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Switched from TDAmeritrade (TDA) to OptionsHouse (OH) several months ago.
Over all, TDA offers more features such as ThinkorSwim and TradeArchitect, but you pay for those extra features through higher commissions and higher margin rates.
I switched from TDA to OH primarily because I was starting to hold some positions in margin for a week or two at a time, and wanted a lower margin interest rate, and also because I am an active trader, about a 1000 trades per year, and figured that the $5. per trade lower cost at OH would save me at least five grand a year.
Also, I was having an issue with TDA that no matter what setting I put the tax cost basis calculation at (FIFO or LIFO), they were miscalculating the cost basis of my stocks where I maintained some shares long term and bought and sold some shares short term. (Example: I hold 100 shares of NFLX long term, since 2011, but buy and sell thousands of shares of NFLX daily - TDA was having a hard time keeping the cost basis of the 100 shares of NFLX from 2011, from being averaged in to the cost of the new shares, even with the calculation set at LIFO.)
BY THE WAY, the get the LIFO setting with OH, it is NOT enough to merely click that setting in your brokerage account, you must also EMAIL or FAX them a letter ASKING them to set your account for something other than the default FIFO. (But with TDA, merely clicking for that tax basis calculation setting in your brokerage account suffices.)
After a few initial hiccups, Options House is working out well for me:
1. When a margin enabled account is fully transferred from one brokerage to another, obviously the stocks and cash are transferred over, but there is also something called an "SMA (Special Memorandum Account) Memo" that lets the incoming brokerage know what your day trading and margin trading buying powers are, based on the standard SEC formulas for calculating these values (in general 2X for margin buying power, 4X for day trade buying power).
For some reason, TDA does not provide an SMA memo on full outgoing transfers, and leaves it up to the incoming brokerage to re-calculate the correct buying powers. OH, on the other hand, expects and relies on the SMA memo. Because none was provided, for a week or so there I had negative margin buying power in my account and a day trade buying power that was too low, even though the value of my account had actually gone up during the ten days or so it took to transfer (during the full transfer you will have no access to your stocks and will be unable to trade against them).
Finally, I had to have TDA email me directly the correct figures for the SMA which I then FAXed to OH, and OH then used these figures to recalculate correctly my buying powers. For a while, OH was saying that they could do nothing unless the SMA memo was transferred "officially" via the APEX clearing house that handles the full transfer (APEX is the company that handles all full brokerage transfers), but eventually they accepted the figures and gave me what was due.
2. If you are an active trader, you need to notify OH that you do NOT want your trades put into "review" - this is a worthless feature where they hold up your larger trades for up to thirty seconds after entry as they "review" them. Really, such a review is pointless unless you are the type of trader who changes his mind quickly and likes to cancel orders right after you place them (which I suppose you could cancel during this review period), because after all - what are they looking for in such a review? That you made a bad call? Once the order is even accepted for entry the computer system has already determined that you have the adequate buying power for the transaction, and that there are no glaring mistakes in the entry such that it would be impossible to execute.
So, first off, once you open the account, let OH know that you wish to have all your orders executed immediately, with no review, and not held up - and that you accept full responsibility for all your trades, otherwise, if you are a rapid fire trader you will not be happy with the delay in execution of your trades.
3. There were a few mornings where the iPhone OH trading app froze up, and when I phoned it to ask about this, they told me that this was a system wide issue. Also, for whatever reason, the OH app works better on the iPhone than on the iPad; although they should be the same app, it tends to lock up more on the iPad than the iPhone.
On the plus side:
Comparison wise, in general, OH gives you an average 3% lower margin interest rate than TDA. If you are holding, as I have in the past, hundreds of thousands of dollars of stock in margin for even a short period of time, this 3% difference may add up. Trades at TDA are $9.95 per, and at OH $4.95 per - saving you $5. per trade. I am not actually that into options, but if you are, OH also has lower options fees - you save the same $5. per options trade and also TDA is $0.75 per contract versus $0.50 at OH. If you trade as much as I do, all that adds up to big savings.
