TradeStation Handicaps Active Traders

T

tfjield

I've been using TradeStation for almost 2 years, now. While I have been pleased with the platform in general (albeit the lack of the ability to control it from another program), recently I have had some very negative experiences.

It all started one day when I was buying up some VPHM on a big movement and I ran out of buying power mid play. Although TradeStation indicated that I had 4x buying power, in fact, I only had 1.5x. This was not indicated anywhere.

I called TradeStation and was told that SOME biotechs have higher equity requirements. How much? Oh, 50% or 75%, depends. Where do they post this information? Get this... THEY DON'T! Why? Because it's an "internal policy subject to change on a daily basis." They suggested that I place "dummy trades" to determine what my REAL buying power is before entering a trade.

You've got to be kidding. For active traders, this is just a silly suggestion. Who has time to be placing dummy trades just to confirm the number that they have written on the bottom of my screen?!

After that, I had the same experience with PETS, "Petmed Express." I called the trading desk, and yup, 75% equity requirement. Why? "It's a biotech." WHAT?! It's specialty retail, but their brilliant credit desk labeled it as a biotech because it's got "med" in the name. Go figure.

So recently, TZOO and EZPW are moving around. EZPW isn't marginable, and TZOO's equity requirements are high. I called about EZPW... "It's not marginable." Why? "Because it's been volatile lately." volatile? Ummm, ok, sure. I'm a day trader and I prefer to play those stocks that don't move. I mean, why not? Safe for TradeStation because I'm still paying commissions without risking my margin... OF COURSE I WANT TO TRADE volatile STOCKS!

I am an active trader, making on average 4 position trades per day. So far this year I have paid TradeStation almost $5k in commissions. Yet, now, on practically a daily basis, I find a position I would like to trade only to find that AFTER I begin to enter the position that my margin has been reduced on that particular issue.

TradeStation has shown several times that they are more concerned with risk mitigation of their offered margin than they are for their customers. They are willing to pull the rug right out from under you by cutting your margin without telling you. When it was pointed out that this was unacceptable, their representative explained that they would have to carefully weigh the benefits of providing equity requirement information to their customers with the cost of implementation. Even a web page with a listing of non-standard equity requirements would require "careful consideration."

Have others experienced such frustration with their deep-discount brokerage? Is there another firm that has more regard for their customers than TradeStation? That does not handicap their customers so? TradeStation tries to sell to active traders, then they pull stunts that may directly damage an active trader's performance.

I've heard good things about eTrade Pro, including lower commissions and up-front indication of non-standard equity requirements. The platform isn't as nice as TradeStation, though. What about eSignal?

Any recommendations? At this point, I'm sure that one of TradeStation's new "risk mitigation" issues is going to cause me to suffer a big loss...

Thank you!
 
Gotta live with it buddy. That's discount brokerage. I was charge $40 just to call in to check the status for a mistake they made on a pit-traded options trade.

The best we can do is to get a prime broker when we are rich enought.
 
Tradestation is not free, and they aren't even the cheapest. There are other direct-access brokers that don't play those games. If you are profitable, why not keep Tradestation for charting and trade through MB, IB, etc.
 
Quote from Triple X:

If you are profitable, why not keep Tradestation for charting and trade through MB, IB, etc.
More...

If profitable......yes, then $250/month OK

To avoid paying that amount, traders force themself to trade with TS securities, unfortunatly brokerage side isn't yet ready to accommodate intraday traders
 
Quote from Nana Trader:

If profitable......yes, then $250/month OK

To avoid paying that amount, traders force themself to trade with TS securities, unfortunately brokerage side isn't yet ready to accommodate intraday traders
More...

Exactly... However, they continually promote themselves as being the number one choice for active traders... Actively trading stocks that have no volatility, I guess.

I think this has been getting worse as time goes on. Maybe they recently hired some really anal risk mitigation personnel, or perhaps they've sustained some very large losses recently and that forced them to tighten up.

Although I think that their claims and their actions do not reconcile, I would at least be somewhat placated if they would just tell us beforehand what the margin requirements for the symbol were before I started trading it.
 
I'm not a big fan of TradeStation,the company, but I have to think that in this case, they are doing the majority of their customers a favor. Going full boat on some thin biotech play may work for some, but a lot of others will blow out doing it. Same deal with $500 intraday ES margin. Sounds great, but using it is just asking for a blow out.
 
I would disagree. According to your thinking, they could just not give customers any margin and since most traders lose money, they would be doing most of the traders a favor.

I would think it's the customer own responsibility if they decide to play with standard 4:1 daytrading margins.

Quote from AAAintheBeltway:

I'm not a big fan of TradeStation,the company, but I have to think that in this case, they are doing the majority of their customers a favor. Going full boat on some thin biotech play may work for some, but a lot of others will blow out doing it. Same deal with $500 intraday ES margin. Sounds great, but using it is just asking for a blow out.
More...
 
Quote from AAAintheBeltway:

I'm not a big fan of TradeStation,the company, but I have to think that in this case, they are doing the majority of their customers a favor.
More...

Protecting there interests as a company definately have to be a factor in their decisions. However, doing so in a way that provides a distinct disadvantage to the trader is not acceptable. Limiting margins is one approach, just tell me beforehand. I consider it this way: if they didn't offer me margin, I wouldn't trade there. Simple as that. Now what they're doing is slowly revoking my margin, giving me less and less reason to stay.

There are other approaches that may be considered as well. Even fully margined out, how far would a stock have to drop before all of my equity was wiped out? Since I don't have 4x overnight, that movement would have to happen intraday. That's a pretty drastic intraday drop that only happens on rare occasion. Now include the commissions that I have already paid, above and beyond my equity, and I think the odds of a trader losing money to the point of breaking even for the company are pretty low. In most cases, they should be able to step in before that happens. Even further, sometimes it's just going to happen and they need to live with it. While reducing losses from overmargined clients is one way to improve their earnings, it's not going to continue to work if their client's migrate to other brokerages.

As I mentioned before, I have heard that eTrade Pro alerts you beforehand whether the symbol is marginable or not. Recently, they made some changes that greatly improved their customer's ability to short. The platform is definately not as advanced as TradeStation's, and that's basically the reason why I don't migrate.

Is there another out there that would be a good competitor? Perhaps some of you have experience both with the platform and the brokerage's policies? I have only used TradeStation, but I see a lot of advertisements with eSignal. Any feedback with regard to the above? How about controlling the platform externally, so I can run strategies in code I've written in my language of choice?
 
It's not that I disagree with you. I'm actually not sure what other brokers do. I know that they don't count some of these volatile small caps as full equity for margining purposes. What I don't know is if they restrict your daytrader BP when you are buying them. For a company that is constantly boasting about its technical prowess, i wouldn;t think it would be that difficult for TradeStation to give you some means of knowing what your BP is for these companies. They obviously have it in their s/w already or they wouldn't be able to restrict you in real time.
 
Quote from Sanjuro:

I would disagree. According to your thinking, they could just not give customers any margin and since most traders lose money, they would be doing most of the traders a favor.

I would think it's the customer own responsibility if they decide to play with standard 4:1 daytrading margins.
More...

Sanjury, I agree with you completely.

In fact, when you open a TradeStation account, you must provide information regarding your liquid assets, income, etc., in order to qualify for a margin account. When they issue a margin account, they shouldn't restrict that margin unless it's under the most extreme circumstances.

My Visa card doesn't not work when I go to some store because Visa doesn't agree with my purchase...
 
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