More things that are left out when you”Talk to Chuck”
As promised,I am continuing with some peculiarities of the Charles Schwab brokerage; not advertised for obvious reasons,which have caused aggravation and large losses for me over the years(that’s right… years).Hopefully when you are evaluating prospective Brokers you can use my misfortune to avoid the same problems.
Now as one of the original online brokers,Schwab uses a trading platform which is a “detuned” version of a acquisition they made years ago;Cyber Trader,at the time that company was regarded as having one of the most advanced trading platforms around,which may have been why they bought it; to integrate the trading software into the larger brokerage.Now that was a long time ago,and that trading platform that was state of the art,no longer is,yet Schwab persists in using this platform under the name “street smart pro”.It is neither.
None of that would be that big of a deal if they used there considerable resources and IT department to fix known flaws in the platform.Or replaced it.They just release new versions(read;add ons) with the same known bugs.This trading platform like most ;allows the customer to cancel replace quantity and prices of securities open orders by the customer in order to adapt to market conditions.Obviously this is extremely key feature that must function flawlessly with the increased volatility and quick price moves prevalent in the hedge fund dominated stock market.
The problem is; sometimes the trading platform will lock in the middle of a cancel replace cycle,or if there is a partial execution while the order is executed at the old price.What does this results in?let’s say you were attempting to sell 1000 shares of stock @$ 20.64 you then cancel replace to 20.4 because the price started to move away,but in the mean time you had a partial execution of 173 shares@ the original$ 20.64,the stock continues to fade so you lower your offer to sell to$20.2.This platform will sometimes not execute the remaining portion of the order.Not good ….but not a disaster yet!.The work around procedure should be to cancel the whole order.and start a new order”ticket” (in broker parlance )for the remaining shares not sold right?..and by the way this conveniently ends the original “ticket” which creates a separate commission charge for the portion not sold..that is now a new order.
Well there should be no problem selling the 1000-173=827 shares left right?Wrong! the trading platform doesn’t recognize that the securities have not been sold since the software cannot tell it has not executed,so therefore it will not permit the sale of the remaining stake you were trying to sell.Now what can be done now that the stock is sinking and you want to sell!!! get out!!!. First time this happened in 2002 (that’s right…. that how long they have know of this defect!)I assumed that it would be a matter of calling up the IT department and having them “unlock “the software glitch.That turned out to be a fantasy!,one that Schwab employees encourage by telling the customer; “the order should go through now,it’s all unlocked”.They actually can’t unlock it.The only way to sell the security is with a phone order,then you can beg them to reduce the commission since the order had to be replaced due to a defect in there trading platform.
At one time , discount broker’s had large staffs to take telephone trades.Those days are gone!.Today when this happened i was on hold for 15 minutes waiting for a broker to answer phone ;as usually happens the market moves against you.Telephone trades are simply two slow(even without the 15 minute wait) when you are competing with other traders who are trading online. and i suffered losses.
This single defect, caused losses just today of aproxim.6000$,over a bunch of years I would estimate the losses in the $50,000 range just from this defect alone.Here’s the best part..Does this ever “unlock”?yes ;usually after a day or so weather they pretend to unlock it or not.However todays incident resulted from a partial execution on Friday..so you can see that this problem persisted for 3 days and may not resolve itself until tomorrow!!!.Ask yourself if you would be comfortable locking your account access down like this for days at a time,and think about various events such as earning releases,news releases,options expirations,emergencies..etc that would dictate a quick transaction and decide for yourself if this would be acceptable to you?If you would like to learn more about how to shop for a broker,visit Broker detective.com
No comments:
Post a Comment