Ustocktrade is an online stock brokerage company with a twist. Unlike traditional stock brokers who act on your behalf to execute trades in the exchange, Ustocktrade is different. Operating as an Alternate Trading System (ATS), Ustocktrade offers something unique for trades.
Based in the United States, Ustocktrade is regulated by FINRA and operates under the name Ustocktrade Securities Inc. There are a number of other affiliate companies such as Ustocktrade LLC, UStocktrade LK.
The basic unique selling point about Ustocktrade is that it aims to allow better prices for retail trades via its own Alternate Trading System.
In this review about Ustocktrade, we take a look at the various features and functionality including the stocks that they offer, the fees, the trading platform interface and other details.
What is an Alternate Trading System?
An Alternate Trading system is a type of a centralized exchange that operates outside the ecosystem of a traditional stock exchange. The ATS in itself acts as a mini-exchange which then links out to the main exchange.
Thus, most of the trades are settled internally within the ATS. The ATS is also referred to as a peer – to – peer trading platform. Your buy and sell orders are matched internally against other buyers and sellers.
This has some distinct advantage over the other stock trading platforms because firstly, executions are quick and you tend to get better price fills. This also lowers the cost of trading which traditional stock traders often complain about.
In terms of regulation, any Alternate Trading System must be registered by the U.S. securities regulator. Ustocktrade is regulated by the Securites and Exchange Commission (SEC) and the FINRA.
Ustocktrade Same Day Settlement
The Same day settlement is one of the other unique selling points for Ustocktrade. The settlement date is when the buyer has to settle or pay for the trade. Upon settlement, the shares are delivered to the buyer immediately.
This has been the traditional function of the markets in general. It is also known as the T+2 settlement which means, trades and shares are settled two days after the trade date. The general argument is that traditional stock traders will need to pay for the trade before it can be settled.
This can be a bit tiresome especially if you want to use the proceeds from the transaction to make another trade. In other words, this is the general practice for a regular stock trading account.
Ustocktrade claims to have addressed this issue by creating its Alternate trading system. It makes use of the same day settlement and there are no additional costs. In other words,
with Ustocktrade, the stocks and cash are settled immediately, thus allowing traders the option to use the funds immediately to invest in other stocks.
This is a style that is particularly suited for intraday stock traders.
The concept of same day settlement can also be seen as a boon for traders. Traders who trade on margin are required to maintain a minimum balance of $25,000 in their account. Most of the times, this is not possible due to the T+2 settlement practice.
Ustocktrade Pricing & Liquidity
Due to the fact that Ustocktrade operates as an alternate trading system, trades are settled internally. This can bring up questions on whether you as a trader get the best bid and ask and questions about liquidity.
For one, there is no denying the fact that liquidity can at times dry up when trading with an alternate trading system. However, Ustocktrade claims to have addressed this. According to the terms, if there are no counterparties matching your order, a liquidity provider (also known as a superuser) steps in to act as your counterparty.
Still, as anyone would know, such a liquidity provider is someone most likely to be a market maker. Therefore, at the cost of liquidity you will have to sacrifice on the spread or the difference between the bid and ask prices.
For the pricing of the stocks Ustocktrade claims to use the National Best Bid and Offer (NBBO). These are the best bid and offers that are published in the markets, even in regular exchanges.
A quick comparison however shows that this is true and the pricing you see on Ustocktrade is basically what you see at some of the major exchanges. But still, questions remain about the liquidity.
While test driving the Ustocktrade platform, we placed an order to buy 10 shares in Morgan Stanley. However, due to lack of liquidity, the order remained as pending. While this can be a bit disappointing, on the positive side, the demo trading account looks to behave the same way as the real markets.
While you are certain to find various traders for popular stocks, if you jump to unpopular stocks, chances are that you might find the volume to be low. Thus, this could mean that you would be ending up paying more in terms of the spread, on top of the $1 fee.
However, all things considered, this shouldn’t be that much of a problem as the fees are relatively low compared to many other discount brokers.
Ustocktrade Trading Platform
The Ustocktrade platform is available as a web interface and is also available on various mobile operating systems as well. It is currently supported by the Apple iTunes store and the Google play store.
You can open a demo trading account to test drive their trading platform. However, you will need to register for an account, and you can deposit up to $1000 on your practice Ustock trading account.
When you login to the Ustocktrade web based trading platform, you are presented with a screen that allows you to first select the sector of the stocks. After selecting the sector, you are then presented with a list of stocks available to trade.
Ustocktrade Trading Platform
You can scan through multiple sectors and select only the stocks that you prefer or are interested in. Note that you can select only 10 stocks. You will need to add the stocks first before choosing the option to save and close.
Once you are done with this, the trading platform lists your favorite stocks. There is the last traded price with the bid and offer. These also include the total available quantity at the price. The spreads are relatively tight.
For example, when demo trading AAPL stocks, the spread was $0.01. You can set your orders to be executed at Market or you can specify your own price. Once you make a trade, you are shown the confirmation screen.
When the order is executed, the vertical strip where your stock is displayed shows the details such as the quantity, the day’s gain and the profit and loss in the dollar value. You also get to see the details such as when you bought or sold the shares.
Ustocktrade - Interface
The vertical strip also has other information such as upcoming corporate actions and the ability to set alerts.
In terms of the charting interface, there isn’t much to talk about. You can see just a line chart but even this isn’t very visually appealing. On the top side of the trading platform, you can see the funds available and the current net worth which is basically your running profit and loss or unrealized profit.
It is interesting to note that despite Ustocktrade mentioning the use of Candlestick charts on their trading platform, we were able to only see the line charts.
