Lightspeed vs Interactive Brokers

Hey Guys,

This weekend I am taking a look at both the Lightspeed trading platform and the Interactive Brokers platform. Currently I am using Lightspeed for my day trading with Ocean View Capital, which is all I can do in that account. I use trademonster.com for my options and longer term trades.

At trademonster I am paying $0.50/contract or $12.50 minimum for options trades, and$0.50/Contract for or $7.50 minimum for multi leg trades. It is a flat fee for of $7.50 for stock trades. I do not trade enough size to take advantage of the per contract rate so I always end up paying the minimum, which becomes very expensive in commissions. I love the platform as it is very intuitive and easy to navigate but would like to save some money on commissions. For example, This week I put on three positions that cost me about $45 in commissions that would had only cost me $3-$4 on Lightspeed or IB.

At Lightspeed they charge $0.50/contract with no minimum commission and $0.40 per 100 shares traded. But I think they may have a monthly platform fee as I pay $29/month for my day trading account for data access fees. Which I don't mind as I will save much more by making at least 3 trades per month.

But I am also checking out Interactive Brokers, as I like all the extra tools that they have. I see that they charge $0.70/contract for options and looked like $0.34 per 100 shares traded. From what I can tell it looks like there is a $10 charge per month for their platform.

To help me with the comparison, can you please provide your insight and experiences with the interactive broker platform? Also can you confirm commission rates and monthly fees? And anything else that you want to trade about the platform.

Thanks

Dominic

Straddle Spreads

Hey guys, I'm going to look at the prices over the weekend but I'm interested in buying a straddle spread. I think we're either going to see big downside, or after some consolidation we'll see the continued climb. Either way I think we move from here. I lose money if the market trades sideways with little volatility. Mark, your boy Fitzpatrick just went bearish on national TV.

These are not bullish indicators

While I love speaking out of both sides of my mouth here are some things to consider before moving aggressively into the bullish camp of the market.

PIMCO's Bill Gross on why the rally may be in jeopardy:

http://www.pimco.com/LeftNav/Featured%20Market%20Commentary/IO/2009/Midnight%20Candles%20Gross%20November.htm

Longer-dated treasury auctions are not going well while shorter dated ones are... If bond buying stops the Fed cannot sustain lower interest rates would definitely hamper any recovery as borrowing costs inflate to more rationale levels:

http://www.cnbc.com/id/33531343

A look behind the GDP numbers:

http://www.cnbc.com/id/33532009

XLE, SLV call spreads

I liquidated both spreads this morning for a few reasons. The first is it seems the short dollar long commodity trade is overdone and people are starting to unwind as the FED is signaling a change in their language for keeping rates low. It used to be there was no end in sight, now they are changing their tone. It could be that they really won't make any moves any time soon, but they need to put that threat out there because the dollar was getting hit too hard.

For the last two weeks I had wanted to take some of these positions off but could never commit or decide what to do. After watching them get the shit kicked out of them the last few days I decided to just end it while they are still profitable. I never expected the SLV to be profitable so while I screwed up and could have got more for them, I still got something for nothing. The XLE was put on a while back when I thought the world was in recovery and therefore energy demand would slowly increase again. I have no idea if that is what happened but this too was a profit with no cash outlay. The main reason for taking this one off is the intrinsic value was $1.50 and the time value was $2.50. With the clock ticking towards Jan 10 expiration that was all going to erode away. I've still got naked $45 puts on XLE that I'm not going to buy back.

In general I guess I'm happy that I made some $, I'll post the numbers later after I update my spreadsheet, but I also mismanaged the position by not having an exit strategy and not reviewing my positions once a week to see how I felt about them. This left me anxiety ridden as the market sells off. I shouldn't have any anxiety if I had a plan. I feel I have a plan with my other positions in that I'm will to take possession and sell covered calls long-term to create income. I'm still guilty of being involved in the market on a part-time basis. Sometimes I watch, sometimes I don't, this passive attitude will always lead to inefficiency.

Looking to enter CC in MGM...

In T3 news letter yesterday, they highlighted MGM as a possible canidate for a covered call strategy. I will be looking to enter around 9 and selling the $9 strike between Nov 09- Jan 10.

