.
This is the uncertain future.
Any automatic stop order uses the quotes to determine when the order gets triggered, not the price. So a stop order to close a long position set at $34.00 will trigger and become a market order when the bid hits $34.00 or less. The last traded price could still be well above the $34.00 mark but the market order will likely execute at $34.00 or perhaps less.
This is what the stop order does, it goes by the quotes not by the last traded price.
Virtual Trailing Stop Order (VTSO)
This can be a handy device if used properly. I have tried a number of methods to employ the VTSO and really have found none to be very good mainly due to me having a very tight loss stop in mind. Basically, I was not really using then properly even though they worked reasonably well and I was able to make some decent profits with them. I'll mention the profitable uses later.
In the VTSO you set the price difference you are looking for when you place the order and it adjusts the stop based on the last traded price. Other than this ratcheting of the order price it is the same as a stop order.
For example, you are in a long position and the price is at $34.00 and you determine that you want to sell if the price drops 50 cents. In Questrade's Questrader Pro you select the VTSO box and enter 0.50, it will set the stop at $33.50 immediately and you will see the order in the account box to sell at $33.50. The first time I did this I had to call to verify that is how it worked as I did not want to accidentally sell my position for 50 cents, that would have been a real bummer to find out the hard way.
Interestingly the stop order does not appear with the correct price until a trade has occured.
Now when the price moves up to $34.50 the stop price automatically ratchets up to $34.00 and will not go back down. This continues as long as the bids never drop to 50 cents below the highest price since the order was placed.
Keep in mind that the stop is set by the price but triggered by the bids. This can be a problem at the opening of the market, especially now with the volatility that we are seeing. The bids can be way off of the actual first trade price. Today on a stock that is around $50 I saw the bids over $2 higher than the actual open price...it can be lower just as easily and if the market opens and that low bid stands for the first second you will become the first trade of the day as the VTSO is hit, passed and executed at the fastest possible price.
I have had stops and VTSO's in place overnight and had to either cancel or change them to allow for a huge gap between the price and the quotes for fear of having my position closed prematurely.
It is worth noting that pros in the market, big players, will intentionally drive the price down to a point where most safe traders might have placed stops in order to have those stops executed. This is actually a strategy to "clean out the stops" and garners a better price for them from the flood of market orders that get executed as a result. When this is obvious it makes a very good point for a daytrader to jump in with a long position trade to catch the resulting rebound of the price.
There are good technical stop positions that are sort of "traditional" to watch for. I have learned to place a stop then adjust it a bit farther out from where I first considered it as my stops often get nailed to the penny and I miss out on further gains.
For the record, this is partly why I have migrated to daytrading as there is no stop order in place, or at least not one that is likely lto get hit unless I want out of the trade at that price. I should be placing a worst case stop for each trade opened just in case my connection fails but I am lazy as it takes and extra step and I would rather watch the price move along and exit quickly than have another step between me and a clean exit, even though it can only be one click to cancel.
The profitable applications of the VTSO for me were the longer day trades. I have not used them recently though. What I did was forecast a move of a stock price early in the day, place the order to buy then place the VTSO at a certain distance from the price. If my stop was hit then I was wrong and wanted out anyway, if the price moved up then my stop moved along with it. I might use a 20 to 50 cent VTSO for these. I would set these and shut down my platform and go for lunch or do what ever I might do in the afternoon. then check them at the end of the day. Depending on my confidence I might let them go overnight. I got lucky doing that once with a $6 gap up in price the next moring...I actually thought that there was a problem and could not figure out why my account balance jumped so high. As soon as I did I dumped the stock as it should not have been so high, I was right. That was when I realised how easily I could have been on the wrong side of the gap and lost as much as I gained, at least on paper, until I sold.
I now consider these to catch some of the afternoon runs that take hours to resolve,
I have yet to try them again though. One of my primary tenents is to remove emotion from the trade, that was the main reason I used the VTSO, that and time management.
Final Comment:
I don't recall if this option is available in the basic browser platfomr or the Webtrader, it may not be. I do know that they will not allow limit or VTSO's in anything other than even lots of 100 shares...it's been a while but limit orders might also not be allowed for odd lots either. In any case this is something that you should check with your broker about as some even charge different commissions based on the order type.
I will be considering stepping up to the Questrader Elite in February as it gives some more automation and alerts that might be nice to have as well as for different methods of entering trades right form the quotes.
Jeff.
Saturday, December 13, 2008
The overview, goals and targets
Perhaps I mentioned before that I like to do spreadsheets and I set up auto filling fields and various columns to... well ...let's just leave it that sometimes the more complicated the better. The first one that I set up to get an idea of the potential of my trading blew me away when I realized exactly what my initial, attainable and realistic small goal would produce. I still use it as a benchmark for all of my trials of trading strategies.
