SpeedTrader Review
SpeedTrader is one of the most widely used broker and a trading platform for day trading stocks. Unlike many of its competitors, SpeedTrader distinguishes itself from the rest by calling itself the first true direct access broker.
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SpeedTrader allows you to trade on a margin of 4:1 for intraday trades and a 2:1 margin for positions that are left open overnight. However, such accounts need to meet the Pattern Day Trading rule (PDT). The margin requirements can change from stock to another, which is something that traders need to bear in mind.
One of the things that stands out with SpeedTrader is the amount of customization that you can do with it.
Of course, while the main selling point is the option to choose from where your orders can be routed and executed, there are a host of other features available as well.
Think of SpeedTrader as a low cost airline that gives you basic fares while allowing you to make your journey more comfortable by purchasing additional services. SpeedTrader operates in the same aspect while retaining a core theme.
By giving control of order execution to the traders, SpeedTrader platform has created a niche market for itself. The costs for trading are fairly priced, but there are overheads that can quickly build up if you do not pay attention to the features that you want when using SpeedTrader.
In this review of SpeedTrader, we take a look at the various features and functionality offered by this discount broker and also the fees that you are likely to incur for using this broker.
SpeedTrader Fees and Customer Service Review
When it comes to fees, SpeedTrader allows you a lot of features that you can add. However, these features come at an additional cost. For starters, the platform or the software fee starts at $30. If you want to access the Web and mobile interface, there is an additional cost of $25.
While SpeedTrader boasts of the level 1 and level 2 quotes, these too come at a cost which can quickly add up. On top of these, access to the level 1 and level 2 quotes for options are charged extra on top of the regular fee to access the depth of the market.
Then there are fees for the trades itself. You can choose to pay on a per trade commission or a per share commission. This can depend on your trading style and we cover this in more detail in the next few sections of this SpeedTrader review.
There are also IRA fees that you pay if you are using such an account type. There is an annual cost of $75 for IRA accounts. The IRA asset reviews are charged $300 and there is a cost for termination at $75.
Transfers from and to an IRA Roth to a traditional IRA has a cost of $55. Then there are costs for receiving the confirmations and statement. An electronic statement costs $4 while a physically mailed statement costs $10.
The Speedtrader customer service is available from 8AM – 5PM Eastern Standard Time. During the regular market hours, you can get access to customer support via Email or via the chat on their website.
Because of the fact that Speedtrader is not a huge brokerage, the customer service is quick and courteous. There are some educational videos to help you get acclimatized to the Speedtrader platform. It is recommended that you go through these videos as they will answer most of the questions you might have at the beginning.
SpeedTrader Platforms
SpeedTrader offers you the choice of three different platforms to choose from. These include:
- SpeedTrader pro
- ActiveWeb
- Mobile Trading
As the names suggest, each of the trading platforms specializes in a particular domain. The main platform, the SpeedTrader Pro is a desktop application, while the Active Web is suited for web based interface and finally, the mobile trading platform allows you to download the app and trade from your smartphone.
SpeedTrader Pro Platform Review
The trading platforms are not proprietary and are in fact licensed from DAS Inc. which is a leading software and IT solutions provider for trading. The SpeedTrader Pro is basically a rebrand of the DAS Inc. platform.
The trading platform offers traders with a host of features including access to level 2 screens, real time charts and pricing, 25 order routing options and the ability to speed your trading with over 100 hot-key combinations on your keyboard.
When it comes to the mobile and the web interface, the options are understandably lower due to the interface. You can get access to just the level 1 quotes besides the other functions which include real time charts, streaming news and much more.
When you use the trading platform, there is a monthly fee that starts from $25 and can go as high as up to $100. Remember that this is an additional fee that you pay on top of the trading commissions for executions.
SpeedTrader Pro Review
The SpeedTrader Pro is the flagship trading platform at SpeedTrader. This is the main platform from which you will be placing your trades. There are two types of accounts to choose from here. The basic difference is the way you prefer the fees to be charged.
SpeedTrader Pro COR Account
The COR account is where you have the option to pay per trade. This is basically the commission you will be paying. The COR account is more suited for traders who are trading larger volumes. With the COR account, you can avoid the cost per share.
Fee: $4.49/trade
SpeedTrader Pro ETC Account
The ETC Account on the other hand charges commission per share. For example, if you were to trade 100 shares, then you would be charged a commission for the 100 trades. It does not matter whether these 100 shares are traded as a single trade or in multiple trades.