Based on yesterday's closing price if I sell the $9 strike @ Jan 10 expiration I can get about 12% and that would put me at an avg price of about $7.90 if I am not exercised, right into heave support on the daily chart. Next level of support would be $6.

I will keep you updated.

New Options position

Today I took a position in he Chinese company SOHU. I sold a bullish put spread: Bought Jan 11 $55 puts and sold Jan 11 $80 puts. Max profit potential is $1,665 with a maximum loss $835 per contract. A risk/reward of 1:2.

Because of the volitility of this stock I only did one contract.

I will keep you guys updated.

Earnings plays I'll be watching tomorrow: Wednesday

Before the bell: V (announced tonight confirmed), WLP, COP, Q
After the close: FSLR, HGSI, AFL, NLY (Disclaimer: I have a position), TRN (Disclaimer: I have a position)

Stocks I'll continue to monitor as day trades: BIDU, DVN, UUP, DRYS

Earnings plays I'll be watching tomorrow

Before the bell: AKS, JCI, PCX, X, WYNN
After the close: MEE, PNRA, V, ERTS

Roy Davis on Stocktwits TV

Hey Dom, Roy confirmed my analysis of FAS

DRYS reports tomorrow after the bell

SOHU in the morning and FLEX after the close too.

Trading Moving coming out soon

http://flooredthemovie.com/community/?page_id=11

Investors Business Daily

Hey Guys,

I recently subscribed to investors business daily, the electronic version. Everything is the same as the real paper it is just in pdf version. I have created a file in the dropbox called EIBD and I will save the paper in there daily if you guys would like to view it. I just saved Monday's paper in there today. The cool thing about the electronic version is the next days edition is always available the previous night.

Dom

Learning Earnings Plays

I need to get on a program of keeping track of the earnings and playing those stocks especially techs. I've had real success first with SNDK and paper success with SNDK, AAPL & AMZN. AMZN was a great play this afternoon. I was just checking CNBC online and caught that Amazon beat expectations and the stock was trading higher after-hours. I immediately jumped on Lightspeed right now and was on the demo and within 10 minutes was up about $250. These earnings were great easy money because you can feel the momentum which is very forgiving and as long as you know the levels which are usually psychological you can rack up the P&L pretty quickly.

http://blackmarkt.blogspot.com/2009/10/todays-paper-performance_22.html

Pivot Points

I've been using pivot points for the past 1-2 months and they've really helped me gauge the strength of a stock, SPY's & dollar index. IB charts has these pivot point built in and I checked the calculations and they're the standard pivot point formulas. I've noticed that the levels of resistance and support are followed by the stocks probably because a lot of traders are watching them and therefore it becomes a self-fulfilling prophecy at least that's my theory. Also they help ground you. If you can I would read "The Logical Trader" or at least the first few chapters to see how you interpret the probabilities of a stock continuing an uptrend or breaking down with pivots and how that these secondary indicators can boost your confidence entering/exiting a trade or adding/lightening up on a position. I really struggled to find some grounding before I started incorporating pivots into my day trading.

See the rainbow colored lines those are the pivot levels.

WATCH THESE VIDEOS!!!

Hey Guys,

I am getting more and more bullish long-term about the market's run. I've really been hitting the books and studying the relationship between the dollar and the markets. Everything seems to confirm that the government wants the dollar to go lower and basically inflate assets and equities in the short-term. They've done this before to emboldened and make Americans feel wealthier. Yahoo had a few videos today illustrating the rise and fall of recent Western empires and how America's rhymes to these stories. Also PIMCO released a great read too about the reserve currency and how it affords us to ride the downside of the dollar. Basically until oil gets out of control and/or there's a disorderly decline in the dollar the Fed will view what is happening as more than acceptable and may even be encouraging the dollar's demise.

