I was just wondering how many of my fellow elite traders use a full service broker for their trades. How many RT/ month with broker and what kind of commissions do they charge. Also are they really worth it, do they trade that much better than me as a semi experienced trader?
Technically: They will throw some analysis at you (easy to get separate) and make sure you dont to utter stupid things when making an order (mixing up buy/sell etc.). I would suggest them for starters - too easy to blow ones account being trigger happy or/and not doing what one WANTS to do (technical entry error). Besides that - nope, not worth it
If a broker had an edge, they would be traders If a newbie needs hand-holding, they should be sim trading. It is hard enough for many to make a profit. Keeping commissions low is critical.
Well, I fully agree... ...except: sometimes psychology goes crazy after going life Starting that with a broker for a month may be good. After that: If you still are not able to handle the technical aspect properly (I.e. order entry) - get another job
I have a long-term brokerage account with the US arm of a Swiss FSB up in NYC but rarely shift positions there because their commish was out-freaking-rageous -- I had a huge gain in some stock I inherited and sold last summer during a buyout for a nice profit. The commisssion on that sale almost made me sick -- when I think of how much it would have cost if I transferred the shares to my trading account and sold them there. (Hindsight = 20/20). Once the AE there (family friend for 30 years and definately a good person and financial advisor) retires, I probably will close my account there. I keep it open just for sentimental value and sometimes research. But yes, I am not a huge fan of FSBs in most cases. To wit: on my FSB account 2 years ago I set a bunch of collars up on long positions. I had to call my AE, who took my order on the phone (they don't accept email orders), who calls the trading desk, makes the trade, and calls me back. Meanwhile, in my trading account, I had done 3 other such collars and was modelling my fourth when he called back to say my trade was done. While that's how the firm takes orders, I didn't appreciate the process. (And yes, while I got support on that first set of collars, when I tried to make more down the road, I get the 'sense' that the backoffice didn't like doing options trades for retail folks, and the level of support I got was NOT the same.) Strike 1. The FSB would not let me trade options (ie sell cash-secured puts, buy calls) unless I changed my account "profile" from "conservative" to "speculative." When I asked why, they said "because you're trading options" -- even though I was using them conservatively to protect a conservative portfolio (and did not request naked privileges there anyway) in the firm's eyes I was "speculative." Strike 2. Finally, what drives me absolutely batty with FSBs, aside from the insane commish, is how they handle account information. To wit: I go into my trading acct at TOS or OXPS and can see current price, P/L, cost basis, percentages, and so forth on one screen. At the FSBs I deal with that info is scattered across different screens, cumbersome to access, and there's a lot of idiotic clicking around to get that same data. Oh yeah - their quotes are delayed 20 minutes, despite our paying annual account fees there. I mean, W.T.F.? Strike 3. As I said, I keep the account open for sentimental reasons. And not all FSBs are bad -- my father has a retirement portfolio at a boutique FSB and their fees are not bad at all, and while their data is still somewhat quirky other perks/processes are helpful enough and don't annoy me to consider moving his account. Sorry for the FSB rant.
Full service brokers can be an absolute must for some strats, for others it makes absolutely no sense. For example,lets say you a very active EUREX prop scalper, then a high priced full-service broker is an absurd choice. Margins are razor thin and you have to bargain down on a $/RT basis. But usually you promise more RTs to make up. However, on the flip side, an independent trader friend of mine (+30 year wall street veteran, clears +$3Mil annually) lives and dies by his relationships with full service brokerage houses. One of his two rules of trading is "Make your broker rich and he'll make you even richer". His whole underlying theory is that creating goodwill of any kind (in this specific example paying tons of commish $$) eventually must be repaid in any relationship. Trading is a business, and as in any business, relationships/reputations either contribute to or detract from the bottom line. It's all give and take. He has a quiver full of different ways he creates goodwill for others in the biz, and in return there are multiple (fully legal and ethical) ways counterparties and intermediaries repay him. It took me a long time to come around to this way of thinking. I personally came from the "Don't pay the Vig" viewpoint, mostly from my extremely stingey(sp??) personality. But after seeing how successful his strategies perform and the benefit they provide to others, I've changed my mind. Sorry for the ramble, again just my 2c.
Actually a full service broker can be cheaper than a cheap one. Imagine you are rich - and manage that money yourself. Rich enough to buy more of small stocks than you can easily buy. Not rich enough to have your own full term trader, and you just dont WANT to do the trading. Your strategy is long term. A full service broker you can call and say "get me X shares" (which may be 4% of the company) and so so around a price X - and he can execute that ins a slow buy venture. Naturally ONLY makes sense if one is big enough for NOT Just buying them. Doing that occasionally with a broker may be cheaper than... doing anything else. It all depends on you strategy. In the past a broker also could help with research, getting company info etc., but today... that is all available on the internet.