(Underlined italicized
text represents the latest additions to this training
guide. Underlined text represents the previous additions
to the training guide)
Picking a broker can be
a difficult task, however as your portfolio grows it may
become necessary, even wise, to have several brokers. For
the Hannaian Business we feel you should have several
online discount brokers if possible. Currently the online
brokerage business is in a state of flux with many
brokers in fierce competition to make their mark. They
are constantly updating their services and on the whole
doing a fine job at this early stage of industry
maturity. They have collectively made a tremendous dent
into the business of traditional full service brokers, to
the extent that most full service brokers have now become
online brokers and many investment bankers who catered
solely to the traditional brokerage houses, now openly
court the affections of the online brokers and their
booming business. Due to the high rate of flux in the
industry the following review of online brokers may as
accurate as the current state of affairs at any point in
time. However the review should serve as a good guide to
selecting a broker. It will be updated as needed, so that
it should be revisited from time to time to keep updated.
Your choice of broker(s) is an important one and should
be constantly monitored and updated based on your
needs.
Professional day trading and market making
activities require additional tools to be fully
competitive. If you want to participate in market making
activities and professional short term trading and you
want the ultimate in access for short term trading you
should get an account with a brokerage service like
The Executioner
combined with LiveWire
Trader Software in order to maximize your
participation at this level. More and more brokerages are
now entering this special arena, AB Watley,
Speedtrader.com and 1800daytrade.com now all offer
similar services. It can be expected that there will be
many more opportunities in this area in the very near
future.
When possible it is essential to upgrade your
brokerage accounts to Level II status. Level II accounts
are now available for reduced rates and even with OTC:BB
quotes. These types of accounts allow real time data on
stock quotes, Market Maker trading, Time & Sales
reports, size and depth of orders and more. having access
to such data significantly enhances the efficacy of
trading. In addition many level II type accounts allow
for enhanced executions, even market maker type
executions which significantly improves your trading
capabilities and bottom line profits. The necessity of
having level two data and execution capability is that
more and more of the competition will be having it in the
future and hence it will be essential to keep up with the
competition at some point. Currently ABWatley offers an
account called Ultimate Trader Free which allows most of
the important Level II data and trade execution functions
without extra costs when you open an account with
$10,000. This appears to be the most cost effective
approach to Level II data and executions at this time.
Due to the fierce competition between brokers we can
expect that other excellent Level II opportunities will
develop quickly in the near future. Stay tuned to "Broker
Notes and Comparisons" to watch for these developments.
in Level II accounts.
Keep abreast of this "Broker Notes and Comparisons"
training guide which is constantly updated with new
information about online brokers. Your choice of broker
will significantly affect the way and efficacy of how you
trade. this can mean savings or losses of thousands of
dollars and is of extreme importance. hopefully everyone
will at some point be able to afford a proper Level II
brokerage account, since without it the playing field is
not even.
Whatever your trading needs the brokerage or trading
service you use is an important tool which you should
constantly keep updated on. This is a highly competitive
area and your due diligence in this area will save you
significant time, money, and resources by making and
keeping the right choice of broker(s) and trading
services for your needs and level of operations.
Establish several accounts with online discount
brokers if possible. This gives you access to several
sources of proprietary research and research tools and
methods. You can research the various online brokers at
or Stock Research Tools page.
Make sure that the brokers you select meet as much of
the following criteria as possible;
a. Allow trading without extra costs on OTC:BBB
stocks, International stocks, and penny stocks
b. Provide check writing privileges to access the cash in
the account
c. Pay a good rate of interest on the cash balance in the
account.
d. Allow phone trades at a reasonable price or at no
difference to Internet placed trades.
e. Allow access to trade Initial Public Offerings
(IPOs).
f. Have adequate Internet and phone access during times
of heavy trading.
g. Provide real time quote access.
h. Provide margin accounts at low rates.
i. Provide the ability to trade options.
j. Provide Level II quotes.
k. Allow online trading of OTC:BB stocks. This is very
important for H.I.P.S. trading.
l. Allow After Hours and Pre-Market trading.
m. Provide instant online updates of order fills and
status.
RJT.COM
RJT actively supports various trading needs of
QuoteTracker users by providing: Most efficient
tick-by-tick streaming quotes Tick-by-tick Level II
quotes A specialized server interface for QuoteTracker
Integrated Trading.
RJT.COM is making tick-by-tick NASDAQ Level II
quotes available to all clients for only $25 per month
including all exchange fees. To make it even better,
they lowered their requirements for opening an account to
just $100 if you sign up for Level II quotes.