PIMCO

http://europe.pimco.com/LeftNav/Global%20Markets/Global%20Perspectives/2009/Global%20Perspectives%20Clarida%20With%20Privilage%20Comes%2010-09.htm

Yahoo interview with Niall Ferguson:

http://finance.yahoo.com/tech-ticker/article/357319/Niall-Ferguson-U.S.-Empire-in-Decline-on-Collision-Course-with-China?tickers=FXI,PGJ,^GSPC,^dji,SPY,LMT,RTN

http://finance.yahoo.com/tech-ticker/article/357373/The-Dollar-Is-Dying-a-Slow-Death-Says-Niall-%27Ascent-of-Money%27-Ferguson?tickers=tlt,tbt,udn,uup,dia,spy,eem

http://finance.yahoo.com/tech-ticker/article/357648/Wake-Up-Washington!-China-Is-Already-Dumping-the-Dollar-Niall-Ferguson-Says?tickers=FXI,PGJ,UUP,UDN,GLD,TBT,DBC

Earnings play: SNDK

Scaled into a small 200 share position ( 50 share lots) averaging $21 a share throughout today on Sandisk because of the Apple earnings explosion today. Sandisk blew away estimate earnings after the market closed and ran right up to $24. Scaled out of the position in 50 share lots from 23, 23.5 & 24. Made about $450. Was able to trade it with Lightspeed too and made about $170. This was a good easy earnings play. Kinda makes up for missing Apple. Ironically I usually don't do earnings after hours but this was a no-brainer.

Tech all week.

Official Rejection Letter from Susquehanna

Below is the standardized rejection/we'll keep your resume in our shit can for future rejections letter. The only surprise was that I actually heard anything at all. It's been about five weeks I think since I applied. I inquired to the person listed on the HR email and the person who hand delivered my resume for some useful feedback like why in particular I'm not a match. This wasn't a case where I was just applying for something that didn't exist. I applied to an open listing and I felt I exceeded the listed criteria. So we'll see if I get any useful information but I doubt it. Just thought I would share. This is the kind of treatment I expected so that's why I was interested in taking an unpaid internship somewhere just to get in the door and meet some people.

Dear Jason:

Thank you for your interest in SIG. We have received your resume through our employee referral program. We place a strong emphasis on the recommendations of our employees; however, at this time we do not have any openings for which your background is a match.

We will keep your information on file in our Recruiting Database for a period of time. Should additional opportunities arise for which we feel your skills and qualifications match, we will contact you.

Again, we would like to thank you for your consideration of SIG. We wish you the best of luck in your endeavors.

Sincerely,
SIG Recruiting Department

Week 3 Key Earnings --> Tech Time

Expiration Friday

Hey guys, it's been a while since I had anything to say. I had put on a total of 5 naked option positions at various times this month. I had naked puts on GG, LEAP, VLO, and UA. I had naked calls on SPY. GG and UA expired worthless, I closed out VLO early for a gain, closed out the SPY calls today for a -$100 loss, they expired worthless three hours later, frustrating. I have a -$2000 paper loss on the LEAP puts. I will be taking possession this weekend at a strike of $17.50 with a cost average of $16.50, and will sell Nov calls on Monday. So the realized gain this month for the four positions was $1240, however, including the paper loss it currently stands at -$760 for the sum total of the five positions.

For me this was a good month because I'm back to being in the game and speculating. Between the financial crisis and the uncertainty of future employment I had been running scared for a while and just hoarding cash. Just a few weeks ago I closed out my JPM call spread and left a lot of profit on the table because I wanted to get in cash for a possible move to Chicago. I would not be closing out that position today and currently regret doing so. It's a signal to me that I wasn't in my right mind a few months back. I feel like I've got my confidence back now after having lost it a few years ago. So I'm happy, today, we'll see what tomorrow brings.

Are we going to 1200 Dow?

I've really made my money this year learning from Dan Fritzpatrick at StockMarketMentor.com. In 1 year I've gone from basically only having a few thousand dollars to over $100k. My swing portfolio is up over 50% year to date (my 401k which I opened in January is up over 30%) but I missed a lot of money having not taken his trades and market commentary.

Here is his current thesis:

He has called and stayed with the trend all the way up from March and advocated being a "vigilant bull". He feels that investors are emboldened in to buy in this easy money "temporary bull" market where Americans aren't consuming their income but investing and their flowing into stocks because a) it's been easy money for almost 6 months now and they are chasing ROI b) lack of competitive options (real estate is too risky and credit is difficult, bonds are boring and savings are basically 0% return) c) no one wants to be in dollars. He also believes that the market will be heading to 1200 Dow but will encounter heavy resistance as we approach this level because this is a natural level for sellers to take profits. There are 3 things he feels could derail this rally:

1) Unexpected consistently negative earnings
2) Disorderly fall in the dollar or a reversal in the dollar's demise
3) Fed changing it's tone and raising interest rates

So I will continue to buy on pullbacks, short the dollar on rallies and buy oil when the S&P looks strong.

