I started a new thread with this posting, but it's really a follow up to a question that was asked on another thread in this area. I indicated that I would post again once I had more information that I could verify. http://www.elitetrader.com/vb/showthread.php?s=&threadid=2889&perpage=6&pagenumber=3 Someone had posted that eLocal had dropped their $500/month minimum charge, and another had asked if anyone used eLocal. I've been a customer of theirs since June. I've been extremely happy with both eLocal and JTrader for my futures trading. Mine's a small account, and I've received the same excellent customer service as people with very large accounts. (I've compared with some friends of mine that fit into this category....hmmmm, someday for me.....). I have no affiliation with eLocal except as a satisfied customer. I know this might sound like some kind of advertisement, but really I have nothing to gain by making this recommendation. My sole motivation is that they've been an excellent company in terms of execution and support, and I'd like to see that sort of a business model grow and flourish. I did verify that eLocal has dropped their $500/month minimum charge. With that comes a new commission structure. I spoke on the phone this morning with Doug Zalesky and confirmed all of the following. The charges below are inclusive of exchange fees, clearing fees, software vendor fees, etc.: Contracts per month represent one side of the trade only, so if you buy a futures contract, then sell it later that morning, that would be 2 contracts: 1-175 contracts/month, $4.25 per side, $8.50 round turn 176-500 contracts/month, $4.00 per side, $8.00 round turn 501-1000 contracts/m, $3.45 /side, $6.90 RT 1001-2500 contracts/m, $3.25 /side, $6.50 RT 2501- and up, $3.00/side, $6.00 RT While this is more than I was paying at Interactive Brokers (another broker that I started with when they first went retail and really like), the advantage for me is being able to call when I have a problem. As I related on another thread, just yesterday I was long the NAZ futures. I had left my computer on for several days and one of the many programs I was running on it (I don't know which one--stupidly, I had way too many going) caused a glitch. I held on to my long position in the NAZ overnight on Tuesday, was pleasantly happy on Wed morning when I saw what the overnight price action had done, but couldn't use my computer to reset my stop. A quick phone call to eLocal got me out at 1605 as the market started to sell off. In very short order, that market sold off by 20 or 30 points. The ability to make that phone call and get my position resolved so quickly was worth a tremendous amount to me.
I'm glad I didn't sign up with them. Their old commission structure was a minimum of 175 contracts a month for $5.32 r/t flat. Now you have to do 2500 contracts for $6 r/t.
1-175 contracts/month, $4.25 per side, $8.50 round turn 176-500 contracts/month, $4.00 per side, $8.00 round turn 501-1000 contracts/m, $3.45 /side, $6.90 RT 1001-2500 contracts/m, $3.25 /side, $6.50 RT 2501- and up, $3.00/side, $6.00 RT thanks for the post. Nice to see some full disclosure from someone else besides IB. These guys look like a good competitor for IB.
It's a shame that elocal raised their rates. It looked like they were giving IB a "run for their money" on futures commisions. Besides IB, it seems that futures commisions are still volume based and negotiated for the most part. I always dreamed of being a local in the bond pit in Chicago, but I recognize that futures markets are going electronic worldwide - resulting in a dead end endeavor. To that end, I am eagerly awaiting the chance to scalp as an "electronic local" on the screens. I don't think this is economically feasible until one can get futures rates comparable to the locals on the floor (ie. roughly 50 cents a side). For the time being, I am a stock scalper at my local proprietary firm. If anyone has a background in the futures area I would appreciate your comments. Thanks. Haas
$8.50 per RT that sounds good. There must be some hidden fees somewhere. No minimum at all? Don't they charge something for Jtrader?
Kicking, No hidden fees. That's an "all in" price. Everything's included, even the PATSSystems royalties. (It used to be an additional $1.18 per side to cover fees, in addition to the $1.50 per side advertised.) Haas, I agree that for high volume traders this is a higher price. This pricing shifts the curve towards the lower volume trader. If I'm doing the math right, one NQ contract controls the equivalent value of 800sh of QQQ, so $8 (assuming 1 cent per share, no ECN charges) versus the $4.25 to do each side of the trade is the comparison that I make. When I was scalping, I could easily do 8 or 10 trades an hour, so that would quickly put me in the lower price echelons. 50cents a side would be awesome. Practically free!!! Also (again this is what works best for me) at the end of the year, I'm paying the long term tax rate on 60% of my profits on the futures instead of the full 100% as ordinary income.
DaveN - Thanks for the reply.....that was my first posting, so it was nice to get some feedback. I agree, the IB and elocal futures rates do work out to be cheaper to trade than QQQ/SPY/DIA's. The economics of the pit locals' rates (50c a side or lower) allow them to scalp for single ticks hundreds of times a day. With the current electronic rates it is simply not feasible to pay $6 to 8 round turn to try and scalp a tick or two. Maybe there is room in the middle, say $2 round turn rates, which might make it feasible to scalp slightly larger moves than a tick or two. That is what I was hoping the original elocal rates would lead to. Maybe another firm will try and fill that niche. I agree that the 60/40 Cap. Gains rates, as well as the lower cost of trading the market indexes does make the ES and NQ more attractive than the SPY and QQQ. I wonder why more people are not gravitating over to the futures.
Scalping an electronic market compared to open outcry is totally different. Pit scalpers make money because they can read the order flow, get in front of stops, and get chummy with brokers (I'll scratch your back, you scratch mine). None of these advantages exist in an electronic market. If you look at markets that have made the transition from pit to screen (eg Australia and UK), very few locals have survived. The ones who are still around tend to be swing traders or position traders.
I talked to Doug at eLocalTrading this aft and learned more: - $7500 to open account - he claims that their quotes and fills will be faster and more reliable than brokers tied to GNI or PMB (or IB)...making the $8 vs. $6 commission difference irrelevant - you can trade futures on LIFFE and EUREX at same rates, with same account, and they will take care of any currency conversions for you - access to DOME in J-Trader is free - after setting up an account, you get free advice on risk management and J-Trader training by phone - quick response to phone orders at no extra charge (i.e., for emergency position closing, etc.); they also have several different ways of executing such phone orders, so it's unlikely that you'll get stuck because their own system is down - the API for automated trading is free after signing an NDA - the API can be accessed from within apps or code libraries, such as those one uses with TradeStation, MetaStock, etc. (and any orders placed this way will automatically show up in J-Trader at same time) What's not to like?
1-175 contracts/month, $4.25 per side, $8.50 round turn 176-500 contracts/month, $4.00 per side, $8.00 round turn 501-1000 contracts/m, $3.45 /side, $6.90 RT 1001-2500 contracts/m, $3.25 /side, $6.50 RT 2501- and up, $3.00/side, $6.00 RT I think a $1/RT deduction from the avove will be more reasonable and attractive. Am I too much greedy?