You can also look at your total portfolio to get a glance of your trades. The next screenshot shown below gives a visual depiction of the trades currently made.
Portfolio at a glance - Ustocktrade
It is important to note that you cannot short sell. You can only sell the stocks in which you currently have the holdings.
Trading can also be halted on some stocks. For example, at the time of review, trading in Boeing Company was halted for the day (mid-day) due to the upcoming corporate actions.
Trading halted – Boeing Shares
Ustocktrade – Fees
When it comes to fees, Ustocktrade makes it very simple. There is a monthly fee of $1 which is the software fees. Following this, there is a $1 fee for every trade you make. This is regardless of the quantity that you buy or sell.
There are also no additional fees for using the mobile trading apps with Ustocktrade. The free structure is very transparent and there isn’t much of reading between the lines. In this aspect, Ustocktrade is quite transparent when it comes to fees.
Of course the main takeaway is that the stock trading fees at Ustocktrade is relatively cheap compared to many other online discount brokerage firms.
Ustocktrade – Market coverage
The company has managed to get a bit of coverage in the mainstream media. The company, according to one of the press releases was founded by Tony Weeresinghe. Tony was the former head of the global development at the London Stock Exchange (LSE).
The business model sounds philanthropic with the main mission statement being to support a non-profit organization called Cainan. The not for profit organization builds schools for disadvantaged children.
The founder has a lot of experience when it comes to IT in the financial sector. His first venture was an IT company called Millenium IT and later sold the business for $30 million and then moved on to the London Stock Exchange.
At LSE, Tony apparently reduced costs by a whopping 70% but then left in 2014 to start Ustocktrade. The main goal of the stock brokerage company is to encourage non-traditional investors into the stock market game.
An interesting point about Ustocktrade is that traders in Sri Lanka can also open a trading account as long as they are not U.S. or UK citizens.
Can you use Ustocktrade to day trade stocks?
Yes, the Ustocktrade platform is designed for both intraday traders as well as investors. However, it is unlikely that investors will use the platform due to the limitations in the overall service.
But if you are thinking about day trading stocks, then Ustocktrade is something worth considering. For one, the cost of trading is very low. But on the same hand, you will need to do your research elsewhere.
In a way, Ustocktrade works like a simple execution platform and doesn’t offer any other integrated benefits within the trading platform. The low cost fees was aimed towards keeping the costs low with stock day traders.
Does Ustocktrade have the PDT rule?
The PDT or the Pattern day trader is a rule that is applicable firstly for U.S. citizens. One of the main benefits of Ustocktrade is that traders from anywhere in the world can sign up and begin trading on U.S. based stocks.
For those who are based in the U.S., the pattern day trading rule applies. The PDT is a rule that is used to protect beginners in trading from overleveraging themselves. Overleverage can lead to losses more than what was invested.
Because trading on leverage means borrowing stocks from your broker, the losses are felt on either sides. The PDT rule basically applies to traders who have an account balance of less than $25,000 on any given day.
Many day traders find the PDT to be a limiting issue when it comes to day trading stocks. Simply put, if you make four or more trades during a regular week day, you will not be able to trade any longer until you exit your initial positions.
Ustocktrade tries to avoid this by offering you initial settlement on the same day. This is where the same day settlement can be a big boon for traders. Because your positions are settled on the same day that you trade, your account balance reflects your current position.
Unlike other stock brokerages where you have you wait for two days for the settlement to occur this can be avoided with Ustocktrade.
Ustocktrade Pros and Cons
Talking about the experience on the whole, there are some pros and definitely some cons. However, one should understand that with low fees, there isn’t much to complain. Starting with the positive, Ustocktrade stands apart due to its style of execution.
Using an Alternate Trading System (ATS) for the retail trading community is something that is relatively new. ATS have been a standard for the market structure and participants on the whole. However, these venues were mostly suited for large institutional players.
There isn’t much information provided on how the ATS is built or the number of traders that ATS currently has to get a fair idea of the volumes.
The fees, of course stand out.
With just $1 per trade and $1 a month in software fees, you cannot get a better deal.
However, with the cost, of course there are some compromises to be made.
Firstly, the platform is a bit basic in nature. This means that even before you login, you need to do your research and pull up a list of stocks in your hotlist. You can then search and add these stocks in your Ustocktrade account.
Besides this, there is no way to use some kind of an internal scanner on the platform.
Another downside is that the charting interface is basic to say the least. With just a simple line chart and a few time frames, there aren’t that many details to fall back upon. Therefore, traders will certainly need to make use of a professional charting service (which means extra fees for real time data from thee exchange) to monitor their holdings.
The Ustocktrade platform is built for the day trader. However, the lack of short selling stocks is something that could keep some intraday stock traders at bay. Add to this the lack of any inbuilt charting platform which is somewhat essential for the day trader.
But for all the cons, the fact that traders can avoid the pattern day trading rule is something worth talking about. It is advisable that traders could use the Ustocktrade as a secondary trading account. This way, you will not be restricted under the PDT rules.
Bank transfers are the only way you can fund your Ustocktrade account. But traders are relatively fast and the company claims that deposits will be realized within one business day.
There are no minimum balances required to open an account. This makes it easy for just about anyone to open a stock trading account for under $1000 and begin to trade the markets.
Having listed the pros and cons of the Ustocktrade platform, overall, it offers traders a unique view to trading stocks. Unlike regular stock brokers that come with high fees and a lot of bells and whistles, Ustocktrade is relatively simple in a way.
It is regulated by SEC and FINRA which offers a level of transparency and security for traders.