As far as trade execution times and fills, I have noticed no difference between TDA and OH. Back in the 1990s, when online brokerages were getting into full swing, I recall more than one trade at the end of the 1990s when I first started trading where I got killed due to poor execution times - buy or sell orders sitting on desks for up to 12 minutes before execution, which on the fast moving stocks of especially those days could mean a difference of thousands of dollars. (On two occasions with a couple of online stock brokerages, I was actually compensated close to eight thousand dollars for poor trade fills which they acknowledged were their fault.)
Also back in the late 1990s, full service brokers used to hand you the malarky line that "you need a real broker to get better fills." Back then, as all trade execution was starting to be done electronically, and now, as all of it is done electronically, there is absolutely no difference between the execution price you will get by entering the trade on your online brokerage account versus having a flesh and blood broker enter it at his own brokerage.
With OH, I have entered limit prices to buy or sell or a stock that were entered long before the prices hit, and yet still, on a fast moving stock, been filled at a BETTER price than my limit - which certainly belies the notion that anyone is manipulating the fills or unable to get good fills. These days all brokerages get the same fills and have the same execution speeds, within statistical deviations.
In the A.M. pre-market, TDA allows you to trade from 8AM to 9AM EST only - there is a full half hour before the market opens where TDA allows no trading. OH allows trading from 8AM to 5PM EST with no interruption (which includes one hour only of after hours (AH) trading).
NOTE: AH refers to both A.M. pre-market and P.M. post-market trading.
Sometimes there is a lot going on in that half hour from 9AM to 9:30 AM PST and it is advantageous that OH allows trading during it.
(BUT, see below: TDA allows after hours trading all the way until 8PM EST when the AH trading ends, while OH cuts you off at 5PM EST.)
On the negative side:
A. For some odd reason, while TDA gives you the exact same buying power for long as short trades, OH gives you LESS buying power for shorts than longs. For example say that your buying power is $800K and you want to buy 1000 shares of CMG trading at 750. No problem! with either brokerage. But while TDA will allow you to short 1000 shares of CMG against the $800K buying power, OH will not! claiming that you need an extra percentage of buying power well beyond the dollar value of the shares in order to short.
Despite a few conversations back and forth with OH, they have not come up with any meaningful or logical explanation as to why a specific stock would have a different buying power or margin requirement for going short versus long.
B. OH does not allow you to go short against the box - TDA does. Sometimes you might be holding some shares long in a company, but want to go short at the same time. Why would you ever want to do this? bet both long and short at the same time on a stock? Well, you might be holding shares long term, but detect a temporary downtrend in the stock, and wish to enter a short term short position. This is called going "short against the box" because you are going short against your own long position.
OH does not allow this - you may be long, or short on a give stock, but not at the same time. TDA does allow it.
C. TDA allows you to trade until the after market (AH) is fully closed - all the way until 8PM EST. OH cuts you off an hour into the AH. This can be a shortcoming sometimes, when a volatile stock reports earnings at, say, 4:30PM EST, and you want to sell in the AH, but the maximum price doesn't happen until sometime later in the AH - towards its close.
D. TDA allows maximum flexibility with orders - you may set limit orders that will execute only in the AH, or in both the AH and regular market, including long term GTC (Good Until Cancelled) orders that are only for the regular market or for the regular market plus the AH.
OH has no option for an order that is ONLY in the AH. OH also has no option for a GTC order that includes the AH. OH allows you to have orders that include the AH, but only for that day - in other words, with OH if you want to set a long term (GTC) order to be filled in either the AH or the regular market, you must resubmit it EVERY DAY after the AH closes, because your regular GTC at OH will be ignored even if your limit price is hit at some point in the AH.
These days, stocks move a LOT in the AH and the inability to set a GTC order which includes the AH can be a handicap.