Options on stocktwits tv, oil & earnings this week

Hey Jason,

Sorry we've been talking stocks so much lately but I'd check out Steven Place's segments on Stocktwits TV. He specializes in options and seems to be quite a guru. He does like a 1 or 2 hour market breakdown to stock picking over the weekend. His segment is called something like "Brunch" if you're looking for ideas.

Personally I'm looking at oil to breakout this week if this market continues its strong uptrend and the dollar continues its orderly decline.



Also here's some important earnings for this upcoming week:

Yuan ETF?

Hey Guys,

Does anyone know if there's an ETF or basket of ETF's that track the Chinese Yuan? The only one I can find is the CYB but not exactly sure how this works. Looking to get super-long...

Tomorrow will be interesting key resistance will be tested

The past few days have been incredibly rewarding for those who have stuck with the trend and traded alongside the falling dollar. The SPY is at a key technical resistance level (see chart for details). Although we were able to sustain most of the gains today we still were not able to break above resistance. If we make a lower high this time in the trend my thesis will begin to focus on really being hawkish into earnings and keeping an eye on the falling dollar relationship for any signs of decoupling.

Exploring the tools to build my toolbox

My free trial to flyonthewall just ended. I really like the news feeds but wanna see how this service compares with Madscan and briefing. So I just signed up for Madscan Elite 1-month trial. The trial costs $3 which is made up of Exchange fees. If this filtering software can consolidate the features you would get with flyonthewall or briefing for the same or less monthly price and on top of that eSignal then when i do go live I may look at this as my 1 stop shop.

My rules

Trading System Rules (Sep-Feb): Re-evaluate after first 6 months
Max Tier Size, Max Stop Loss, Max Daily Shares
100, $120, 10,000
200, $150, 15,000
300, $175, 20,000
400, $200, 25,000
500, $225, 30,000
600, $250, 40,000
700, $275, 50,000
800, $300, 60,000
900, $325, 70,000
1000, $350, 80,000

Ways to increase Share Size

1) Gross $200 over 5 day period
2) Net 3x max stop loss in one day and over 50% of max shares allowed
2A) Up 7/10 trading days
2B) Up 5 days in a row >=$500

Ways to decrease share size

3) Violating the max number of shares rule
4) Violate max stop loss by 20%
5) Trading more than 5 stocks a day not profitably
6) Getting stopped out once
7) If gross loss is greater than 2 x your max stop loss during a 3 day period
8) Violating Max position size
Ways to get tiers size downgraded to 100 from any size

9) Violating the max number of shares by 30% and TA <-4
10) Violating max stop loss by 50%
11) Losing more than $1 on a stock valued at $10-$80
12) Getting stopped out two days consecutively ( Unless max is already 100 then stop loss is reduced by $25 each time this happens.)

General Rules:

13) A trader must trade on the demo on take a day off for 1 day if he/she gets stopped out two days consecutively.

14) If the trader is stopped out 3 times in a row his/her max stop loss and max number of shares will be reduced by 50%. Things will go back to normal tier size schedule once the trader nets 2 times his/her reduced max stop loss.

15) The trader should trade only one stock at a time. Ther is one exception to this rule: if the trader is making a support/resistance play around an important intraday level and the stock is not moving and a stop is entered to manage the position.

16) A trader may exceed his max number of shares traded daily if their ticket aerage is 8 or better. If at anytime their ticket average drops below 8, after they have exceeded their max numbr of shares then they must cease trading for that day.

17) Stop loss for the month is 10% of Equity

18) Can only trade maximum of 3 different stocks unless up at least 3x max stop loss.

19) No pre-market or afterhours trading is allowed for 6 months and then not allowed unless net positive MTD as of the trade.


20) For first 6 months or until I am positive, I will not take more than .15 risk per 100 shares.