To open an account, just go to:
http://www.rjt.com/qtdefault.html
Make sure to select the Level II option. RJT will then
charge your account for the first two months of Level II
service ($50). You can then deposit more money to trade
or transfer securities into the account at your leisure.
You are under no obligation to continue Level II quote
service after the two month period that has already been
paid for.
RJT provides unrestricted limit orders for $5
and appears to provide a solid level of performance in
online transactions.
Wit
Capital
Wit Capital was our number one
choice for purposes of the Hannaian type business if you
are interested in IPO's. However we have slowed our
pursuit of IPO's at this time due to difficulty in
getting signifcant amounts of shares at the initial
offering price, the inflated intial offering price of
many new IPO's, and our ability to achieve greater
profits in our primary business of choosing good
intellectual property rich companies at low prices and
benefiting from their growth.
Wit Capital is probably still the number one overall
choice for its range of services and innovative approach
to supporting the small individual investor with services
traditionally only available to institutional and other
large players.
Pros: Check writing privileges,
moderate costs per trade, limit orders, phone orders
essentially the same price as standard trades, allows
online trading on all exchanges including international
sock and OTC:BB and penny stock. Offers IPOs; has
innovative approach to brokering and cooperative
investment banking activities.
Cons: Poor telephone service,
can't get through on the telephone often, telephone
numbers have been in a state of flux, but getting better
with time. One poor feature of WitCapital
accounts is the lack of instant updates of trade order
fills online, a very important feature if you are doing
quick and frequent trades in the same stock.
Account setup: Available over
the net but may have to call to complete setup. $2000
minimum account setup.
A B
Watley
This company offers an interesting account if you have
$10,000 to deposit. their Ultimate Trader account allows
for free Level II quotes without extra charge. The other
services offered are comparable to the other major online
brokers
This service appears to be the best deal in Level
II data and executions at this time. It can be expected
that other brokers will follow their lead due to
competition among brokers.
For anyone with $10,000 in an account this should be your
account.
E
-Trade
E-trade is a strong contender
for our number one choice, except not the best in the
trade price.
Pros: check writing included,
excellent research: Comprehensive service; Access to all
markets; Real time quotes
Cons: Somewhat expensive to
trade and has a difficult to understand online
application process. Communication by mail weak. very
difficult to get on the telephone.
Ameritrade
Pros: excellent telephone
contact and trading, good research; Low prices for online
trades and now provides the ever important check writing
privileges. Can open a non margin account for $500,
margin accounts require $2,000. One
excellent feature of Ameritrade accounts is the instant
update of trade order fills online, a very important
feature if you are doing quick and frequent trades in the
same stock.
Cons: No major IPO involvement.
Can't trade OTC:BB stocks online, No stop loss orders on
OTC:BB., Slow with opening accounts, transfers and other
account services. Problems with getting good prices on
market orders in volatile times, it appears their market
makers are taking unreasonable profits in some
cases.
Fidelity
Pros: excellent phone service
and consulting, Includes check writing services; Good
research; Real time quotes. Good online trading of all
types of issues. Fidelity offers an
excellent Perferred account with very little restrictions
and low trade prices. The Fidelity account requires a
minimum of $20,000 deposit. The Hannaian company has
negotiated a special Fidelity account with these services
for as little as $5,000 deposit. Hannaian Affiliates must
email a request to the Hannaian company to take advantage
of this service. One excellent feature of Fidelity
accounts is the instant update of trade order fills
online, a very important feature if you are doing quick
and frequent trades in the same stock.
Cons: Expensive trades for
regular accounts. Their online trading software does not
allow enough deviations from the current price when
placing limit orders, particular the reverse limit orders
used in the H.I.P.S.I. system. This slows down online
placement of orders during critical times when spped
trading is needed.
Pros: Account set up is easy and
quick with good follow-up. A
strong choice but Very expensive on front end. Offers
premier services for frequent traders. Trade execution
efficiencies may mitigate the expensive cost of trades if
monies loss to market makers at other brokers are taken
into account. This is the best choice if you want
excellent trade execution, services, advice and
consultation. Fidelity also has physical offices located
all over the U.S.
**Take advantage of the special
Hannaian Fidelity account by emailing Hannaian with your
request.
Suretrade
Pros: No limit to open an account. Inexpensive trades.
Allows OTC:BB online trading. Good trade prices. A strong
candidate for investors with small budgets just getting
started. Also good for frequent traders due the low
prices and online trading of OTC:BB stocks. A strong
choice for non level II accounts.
Cons: Although it appears easy to set up account,
E-mail confirmation process is confusing and it is
difficult to get money into account compared to most
other brokers. Does not accept company checks, and wire
transfer of money difficult. No check writing.