E. With TDA, the day after a stock trade is executed, its History is shown as the TOTAL dollar amount paid for the TOTAL of number of shares in the transaction. On large share transactions especially, the order is not all filled in the same lot. For example, if I enter an order to buy 1000 shares of GOOGL, it is rare that all of that is filled in one lot. It may appear to be - all of this happens in an instant and all I see is that I was "filled," but in reality, even if all of the shares are bought at the exact same price, 100 might come from this market maker, 200 from another, 350 from another, 80 from another, etc. until the 1000 share order is filled.
Because a stock trader must keep track of all his trades for tax purposes (brokerages just may not be relied on to keep track of rapid fire stock trades, as they often miscalculate the correct stock basis especially if you tend to hold some shares long term and others short term of the same stock), you need to know what you paid for a trade and what it sold for. When recording a trade, it doesn't matter to you that this lot of shares came from that market market or that this other lot came from another market maker, or how many partial fills it took to fill your order, all you care is how many dollars did you pay for the trade and how many dollars did you get when you exited the trade.
This is why it is useful that the day after a trade TDA, automatically adds up each trade to record in its history the total dollar amount going in, and the total dollar amount going out. OH does not do that. With OH you must download the history via an excel spread sheet, and spend a little time using the SUM feature of Excel to add up all the little odd lot partial fills for each stock trade, that add up to the sum totals going in and out of each trade. This extra step of calculation is a bit of a pain.
F. OH does not offer Level 2 stock quotes, which are a way to see into exactly what is being bid and asked with corresponding share lots.
G. In general OH offers less tools to track the market. While of course OH allows you to view the chart of a stock in real time, that charting is rudimentary compared to Trade Architect on TDA. Trade Architect is a desktop application that opens up a whole new screen that you may fill an entire computer monitor with, while the charting on OH remains a window within their trading window.
Trade Architect also has a neat feature which places a line across the chart that represents your buy or sell orders, and then chimes as they are filled. OH doesn't allow any such trade interactive features to interpose on their charting. Trade Architect has a new feature called "Trade Finder" that supposedly finds you a great options trade based on criteria you give it, but so far it has returned zero results based on whatever criteria I have fed into it.
ThinkorSwim is a neat desktop application that gives you a variety of real time streaming quotes for both market indices and stocks you follow, along with news feed and other features. There is nothing in ThinkorSwim that is not available on the OH trading platform, but with ThinkorSwim it is all there, happening real time in one window, while at OH you must click around to get the different pieces of information separately.
(NOTE: even if you leave just a few dollars in your TDA account, you may still leave it open even after a full account transfer. That way, you may still run Trade Architect and ThinkorSwim, although they will no longer refer to your actual trades, but still they will offer you the same information you need to decide your trades, which you may then enter at OH. So, even if you do a full transfer out of TDA, after you do the transfer, call TDA up and ask them to leave your account open, which is a good idea anyway, if you need to go back and look up any old trades for tax reporting purposes.)
By the way, if you trade penny stocks, then neither OH nor TDA are for you - neither allow short positions at all in pennies.
Suggestions for OptionsHouse:
1. Correct your system so that it requires the exact same buying power for going short as long.
2. Allow short against the box positions.
3. Extend your AH trading, at least to 6PM EST.
4. Add more choices to order entry, to include AH ONLY limit order, and GTC orders that include the AH.
5. Summarize trade history to include the total price for an entire order fill, instead of keeping it in lots.
6. Add Level 2.
7. Make your charting platforms more interactive with the stock orders and fills, like Trade Architect - to include images of orders on the chart, and notifications on the chart of order fills.
I would also suggest that OH get it together to calculate margin and day trading buying powers correctly, and quickly, even where the SMA memo is not transferred over, to avoid issues such as I had.
All of the above said, for me - an active trader, I am happy with the move to OH because I know I am saving money daily. It's like the difference between paying a large or small sweep fee to the house at a poker table. In the long run, that sweep adds up and can really crimp your profits. It is true that you get what you pay for, but I not making any less at OH than at TDA, and so long as I am able to abuse TDA for free Trade Architect and ThinkorSwim, I get the best of both worlds other than the few suggestions above, especially 1 - 5, which would make OH even better.