So instead of going on about those sheets I will cut the whole thing down to a few, or not so few, guidelines, goals and targets.
Rather than explain the premise behind, or the validity of each of these points, suffice it to say that I have proven the majority through a variety of trials both real and on paper but all with live data. Basically, no historical chart work. While I did some of that in the past I realized that it is not as valid as it seems as hindsight lifts the fog of the future just enough to make it not as uncertain as true real time testing. Everything that I have based my day trading plan on has been live.
Should anyone reading happen to find error, disagree or just want some further clarification let me know by commenting here or emailing.
Guidelines and rules:
I place $5,000 into a trading account and never add cash to it again
I use a tax free trading account to never have to pay taxes on the proceeds
I trade for 40 weeks of the year (three months of “buffer” in case I fall short of my targets)
I trade four days per week (160 days of a possible 260)
I trade only in the morning (my best time for alertness)
I trade a maximum of 6 trades per day (more have proven less profitable)
I trade one stock from a selection of only four (why make it complicated?)
Limit orders for entries, market orders for exits...so far
No margin use (starting in January)
Even lots of 100 shares traded
Trade size is capped at $45,000 per trade in year two, (I think I can use less and still meet the goals)
Performance:
1% per trading day on average. (I am currently at a 1.26% daily average return)
I am not trying for a quick large win here, just plugging away with a profitable strategy.
The time line:
January 2009, week one.
TFTA setup with Questrade, $5,000 deposited, may take a week or two to get going.
All gains return to the account for growth, even any over performance returns for the time being.
Week 26
Double my money the first time.
Week 40
Tripled my money (this could be as early as October)
January 2010
No additional contribution to the TFTA even though I could put $5K more in, at this point it will only make the difference of about a month or two before I can start drawing back out of the account.
Week 49
Quadrupled my money, I stop noting these marks at this point as I concentrate on cash flow.
Week 56
Returns are at $1000 per week
Week 72
Returns are $1800 per week
December 2010
Plan changes from growth to cash flow and investments
Account balance is $62,000
Investments for dividends are started, still within the TFTA umbrella
Income is $900 per week, investments are $900 per week
December 2011
Annual “wage” has been $36,000 tax free
Investment account deposits have been $36,000
Total account balance less any investment gains or dividends is $98,000
Should I remain working the balance would be $134,000, with $72,000 of that in investments for dividends
Alterations possible:
There are some circumstances that may have me trading more than the 40 weeks per year.
- should I fall short of my goals by the annual targets
- at the end of year two I could have the option of continuing to work a regular salary job or just concentrate on trading alone for my income and portfolio growth, I may trade more as a result
- should interest rates start to rise again I will probably step up mortgage and credit payments
- should my wife decide that she would like to settle out her current job and take on something that pays less but may be more enjoyable for her
- expenses like schooling for the kids kicks in after year three
All in all while this starts to sound like the ads that I see claiming huge returns for little effort, I must say that there has been lots of effort and time put into what looks like a rather simple plan. Countless hours of chart studying, research, trials and lots of emotional roller coaster rides to get to the point where I am now. My three year return on the original investment can be over 2000%. This has been a year in the making now. I have had some fun with this whole trading game but it is time for the games to end and the serious business of trading to begin.
I am looking forward to actually placing this plan into effect in the next few weeks. I consider this my biggest New Year's resolution ever, though I am not one to make resolutions as almost none ever get followed through, I think this will be an exception.
Jeff.
So instead of going on about those sheets I will cut the whole thing down to a few, or not so few, guidelines, goals and targets.
Rather than explain the premise behind, or the validity of each of these points, suffice it to say that I have proven the majority through a variety of trials both real and on paper but all with live data. Basically, no historical chart work. While I did some of that in the past I realized that it is not as valid as it seems as hindsight lifts the fog of the future just enough to make it not as uncertain as true real time testing. Everything that I have based my day trading plan on has been live.
Should anyone reading happen to find error, disagree or just want some further clarification let me know by commenting here or emailing.
Guidelines and rules:
I place $5,000 into a trading account and never add cash to it again
I use a tax free trading account to never have to pay taxes on the proceeds
I trade for 40 weeks of the year (three months of “buffer” in case I fall short of my targets)
I trade four days per week (160 days of a possible 260)
I trade only in the morning (my best time for alertness)
I trade a maximum of 6 trades per day (more have proven less profitable)
I trade one stock from a selection of only four (why make it complicated?)
Limit orders for entries, market orders for exits...so far
No margin use (starting in January)
Even lots of 100 shares traded
Trade size is capped at $45,000 per trade in year two, (I think I can use less and still meet the goals)
Performance:
1% per trading day on average. (I am currently at a 1.26% daily average return)
I am not trying for a quick large win here, just plugging away with a profitable strategy.
The time line:
January 2009, week one.
TFTA setup with Questrade, $5,000 deposited, may take a week or two to get going.
All gains return to the account for growth, even any over performance returns for the time being.
Week 26
Double my money the first time.
Week 40
Tripled my money (this could be as early as October)
January 2010
No additional contribution to the TFTA even though I could put $5K more in, at this point it will only make the difference of about a month or two before I can start drawing back out of the account.
Week 49
Quadrupled my money, I stop noting these marks at this point as I concentrate on cash flow.
Week 56
Returns are at $1000 per week
Week 72
Returns are $1800 per week
December 2010
Plan changes from growth to cash flow and investments
Account balance is $62,000
Investments for dividends are started, still within the TFTA umbrella
Income is $900 per week, investments are $900 per week
December 2011
Annual “wage” has been $36,000 tax free
Investment account deposits have been $36,000
Total account balance less any investment gains or dividends is $98,000
Should I remain working the balance would be $134,000, with $72,000 of that in investments for dividends
Alterations possible:
There are some circumstances that may have me trading more than the 40 weeks per year.
- should I fall short of my goals by the annual targets
- at the end of year two I could have the option of continuing to work a regular salary job or just concentrate on trading alone for my income and portfolio growth, I may trade more as a result
- should interest rates start to rise again I will probably step up mortgage and credit payments
- should my wife decide that she would like to settle out her current job and take on something that pays less but may be more enjoyable for her
- expenses like schooling for the kids kicks in after year three
All in all while this starts to sound like the ads that I see claiming huge returns for little effort, I must say that there has been lots of effort and time put into what looks like a rather simple plan. Countless hours of chart studying, research, trials and lots of emotional roller coaster rides to get to the point where I am now. My three year return on the original investment can be over 2000%. This has been a year in the making now. I have had some fun with this whole trading game but it is time for the games to end and the serious business of trading to begin.
I am looking forward to actually placing this plan into effect in the next few weeks. I consider this my biggest New Year's resolution ever, though I am not one to make resolutions as almost none ever get followed through, I think this will be an exception.
Jeff.
Tuesday, December 9, 2008
Questrade and customer service, my take.
First off, I am not affiliated in any way with Questrade other than I am client.
I have no experience with any of the other brokers at all so I have nothing to compare against. I see a lot of people asking about brokers and services and what to look for and what to watch out for so I thought I might clear up a few things with regards to my experience with Questrade.
The first criteria I had when I was looking to get started trading were low commissions, low balance requirements and easy direct access to the market.
A secondary consideration, actually it was hardly a consideration at the time, might have been customer support...I hesitate to call it customer service as I do not need service, just the odd question or clarification. Service is a value added thing to me. I was not looking for value, just troubleshooting if needed.
I set out to try everything and see how it worked, then ask questions as I needed along the way. I even have options setup in my account but have no desire to actually try them out now, no need.
I found the different browser and downloadable platforms easy enough to use, I liked the no additional fees, the free services with certain quantities of trades, reasonable numbers given the services rendered, generous margin allowance, online chat help.
I also like the CDN and US combined account. I have traded US stocks by mistake though, my bad, but the transactions were completely transparent as the account buying power is displayed in US and CDN funds at the same time...so i don't think there is an conversion fees.
I have had opportunity to place calls twice, both times I was answered in a reasonable timeframe and my questions answered well enough. I have used the online chat help often and, except for one case, received timely information as well. Email help is slow but there, I would call or chat first though as it takes days to get a response and they are pretty much regurgitating what is already on the site when the answer does come.
They offer no frills direct online trading. Executions are quick and slippage is minimal. Connections are mostly pretty solid. I have made mention of technical difficulties the odd time but I believe most of them have been ISP or internal LAN issues, mostly.
So, the bottom line, if you need coddling and advise, go elsewhere. If you are a "do it yourself" trader or want a clutter free experience, then give them a try. If you are a DRIPPer and are looking for a broker to get certificates through, try elsewhere as the certificate fee is very steep.
From the odd comments I have heard about other brokers I have been surprised at some of the fees levied and some of the commissions for what little service is actually provided, it's a jungle out there.
There is still this nagging VTO issue though...I am afraid that I have not taken the time to try it out or to call to see what is up, if anything. To be honest I could see them being dropped as the market is so volatile that I think they would be a liability to any new trader out there, I know they didn't do me any favours and I was not playing in this market action.
I have no experience with any of the other brokers at all so I have nothing to compare against. I see a lot of people asking about brokers and services and what to look for and what to watch out for so I thought I might clear up a few things with regards to my experience with Questrade.
The first criteria I had when I was looking to get started trading were low commissions, low balance requirements and easy direct access to the market.
A secondary consideration, actually it was hardly a consideration at the time, might have been customer support...I hesitate to call it customer service as I do not need service, just the odd question or clarification. Service is a value added thing to me. I was not looking for value, just troubleshooting if needed.