SpeedTrader.com
A good choice for inexpensive Level II data and
executions. Has it own proprietary Level II system in
addition to the somewhat standard Real Tick III system.
requires only a $5,000 deposit to get the Level two
account. There is no monthly fee for the level II if
there are more than 40 trades in a month. if not the fee
is $200 a month. Most OTC:BB stocks require a phone call
to trade, although the Level II data can be accessed in
these stocks. This is a strong choice for an inexpensive
Level II account. They also offer a good basic trading
account with no minimum deposit.
1800daytrade.com
A good Level II account. Uses the Real Tick III
system. Allows online OTC:BB trading. Requires $25,000
deposit to open the Level II account and a $300 a month
fee if less than 50 trades are placed a month. Allow a
fairly good choice it does not compare to the AB Watley
or SpeedTrader Level II systems in price.
1800daytrade.com does offer an excellent basic trading
accoutn for as little as $1,000 deposit.
Firstrade
Frequent Traders would like their express site where
customers can enter multiple orders and enter them
without having to be slowed down by confirmation or
preview screens. Firstrade also offers a streamer for
NASDAQ stocks and confirms. Very inexpensive trades. A
good choice for basic trading. There is no minimum
deposit to open an account.
National Discount
Brokers (NDB)
Has Stockpulse, an impressive streaming tool that
shows real-time quotes and iAnswer, a live customer
service chat offering. NDB allows multiple trades of the
same stock, on the same side of the market, on the same
day, for one commission. Has good trade pricing. A good
choice for basic trading. There is no minimum deposit to
open an account.
Datek
Now an excellent service with
the best prices among the leaders. Now includes the check
writing privileges which are significant for the Hannaian
type of business operation. A major problem is no trading
in OTC:BB stocks.
Pros: Has low trades and good
customer service. Quick easy account setup.
Cons: At last check did not
allow trading in OTC:BB or international stocks. Before
opening an account with them check to see ithe status of
these type of trades. They are essential to the HIPS
public acquisitions of intellectual
properties.
Account setup easy and
straightforward even online; Response quick and
thorough.
Scottrade
Pros: Has many regional offices
to serve customers personally; Inexpensive
trades
Cons: Does not trade all
markets; Restricted OTC:BB and international stock
trading.
Charles
Schwab
Pros: Good research;
Comprehensive service
Cons: Expensive
The
Executioner
Designed for professional day traders and market
makers.
Pros: Level II NASDAQ quotes, Direct, fast real time
access to the market.
Cons: Expensive trades, and expensive monthly fees for
special software use.
Account
Transfers
Be careful about transferring accounts between
brokers. Ameritrade for example advised that account
transfers may require as much as three or four weeks for
full transfers and even more time for partial transfers.
Even more important during this time the account would be
closed and unavailable for trading. This certainly an
unacceptable situation and would require moving your
money out in cash in order to facilitate a faster
transfer process. A conversation with a Fidelity broker
advised that a procedure known as a DTC transfer should
be done within two days. It is possible that you may
specifically have to request from the broker this DTC
type transfer in order to prevent the onerous
consequences of a lengthy transfer process.
One problem which occurs more frequently than
expected is this need to transfer accounts between
brokers. As traders become more sophisticated and
experienced this need becomes more critical since it may
tie up your account and cause costly delays in trading.
We have heard one story where Ameritrade did inform an
account holder that a full transfer would take up to
three weeks with a partial transfer taking longer. In
addition during this time the account would be held
inactive for trading. Such a situation would be
impossible to deal with. The account holder therefore
immediately moved all cash from the account and deposited
it in the new account, and thereafter proceeded to
judiciously sell out his positions in Ameritrade so that
he could transfer the cash out of the account. This is
one way to handle these kinds of transfer problems.
Another way is to request the "DTC" transfer.
DTC Transfers should be capable of happening within
three days. You must request the DTC transfer and
relevant information and codes from the respective
accounts and stay on top of both brokerages to ensure the
quick transfer. Obviously the brokerage to which the
account is being transferred should be more than helpful
in this process.
Our current preferences
for basic trading accounts are; RJT, Ameritrade,
Fidelity, Suretrade, WitCapital, Firstrade, NDB, Etrade,
and Datek in that order.
For level II accounts our current preferences are; RJT,
ABWatley, Speedtrader, 1800DayTrade in that
order.
For a comprehensive review and ranking of brokers visit
the following links:
The
Authoritative Guide to Online
Brokers
For
a review of the more than 80 brokers, or if you are
looking for a particular broker, click here.