Starting out - What tools?

H

Halcyon

This is my first post here, so forgive me if it's in the wrong forum.

Anyways, I have been studying about the markets for about two years now and the time has come to begin.

Since I definitely am not going to scalp trade, or trade very actively (I intend to do about 3-5 round trips a day) I don't think I need access to LII.

So here's the package I consider using:

Broker: Ameritrade
Quotes, Datafeed, ... provider: QQL
Screener: Haven't decided yet, maybe Advanced Analyzer (but no real time scanning) or something like that

Why ameritrade? Since I'm not going to trade overactive, and am going to trade frequently over 5k shares a time I preferred a flat rate broker instead of a per share based one. I also don't need a direct access broker for my type of trading (I think).

Now my biggest concern is that ameritrade uses Payment for Order Flow (PFOF), but is this going to be a major concern for me? Will it influence the price I get for the shares or doesn't it make such a big difference?

And as for the rest, I think QQL is a reliable, cheap tool to use.


What's your view, or recommendation?
 
You're going to get killed.

3-5 round trips a day is plenty hyperactive, way too much for Ameritrade. And are you going to START with 5k shares? That's insanity.

Get IB or Pointdirex or another cents/share broker. Trade 100 share lots until you make money consistently.

Good luck.
 
Some not so hyper traders use Datek, $10 a trade up to 5k shrs I think. Thug has it right, start small if you're just getting your feet wet. There are alligators in the water.
 
Level2 is 50% fake orders to lure you into traps anyway, so why bother paying for it. I agree with you on that point. If you need some measure of market depth the ECN book that you can access for free at www.tradearca.com will do the trick just as well, if not better, but again, there are so many fake orders out there that I personally trade (even scalp) better when I ignore "market depth" and look at Time and Sales instead. Most of the time, that is.

Why ameritrade? There are cheaper alternatives out there, like http://www.brokerageamerica.com/ However, never, NEVER, NEVER!!!!!!!!! use a market order for more than 100 shares on a 4-letter stock. You will eventually lose way more than you save on commissions. Last year, I started trading with one of the online brokers who offered commission-free market orders, and after approximately 50 trades where everything went fine, I lost 80 cents (PER SHARE!) on ORCL because my "free" market order was messed with by SOES. Actually, SOES always gives you 100 "token" shares at the quoted price, but the rest is filled at the least favorable price that happens to come along within the next few minutes. Of course, with ameritrade you get your commission back if that whole process takes longer than 10 seconds, so you don't really lose $720 on that particular execution, just $712... On the other hand, why pay $8 in the first place if others do the same thing for $5 or less. And believe me, in the unlikely case that your order takes longer than 10, 30, 60 or however many seconds are guaranteed, you will not care about the few bucks they refund you. Again, this will not happen very often, but if you use market orders, it will happen often enough to cost you more than if you used limit orders and paid a slightly higher commission every time. Other than a possible difference in commission (which does not exist at interactivebrokers.com), a market order has absolutely no benefit over a limit order. Think about it: Let's say you want to sell 1000 shares of MSFT, which is currently trading at say 60.15, as fast as possible. Then you would use a market order, right? Right. But do you really want to sell them as fast as possible for any price? What if the price drops to $10 that very second that you try to sell? Would you really want to sell it there? What if it drops to $1, or to $.01? I agree, this scenario is not very likely, but it it the only one where ther will be a difference between a market order and a limit order at $10.01, $1.01 or whatever you think would be a price below which you would not sell but rather change your mind about selling.

To summarize it, inferior execution (payment for order flow etc.) will not substantially hurt you (not being a scalper) AS LONG AS YOU DO NOT USE MARKET ORDERS!!!!!

As soon as you use market orders, even the most advanced routing capabilities might hand your order over to SOES or a specialist where you will eventually get screwed big time.

By the way, the same goes for "Stop Orders", which are basically market orders. Use Stop Limit Orders instead. But DO USE THEM! Well, I think you know that by now, since you have already accumulated a lot of theoretical knowledge about trading. Again, a stop does you no good if it gets filled at an extreme spike.

Just my two cents, which will hopefully prevent you from using market orders. Without paying a grand for this knowledge, like I did...
 
I agree with Thug Life; you will get slaughtered.

Try Terra Nova, good software, quotes, reasonable fees, not the cheapest but plenty of hand holding.

Size kills.
 
Lobster, how can a SOES order trade higher than the current offer? SOES/SUPERSOES orders won't trade past the offer if there is an ECN there.
 
"I have been studying about the markets for about two years now and the time has come to begin. "


Study means nothing till your money is at risk. Now you need to learn how to lose money for two years. "....am going to trade frequently over 5k shares a time ...I intend to do about 3-5 round trips a day". On second thought, maybe it won't take two years, that is , unless you have a million bucks to get you through the
risk management learning curve.
 
(You're going to get killed.)...take some time to get some training on what is going on in general. Your whole approach is questionable, and you really need to understand what you're doing to have a chance in this market.

Trading at Ameritrade (or any of those "type" of brokers) is ridiculous if you are attempting to trade for a living...they're fine for the investor who wants to get in ("buy and hold" etc.), but not for even "casual" trading as you describe.

You might want to sit down and figure out what exactly your goals are, why you're doing this (not just $$), and what "mental tools" you have that makes you feel comfortable enough to compete with seasoned, expert traders.

Talk to def or some of the talented retail people on this board about the actual "tools" needed...they are important, but not as important as your education in the business and your overall strategy.

Best of luck
 
Halcyon; [1] Lets say you probably will be profitable in the next 13 to 26 months,more or less. Keep in mind about 20% of traders make it approximately 80% dont...........................................[ 2] Size kills [3]Until you ve proven [$ ]. in your trading notebook and chart reading or tape skills,5 times a day sounds like a huge number of trades in a day.:) One of the few things I did right was daytrade about once a day,home office, when I first started.Also read trading company posts[4,5,6],Dont like market orders in a chart pattern that looks like a crooked 2 by 4 board.Dont like any kind of orders in that chart pattern.[My tradeing personality]Like a trend with more than 3% profit potential to resistance.[7]Buy at support is the aim.......................................
 
Halcyon,

The biggest favor you can do for yourself is start by trading 100 share (or smaller) lots. If you make money doing this, you might make money doing 5000sh lots. If you lose money trading 100 share lots (almost guaranteed at first) you will only loose 2% as much as you would have. Personally, I would absolutely go with direct access - preferably penny per share. Good luck.

PS
I use QQL. They have their problems, but I keep using them.
 
You must log in or register to reply here.
Back
Top