I set out to try everything and see how it worked, then ask questions as I needed along the way. I even have options setup in my account but have no desire to actually try them out now, no need.
I found the different browser and downloadable platforms easy enough to use, I liked the no additional fees, the free services with certain quantities of trades, reasonable numbers given the services rendered, generous margin allowance, online chat help.
I also like the CDN and US combined account. I have traded US stocks by mistake though, my bad, but the transactions were completely transparent as the account buying power is displayed in US and CDN funds at the same time...so i don't think there is an conversion fees.
I have had opportunity to place calls twice, both times I was answered in a reasonable timeframe and my questions answered well enough. I have used the online chat help often and, except for one case, received timely information as well. Email help is slow but there, I would call or chat first though as it takes days to get a response and they are pretty much regurgitating what is already on the site when the answer does come.
They offer no frills direct online trading. Executions are quick and slippage is minimal. Connections are mostly pretty solid. I have made mention of technical difficulties the odd time but I believe most of them have been ISP or internal LAN issues, mostly.
So, the bottom line, if you need coddling and advise, go elsewhere. If you are a "do it yourself" trader or want a clutter free experience, then give them a try. If you are a DRIPPer and are looking for a broker to get certificates through, try elsewhere as the certificate fee is very steep.
From the odd comments I have heard about other brokers I have been surprised at some of the fees levied and some of the commissions for what little service is actually provided, it's a jungle out there.
There is still this nagging VTO issue though...I am afraid that I have not taken the time to try it out or to call to see what is up, if anything. To be honest I could see them being dropped as the market is so volatile that I think they would be a liability to any new trader out there, I know they didn't do me any favours and I was not playing in this market action.
Monday, December 8, 2008
Questrade and the TFTA
I have given up differentiating the difference between real trading and fake or paper trading for the rest of this month here. My entries are the same either way and my exits are very close as well. I don't really want to have any tax implications for this year as I apply all my energy towards fine tuning my trading in preparation for the Tax Free Savings Account coming to Questrade next month. They are referring to it as the TFTA (Tax Free Trading Account) as they are offering all the same tools for trading as their regular account...with the exception of margin I expect.
I will be tracking them separately and combined still but I need to get my headspace around the whole trading game, all of the trades not just two subsets.
Here are the links for the general release and a Q&A about the government rules. Questrade is being pretty liberal with it but I am not familiar with any other offerings.
Pamphlet
The original link again
Jeff.
I will be tracking them separately and combined still but I need to get my headspace around the whole trading game, all of the trades not just two subsets.
Here are the links for the general release and a Q&A about the government rules. Questrade is being pretty liberal with it but I am not familiar with any other offerings.
Pamphlet
The original link again
Jeff.
Friday, November 28, 2008
Questrade and VTSO
I notice a lot of people ending up in my blog after searching for Questrade and VTSO.
(This is an update from April 2009, VTSOs are not available for TSX and Venture Candian exchanges, this has nothing to do with Questrade as VTSO and regular stop loss orders work fine in the Amercan exchanges. I was advised earlier that the problem had to do with some technical difficulties with the operating platform.)
I think I referenced that a little while ago. I either chalked it up to a change in the VTSO function of perhaps just an influx of new traders. If anyone ends up here on a search for answers regarding VTSO or any Questrade issue I don't mind trying to answer any questions. You can to send an email or add a comment, I'll respond. I have tried almost everything that can be done with regular stock trading, and a few things that they didn't like too.
I didn't notice any changes to the VTSO use on their site when I checked quickly a couple of weeks ago. I haven't tried using one since the platform update a while back, they did not work then and they mentioned it was related to the update. I may try one just to see what is up this week. I know there was an issue with how it needed to be entered for it to work though, something to do with Canadian trading regs.
Jeff.
(This is an update from April 2009, VTSOs are not available for TSX and Venture Candian exchanges, this has nothing to do with Questrade as VTSO and regular stop loss orders work fine in the Amercan exchanges. I was advised earlier that the problem had to do with some technical difficulties with the operating platform.)
I think I referenced that a little while ago. I either chalked it up to a change in the VTSO function of perhaps just an influx of new traders. If anyone ends up here on a search for answers regarding VTSO or any Questrade issue I don't mind trying to answer any questions. You can to send an email or add a comment, I'll respond. I have tried almost everything that can be done with regular stock trading, and a few things that they didn't like too.
I didn't notice any changes to the VTSO use on their site when I checked quickly a couple of weeks ago. I haven't tried using one since the platform update a while back, they did not work then and they mentioned it was related to the update. I may try one just to see what is up this week. I know there was an issue with how it needed to be entered for it to work though, something to do with Canadian trading regs.
Jeff.
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