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|Subject: Re: Trademonster Bond Platform||Date: 7/3/2013 10:23 AM|
|Author: just1trader||Number: 34999 of 35248|
I do not yet have an account with TradeMonster. I have only watched their demo per your ