MarketMonk, I did read your advice and found that information very interesting. Just to clarify, I was using Etrade Pro, which claims to be a direct access broker. Is it not true that other retail brokers like Tradestation, IB, etc.. also route your orders to designated market makers. My mistakes were that I should have designated INET or ARCA for this order. In terms of Etrade, I understand what they are saying about it taking 20 minutes to cancel orders. However, IMHO, this is complete garbage. This means that their designated market maker is able to hold my order to sell 500 shares of IBM at $99.65 for 20 minutes after the close including through earnings. Etrade says they wait for this market maker to confirm if the order was filled or confirm that my cancel went through. So basically the market maker can buy my shares for 20 minutes at this price and if they don't want them cancel them out appropriately. I am also upset because their is nowhere that Etrade explains this procedure to a customer. I am certainly no expert, but they claim it is common industry practice for "day" orders to be held for 20-25 minutes after the close to be cancelled out. I don't buy this. I wish there was someone who knew whether this was true with other brokers or not. I guess I will ask tradestation to see if I can figure this out. In terms of my next step. They offered me 5 free trades, I went ballisitic and the guy then offered my 10 free trades. I told him I will still be cancelling my account and telling everyone I meet about my poor experience. I guess realistically there is nothing I can do except learn from this. For people, who say the trade in itself was dumb. I have seen this trade be a very high percentage winner with certain stocks. If you look at most companies when earnings are coming out in afterhours, you will see that prices fluctuate wildly above and below the closing price from the time the market closes to a couple seconds after earnings are released. Obviously, I will never try this trade again, because I cannot chance losing another $2500 or worse on some sort of malfunction. Is there anyone who could advice me on whether I do in fact have any sort of legal claim against etrade for negligience in telling their customers about this 20-25 minute holding time on day orders. I realize no lawyer would ever take this case anyways and I am sure they would win no matter what beacuse they are a giant corporation with unlimited legal resources. I am just curious. Mike
I had similar issues as you did with my cancel requests "freezing" but this was during the day. It cost me a shit ton of money too and I only won one trade dispute against them and that was for a couple of hundred to recoup the losses because it took them 30 min to cancel my order. Hate to say it but you are out of luck they will not do anything even though it was mostly their fault. Run like hell from etrade and never use them again thats what I did and I have not had any problems since then.
Hi Mike, There really isn't anything you can do sorry to say. FWIW, I was a customer of ETrade and used ETrade Pro as my platform. I do laugh when I see ETrade Pro mention they are a direct access trading (DAT) platform. Direct Access to who? LOL. Directly to their market makers! A true direct access broker routes your order to the exchanges and ecns and not to market makers. You are also in control of your order and can cancel it at any time. TradeStation, IB, MBTrading, and so many more true direct access brokers do not route orders to market makers such that they will get a rebate from them. Plus a DAT platform will give you the ability to use advanced order types like: Iceberg, Fill or kill, Order Sends Order, Order Cancels Order, etc. If you are a short term trader then in my humble opinion you would benefit from a DAT platform. If you are a swing trader based off news, then ETrade is fine as you would not be that concerned with the best fill but could use their research as well as free DJ news (they have the best format). Best thing to do is to decide what type of trader you are and find a broker that will meet your needs. One other point, you mentioned that you have done around a 1000 trades in a year. Knowing now that your orders went through a market maker, you may have gotten the price you requested if it was a limit order, but might have experienced situations where you did not get filled and have to "pay up" or chase to get in. Or you might now remember situations where you used a Market order and it seemed strange that you got in at the high of the bar (sometimes 10 to 20 cents above market). The true cost of buying and selling is not in the commissions paid - it is in the speed in which you get in and the ability to get out fast if wrong. A 10 cent slippage on a 1,000 shares is $100. Things to reflect on now that you are a little bit more knowledgeable on how these types of brokers work. Trade well, MM
My advice is let it go and move on. You were not trading on a professional platform. I donât even understand why your order goes to a market maker since itâs a NYSE stock and should only be on the specialist system or ecnâs. I would guess etrade has an order flow deal with a particular market maker. That means the market maker pays etrade to send orders to them. That gives the market maker the best possible edge to make money off your order with no risk.
This is the kind of stuff I'm talking about that I wanted posted for http://www.elitetrader.com/vb/showthread.php?s=&threadid=84409 Like when you route your order with ARCA, are you interacting directly with the ECN? Or is your broker rerouting your order directly to some entity within the ECN or some entity who uses the ECN you chose? How about a broker who claims to be a direct access broker, but is simply an introducing broker to a carrying broker. Is an introducing broker really a direct access broker? Or does that broker get to play however it wants with your trades by acting as an intermediately? I used to have a broker who was an introducing broker. The weird thing was that I always used to get the bad end of a deal. It seemed like my order would wait until somebody could take advantage of me. Of course, I sense this is done automatically by software. One reason I would say brokers take extra precaution in terms of order changes is because of a case in Canada: Zhu v Merill Lynch (2002 BC) Zhu cancelled a sell order. The system reported the order was cancelled. Later he sold the same shares, but then found out that the shares were sold in the first order that was said to be cancelled. Consequently, he shorted the shares and lost $10K. Zhu sued and he won; the judge in effect ruling that "cancelled" should mean "cancelled."
One easy to do test for this is that if you remove liquidity from the ARCA book, by the time you release your finger from the enter key, you should have the shares in your hand... anything slower than that and you're probably getting ripped.
After you open a new account with a different brokerage I recommend avoiding this type of trade from now on...the methodologies some traders employ as an edge these days...
I'd say Genesis Securities, hands down. IB is next-best, because they make more instruments available for trade... but for simple futures and stocks, Genesis has no equal as far as reliability, execution speed, and low commissions.