Fee: $0.0044/share
Regardless of which account you choose, the pricing for options is the same, which is $0.40 per contract.
To understand the above better, let’s take an example of you trading 100 shares. If you had chosen the COR account, you would be paying $4.49 for the trade on the whole. Whereas, if you had chosen the ETC account, you would be paying $4.40 for the trade.
Of course, if we now increase the shares to 1000, the per share option is a lot more expensive.
The above two types of accounts are something that traders need to consider before they open their account. Thinking about how frequently you trade, the average size of your trades can help you to determine which of the two accounts are better.
The SpeedTrader pro platform is packed with a lot of features that will make trading and especially analysis a breeze. Here is a rundown on the main features available with the SpeedTrader Pro platform.
SpeedTrader Order Routing and Execution
- Chart types: There are a number of different chart types to choose from, ranging from the conventional Candlestick charts to price only charts such as Renko, kagi to name a few. You also have the option to trade directly from the charts, saving you a lot of time.
- Level 1 and Level 2 data: Although the platform offers access to Level 1 and level 2 quotes, you need to pay additional amount to gain access to these. The fees to access the order depth comes at a price of $49 per month and $104 per month. Then there are some extra fees if you need the level 1 or level 2 data to access option contracts or the pink sheet markets.
- Organize your work space: Because every trader is different, SpeedTrader allows you to organize and save the workspace with your own customizations. The customizations need to be done just once but after they are saved, you can go back to your familiar settings on the platform.
- Customization: You can also individually select and move the layout of your workspace. You can arrange the spaces based on your hotlist, or the biggest movers of the day.
- Scanning tools: When it comes to the scanning tools, SpeedTrader falls short. The inbuilt scanning tools are limited to just the high and low stocks of the day and the top 10 stocks of the day
- Research: SpeedTrader also lacks a bit when it comes to research. Because the SpeedTrader platform is mostly geared to day traders, you only get to see the major headlines. But beyond this, you would find additional information that you find with a regular brokerage service which is also suited for investors as well.
- Order Execution: You can choose how your orders can be routed and executed. With Speedtrader, you can choose from ARCA, INET, BATS and EDGX. These are the most common and of course very popular. You can also have the choice to route your orders to the more obscure routes like CUTC, XALL, LQPT and ONXX. It basically depends on you from where you want to get your orders filled. Each of the above venues can give you different fills and thus, this is something you will learn by experience.
- Short selling: Speedtrader also has a feature called Borrow and Locate. Borrow and locate are important as they are permissions from your broker to borrow shares for the specific purpose of short selling them. The borrow and locate shares are updated before the market opens, and this allows you to scan through the stocks that you can short sell.
- Account management: SpeedTrader allows you to manage multiple accounts. It also gives you a great level of control to manage your PnL all the time.
How does SpeedTrader ECN Order Routing work?
Many a times, traders do not think much beyond after placing a trade. Many traders thinking that the broker does some kind of magic for the order to be filled. In reality, there is a lot more to just executing your order.
One of the benefits of SpeedTrader is that it allows many options for order routing. While this is one of the Unique Selling Propositions for SpeedTrader, let’s explain this in a bit more detail.
Trading in the stock markets are done at an exchange. But there is a lot that goes into it before the order reaches the exchange. Stock exchanges rely on various intermediaries which act as the counterparties. The intermediaries are primarily made up of ECN’s, also known as Electronic Communications Exchange and of course Market Makers.
The role of a market maker is to act as a counterparty. The market maker matches a client’s buy and sell orders and thus acts as a source of liquidity. The market maker makes a profit by charging higher spreads, in order to compensate the risk that they take by acting as the counterparty.
ECN Execution
An electronics communication network on the other hand is a pool that in itself acts as a small exchange. Orders are automatically matched here before being sent to an exchange. One of the main differences between a market maker and the ECN and a typical stock brokerage is that a brokerage buys and sells stocks on your behalf.
When you trade with a market maker or an ECN, you already know the subtle differences. But these two entities only facilitate the trade. It is you, the trader who is the buyer or the seller and there is no one acting on your behalf.
Both the market maker and the ECN model automatically executes the trade. But when it comes to the fees, a market maker charges a spread. Whereas, an ECN execution broker charges a commission.
The fee, in both cases is relatively cheap due to the immense competition in the markets. But the way the fee is calculated (spread or commission) is something that traders need to consider for themselves.
Market makers are regulated by the Securities and Exchange Commission and form an important aspect to the whole market structure. They bring the much needed liquidity to the markets.
