Barrons 7/2/01: Direct Access Showdown

Discussion in 'Retail Brokers' started by proptrader00, Jul 3, 2001.

  1. def

    def Sponsor

    thanks for the comments, all the points are all well taken and in my opinion accurate. For me and others that work at Timber Hill and IB I guess you can say it is a matter of ego. You work hard at something and hate to see a poor review. I can't speak for the chairman but I would imagine I don't think he expects to be number one in the reviews when taking in factors like charting, research etc. However, in areas where the firm excels - speed and cost, that is another story. C'est la vie.
    #11     Jul 3, 2001
  2. white17


    Call me suspicious or paranoid but I have subscribed to Barron's for years and have always felt they have an agenda. Alan Abelson is a great writer but I doubt he has ever taken a bullish view on anything. The thing I've always wondered about is whether management or the editorial policy board takes large short positions and then generates an article to move the market in that direction. They've sure hit me couple times in the past ten years.
    Makes me wonder which of their advertisers has an axe to grind vis-a-vis IB.

    #12     Jul 4, 2001
  3. twcarey


    As the author of the Barron's online broker rankings, I find it somewhat amusing that people will judge my work based on out-of-context quotes simply because my rankings don't fit the choices you've made.

    The direct access broker reviews took place over a 3-month period (May , June, July) and followed the cover story I wrote on HTML-based brokers that appeared in March. The criteria were detailed in the publication, and a list of weighted totals followed by the tongue-in-cheek tagline just doesn't do the series justice.

    I've been reviewing online resources for investors for 10 years now and have been a contributing editor to Barron's since 1995. Whenever I write an article that a reader agrees with, I'm "brilliant." When I write one that a different reader dislikes, I'm an "idiot who does shoddy research."

    I assure you I'm neither of the above ... just a longtime analyst of the online investing space. I write for my readers, not for anyone else. As a freelancer, I'm given incredible freedom by Barron's management. I've only met Alan Abelson once and had a 5-minute chat -- rest assured that he has absolutely nothing to do with my column. I don't know who the advertisers are, and don't care. Every assumption I've read in this thread about my motives, background, and various other personality quirks are amusing but way off base.

    Here's the complete series of articles, accessible to those of you who are Wall Street Journal Interactive / Barron's Online subscribers. (Please note that you'll need to get permission from Dow Jones to repost the articles here.) The four articles listed here feature hands-on reviews -- using accounts that allowed me to make live trades -- on 35 different brokers.

    March 12 cover feature on HTML-based brokers:

    May 7 column, Hard-Core Connections: Direct-access brokers have plusses for active traders, but they're not for everybody. (5 brokers reviewed, plus discussion of price improvement strategies. Includes details of IB review)

    June 4 column, More Direct Connections: Continuing our look at online brokers for the hyperactive trader. (5 more brokers, plus usage statistics)

    July 2 column, Direct-Access Showdown: Among these online brokers emphasizing performance, a couple of standouts (2 last brokers reviewed, plus a summary of the entire series)

    Thanks for reading. Back to work on my July 30 column...

    #13     Jul 18, 2001
  4. Just a tip: execution quality is 80% of direct acces broker evaluation. Research and other fluff means almost nothing without it.
    #14     Jul 18, 2001
  5. your "work" is a PR smoke-screen akin to many other magazines who issue baseless rankings.
    Incidentally it's my opinion, just curious what research
    did you base this ? South Florida retired investors ?
    #15     Jul 18, 2001
  6. twcarey


    cdntrader, I appreciate your comment. One thing I forgot to point out in my earlier post was that I have a specific audience in mind for the review. Barron's readers are not your average investor, and they have certain things they want analyzed.

    I did not write the article for investors who have already chosen a broker and are happy with their choice. I wrote it for the many Barron's readers who are looking over the field and trying to figure out where to go. In the full text of the series, I make very specific comments about the pros and cons of each broker -- including Interactive Brokers -- from the point of view of the Barron's reader.

    I don't expect people who are already customers of a particular broker and who are not planning to make a change to care one way or the other about the series.

    Take care, and happy trading,

    -- T.
    #16     Jul 18, 2001
  7. So these certain Barron's readers don't consider quality execution to be a the determining factor in going with a direct access broker?

    What do you think the point of a "direct access" broker is???

    If they don't need quality execution send them to Schwab or Waterhouse.

    Scary. No wonder I don't read Barrons.

    #17     Jul 18, 2001
  8. def

    def Sponsor

    Ms. Carey,
    I still disagree with your comments and on how you determine your rankings. Barrons does appeal to a "more sohisticated investor" but that is exactly the point. I do read Barrons and I do not believe research is an important aspect of a direct access broker. There is so much information available these days that a sophisticated active trader should not be dependent or or rely on their broker for advice.

    In your articles, you clearly state IB has the lowest fees (since the article, the cost for over 500 shares dropped to 1/2 a penny), and gets the same ranking as another firm. That doesn't seem fair - especially if you take into account IB's options and future fees.

    Excution speed is another story. My experience and feedback from many institutional and direct clearing customers has to be different than your experience. Nevertheless, when ranking direct access brokers, I think the criteria should be speed, routing alternatives and price.

    Please note, that I am involved on this board to assist other IB users and sometimes throw my 2 cents in areas I know (or think I know) a little about. I am not a firm spokesman and my comments above may differ from the firms point of view. I do apologize if I offended you with my original post as my comment on slippage was out of line. If you are ever in Hong Kong I'd be more than happy to give you a demo in the hopes of persuading you to reconsider your opinion.

    #18     Jul 18, 2001
  9. twcarey


    If any of you happened to read the complete series, you'll see that trade execution is very important. I'm just amazed at how little you know about something you're criticizing so thoroughly.

    The numerical rankings are generated from six different categories, all of which are important to Barron's readers. Trade execution is one of the six, and is given additional weight. Brokers that accept payment for order flow get docked.

    Anyway, I'm amazed at the negative things being said about an article that nobody here has read. If you happen to read the entire series, you'll find hands-on real-life notes about 35 different online brokers.

    I don't make willy-nilly judgments and wild comments about brokers I haven't used myself. I suggest some of you consider withholding your comments about an article series you haven't read.

    -- T.
    #19     Jul 19, 2001
  10. def

    def Sponsor

    i read the entire series however you compile a table at the end of it which naturally will get the most attention. You do make positive comments during the series but when you weight all categories in your final tally equally it doesn't judge what active traders are looking for. Thus if a firm doesn't provide research for example, it will be at the bottom of your list.

    I would like to make one more comment on your conclusion which seems to state that one has to be a very good trader to overcome the brokerage fees. In your calculation, you take an average price and add on ECN fees (BTW, not all firms add on ECN fees).

    In any event, I'll run your numbers:
    You say 4 trades per day = $1200 per month (assume 500 shares per trade). If you are using 20 days per month, your average cost per trade is $15. That would mean one would need to make $30 per round trip per trade or 6 cents to break even. On the low end of the broker fee scale it would cost $5 per trade or 2 cents per trade to break even.

    You compound it to 200 trades per day and thus give the impression that the brokers are the ones making out and not the clients. This is mis-leading. In reality, direct access gives the average person on the street a real shot at making money and allows them to compete on a level playing field with professionals.
    #20     Jul 19, 2001