Over all, TDA offers more features such as ThinkorSwim and TradeArchitect, but you pay for those extra features through higher commissions and higher margin rates.
I switched from TDA to OH primarily because I was starting to hold some positions in margin for a week or two at a time, and wanted a lower margin interest rate, and also because I am an active trader, about a 1000 trades per year, and figured that the $5. per trade lower cost at OH would save me at least five grand a year.
Also, I was having an issue with TDA that no matter what setting I put the tax cost basis calculation at (FIFO or LIFO), they were miscalculating the cost basis of my stocks where I maintained some shares long term and bought and sold some shares short term. (Example: I hold 100 shares of NFLX long term, since 2011, but buy and sell thousands of shares of NFLX daily - TDA was having a hard time keeping the cost basis of the 100 shares of NFLX from 2011, from being averaged in to the cost of the new shares, even with the calculation set at LIFO.)
BY THE WAY, the get the LIFO setting with OH, it is NOT enough to merely click that setting in your brokerage account, you must also EMAIL or FAX them a letter ASKING them to set your account for something other than the default FIFO. (But with TDA, merely clicking for that tax basis calculation setting in your brokerage account suffices.)
After a few initial hiccups, Options House is working out well for me:
1. When a margin enabled account is fully transferred from one brokerage to another, obviously the stocks and cash are transferred over, but there is also something called an "SMA (Special Memorandum Account) Memo" that lets the incoming brokerage know what your day trading and margin trading buying powers are, based on the standard SEC formulas for calculating these values (in general 2X for margin buying power, 4X for day trade buying power).
For some reason, TDA does not provide an SMA memo on full outgoing transfers, and leaves it up to the incoming brokerage to re-calculate the correct buying powers. OH, on the other hand, expects and relies on the SMA memo. Because none was provided, for a week or so there I had negative margin buying power in my account and a day trade buying power that was too low, even though the value of my account had actually gone up during the ten days or so it took to transfer (during the full transfer you will have no access to your stocks and will be unable to trade against them).
Finally, I had to have TDA email me directly the correct figures for the SMA which I then FAXed to OH, and OH then used these figures to recalculate correctly my buying powers. For a while, OH was saying that they could do nothing unless the SMA memo was transferred "officially" via the APEX clearing house that handles the full transfer (APEX is the company that handles all full brokerage transfers), but eventually they accepted the figures and gave me what was due.
2. If you are an active trader, you need to notify OH that you do NOT want your trades put into "review" - this is a worthless feature where they hold up your larger trades for up to thirty seconds after entry as they "review" them. Really, such a review is pointless unless you are the type of trader who changes his mind quickly and likes to cancel orders right after you place them (which I suppose you could cancel during this review period), because after all - what are they looking for in such a review? That you made a bad call? Once the order is even accepted for entry the computer system has already determined that you have the adequate buying power for the transaction, and that there are no glaring mistakes in the entry such that it would be impossible to execute.
So, first off, once you open the account, let OH know that you wish to have all your orders executed immediately, with no review, and not held up - and that you accept full responsibility for all your trades, otherwise, if you are a rapid fire trader you will not be happy with the delay in execution of your trades.
3. There were a few mornings where the iPhone OH trading app froze up, and when I phoned it to ask about this, they told me that this was a system wide issue. Also, for whatever reason, the OH app works better on the iPhone than on the iPad; although they should be the same app, it tends to lock up more on the iPad than the iPhone.
On the plus side:
Comparison wise, in general, OH gives you an average 3% lower margin interest rate than TDA. If you are holding, as I have in the past, hundreds of thousands of dollars of stock in margin for even a short period of time, this 3% difference may add up. Trades at TDA are $9.95 per, and at OH $4.95 per - saving you $5. per trade. I am not actually that into options, but if you are, OH also has lower options fees - you save the same $5. per options trade and also TDA is $0.75 per contract versus $0.50 at OH. If you trade as much as I do, all that adds up to big savings.