Some of the most common market makers that are leaders include names such Vfinance Investments, Vandham Securities, Citidel Securities. Some of the commonly known ECN’s include ARCA (which is primarily used for trading Exchange Traded Funds) and EDGA and EDGX.
With SpeedTrader, traders have the ability to control how their orders are routed. This gives traders the option to choose from the various aspects including speed of execution, the quality of price fills and of course the fee.
If you were to trade with a generic broker, chances are that you do not have a say in the way your orders are routed. This can mean that the broker charges you a fee in which you don’t have much negotiating power. The only exception to the case is to increase your trading volume where applicable in order to lower the execution fees.
Sometimes, the fees charged by the broker are also depending on how big the brokerage is. If you are trading with a small broker, chances are that their total volume is still considered to be small in the general markets. This could mean that the broker themselves have higher fees to pay. This can result in the broker basically passing down the costs to you as a trader.
SpeedTrader – Pros and Cons
As with any online brokerage firm or a trading account, there are some pros and cons. This is because it is hard to please everybody. Some features come at the expense of others. In this section, we outline the pros and cons of SpeedTrader.
On the plus side, the trading platform is quite powerful. Because it is built into the SpeedTrader platform, it combines all the tools needed for today’s stock trader. You can get access to real time news, to creating your own workspace and customizing your charts.
There are a lot of technical studies included as well, something that is required for a stock day trader. Of course, it goes without saying that the order routing and execution is perhaps the biggest selling point for SpeedTrader. However, it is likely that especially beginners to day trading will find these features to be a bit over the top. There is some learning curve that is required here.
Because of the options for order routing, the execution is fast and there is indeed a direct market access. The number of various flexibility options also makes it a breeze to trade with the SpeedTrader Pro platform.
Last but not the least, the availability of the different trading platforms (desktop, mobile and web interface) means that you can access your trading account and platform from anywhere and do not have to be stuck to your computer.
On the downside, the fees are something to watch out for. The inactivity fee of $30 might not be a bother if you are an active day trader, but for those who take a break from their trading will find it a bit difficult to digest the fee.
Then there is the requirement of minimum funding. Starting at $30,000 (USD), the minimum trading requirement puts many retail traders out of the picture. However, given that trading stocks requires a bit more capital than compared to other markets, this is something that serious traders should not object to.
SpeedTrader is primarily tailored for trading stocks.
Still, some traders find the lack of other markets such as forex and ETF’s to be one of the disadvantages of trading with SpeedTrader. As long as your main market of focus is stocks, this shouldn’t be a factor for rejecting SpeedTrader.
The software fee of course is something that is a sticking point. Besides having to pay for the commissions for the trades you make, you also need to pay a fee for using the software. Although this is at a cost of $30 at the basic level, some traders feel that this is unavoidable.
SpeedTrader Review – In Conclusion
To conclude this review of SpeedTrader, it is not to be mistaken as a regular stock brokerage firm. Rather, SpeedTrader differentiates itself from the rest of the competition as a direct access broker.
SpeedTrader offers a lot in terms of choice for the trader when it comes to order execution and routing. However, the overall fees charged when you look at the trade level is mostly in line with other discount brokers.
The limitations, as pointed out is that traders do not have access to the forex or the futures markets. This can limit the ability of using this platform for a very niche set of traders. For example, you cannot use the same platform to hedge your exposure in the equity markets and with the futures markets.
Given the fact that SpeedTrader has been around for over a decade, it automatically gives it the credibility that traders look for when opening an online trading account. In terms of features, with a few exceptions mentioned in this SpeedTrader Review, there is nothing beyond that.
If you remove the functionality of the order execution, the rest of the features are basically what you would get with any of the other common online stock brokerage services.
The platform is ideal for traders at all levels, from experienced to the very beginners. Bear in mind that there is an inactivity fee that will be charged to your account. Therefore, the platform is more suited for day traders who are more active compared to regular investors.
Traders who have a specific preference to order routing and execution will find SpeedTrader as one of the best available out there. The feature of using the short list is another advantage that is particularly suited for day traders. The ability to scan through a list of shortable stocks is something that stock day traders will certainly enjoy.
Order executions are basically in the form of what you see is what you get, and many traders simply love the pre-share pricing which can save money in the long term. If you do not closely monitor your activity, the fees can start to get expensive.
Having outlined the pros and cons of SpeedTrader, we can safely conclude that this is a direct access broker for stocks that is suited for intraday stock traders.