As far as trade execution times and fills, I have noticed no difference between TDA and OH. Back in the 1990s, when online brokerages were getting into full swing, I recall more than one trade at the end of the 1990s when I first started trading where I got killed due to poor execution times - buy or sell orders sitting on desks for up to 12 minutes before execution, which on the fast moving stocks of especially those days could mean a difference of thousands of dollars. (On two occasions with a couple of online stock brokerages, I was actually compensated close to eight thousand dollars for poor trade fills which they acknowledged were their fault.)
Also back in the late 1990s, full service brokers used to hand you the malarky line that "you need a real broker to get better fills." Back then, as all trade execution was starting to be done electronically, and now, as all of it is done electronically, there is absolutely no difference between the execution price you will get by entering the trade on your online brokerage account versus having a flesh and blood broker enter it at his own brokerage.
With OH, I have entered limit prices to buy or sell or a stock that were entered long before the prices hit, and yet still, on a fast moving stock, been filled at a BETTER price than my limit - which certainly belies the notion that anyone is manipulating the fills or unable to get good fills. These days all brokerages get the same fills and have the same execution speeds, within statistical deviations.
In the A.M. pre-market, TDA allows you to trade from 8AM to 9AM EST only - there is a full half hour before the market opens where TDA allows no trading. OH allows trading from 8AM to 5PM EST with no interruption (which includes one hour only of after hours (AH) trading).
NOTE: AH refers to both A.M. pre-market and P.M. post-market trading.
Sometimes there is a lot going on in that half hour from 9AM to 9:30 AM PST and it is advantageous that OH allows trading during it.
(BUT, see below: TDA allows after hours trading all the way until 8PM EST when the AH trading ends, while OH cuts you off at 5PM EST.)
On the negative side:
A. For some odd reason, while TDA gives you the exact same buying power for long as short trades, OH gives you LESS buying power for shorts than longs. For example say that your buying power is $800K and you want to buy 1000 shares of CMG trading at 750. No problem! with either brokerage. But while TDA will allow you to short 1000 shares of CMG against the $800K buying power, OH will not! claiming that you need an extra percentage of buying power well beyond the dollar value of the shares in order to short.
Despite a few conversations back and forth with OH, they have not come up with any meaningful or logical explanation as to why a specific stock would have a different buying power or margin requirement for going short versus long.
B. OH does not allow you to go short against the box - TDA does. Sometimes you might be holding some shares long in a company, but want to go short at the same time. Why would you ever want to do this? bet both long and short at the same time on a stock? Well, you might be holding shares long term, but detect a temporary downtrend in the stock, and wish to enter a short term short position. This is called going "short against the box" because you are going short against your own long position.
OH does not allow this - you may be long, or short on a give stock, but not at the same time. TDA does allow it.
C. TDA allows you to trade until the after market (AH) is fully closed - all the way until 8PM EST. OH cuts you off an hour into the AH. This can be a shortcoming sometimes, when a volatile stock reports earnings at, say, 4:30PM EST, and you want to sell in the AH, but the maximum price doesn't happen until sometime later in the AH - towards its close.
D. TDA allows maximum flexibility with orders - you may set limit orders that will execute only in the AH, or in both the AH and regular market, including long term GTC (Good Until Cancelled) orders that are only for the regular market or for the regular market plus the AH.
OH has no option for an order that is ONLY in the AH. OH also has no option for a GTC order that includes the AH. OH allows you to have orders that include the AH, but only for that day - in other words, with OH if you want to set a long term (GTC) order to be filled in either the AH or the regular market, you must resubmit it EVERY DAY after the AH closes, because your regular GTC at OH will be ignored even if your limit price is hit at some point in the AH.
These days, stocks move a LOT in the AH and the inability to set a GTC order which includes the AH can be a handicap.
E. With TDA, the day after a stock trade is executed, its History is shown as the TOTAL dollar amount paid for the TOTAL of number of shares in the transaction. On large share transactions especially, the order is not all filled in the same lot. For example, if I enter an order to buy 1000 shares of GOOGL, it is rare that all of that is filled in one lot. It may appear to be - all of this happens in an instant and all I see is that I was "filled," but in reality, even if all of the shares are bought at the exact same price, 100 might come from this market maker, 200 from another, 350 from another, 80 from another, etc. until the 1000 share order is filled.
Because a stock trader must keep track of all his trades for tax purposes (brokerages just may not be relied on to keep track of rapid fire stock trades, as they often miscalculate the correct stock basis especially if you tend to hold some shares long term and others short term of the same stock), you need to know what you paid for a trade and what it sold for. When recording a trade, it doesn't matter to you that this lot of shares came from that market market or that this other lot came from another market maker, or how many partial fills it took to fill your order, all you care is how many dollars did you pay for the trade and how many dollars did you get when you exited the trade.
This is why it is useful that the day after a trade TDA, automatically adds up each trade to record in its history the total dollar amount going in, and the total dollar amount going out. OH does not do that. With OH you must download the history via an excel spread sheet, and spend a little time using the SUM feature of Excel to add up all the little odd lot partial fills for each stock trade, that add up to the sum totals going in and out of each trade. This extra step of calculation is a bit of a pain.
F. OH does not offer Level 2 stock quotes, which are a way to see into exactly what is being bid and asked with corresponding share lots.
G. In general OH offers less tools to track the market. While of course OH allows you to view the chart of a stock in real time, that charting is rudimentary compared to Trade Architect on TDA. Trade Architect is a desktop application that opens up a whole new screen that you may fill an entire computer monitor with, while the charting on OH remains a window within their trading window.
Trade Architect also has a neat feature which places a line across the chart that represents your buy or sell orders, and then chimes as they are filled. OH doesn't allow any such trade interactive features to interpose on their charting. Trade Architect has a new feature called "Trade Finder" that supposedly finds you a great options trade based on criteria you give it, but so far it has returned zero results based on whatever criteria I have fed into it.
ThinkorSwim is a neat desktop application that gives you a variety of real time streaming quotes for both market indices and stocks you follow, along with news feed and other features. There is nothing in ThinkorSwim that is not available on the OH trading platform, but with ThinkorSwim it is all there, happening real time in one window, while at OH you must click around to get the different pieces of information separately.
(NOTE: even if you leave just a few dollars in your TDA account, you may still leave it open even after a full account transfer. That way, you may still run Trade Architect and ThinkorSwim, although they will no longer refer to your actual trades, but still they will offer you the same information you need to decide your trades, which you may then enter at OH. So, even if you do a full transfer out of TDA, after you do the transfer, call TDA up and ask them to leave your account open, which is a good idea anyway, if you need to go back and look up any old trades for tax reporting purposes.)
By the way, if you trade penny stocks, then neither OH nor TDA are for you - neither allow short positions at all in pennies.
Suggestions for OptionsHouse:
1. Correct your system so that it requires the exact same buying power for going short as long.
2. Allow short against the box positions.
3. Extend your AH trading, at least to 6PM EST.
4. Add more choices to order entry, to include AH ONLY limit order, and GTC orders that include the AH.
5. Summarize trade history to include the total price for an entire order fill, instead of keeping it in lots.
6. Add Level 2.
7. Make your charting platforms more interactive with the stock orders and fills, like Trade Architect - to include images of orders on the chart, and notifications on the chart of order fills.
I would also suggest that OH get it together to calculate margin and day trading buying powers correctly, and quickly, even where the SMA memo is not transferred over, to avoid issues such as I had.
All of the above said, for me - an active trader, I am happy with the move to OH because I know I am saving money daily. It's like the difference between paying a large or small sweep fee to the house at a poker table. In the long run, that sweep adds up and can really crimp your profits. It is true that you get what you pay for, but I not making any less at OH than at TDA, and so long as I am able to abuse TDA for free Trade Architect and ThinkorSwim, I get the best of both worlds other than the few suggestions above, especially 1 - 5, which would make OH even better.
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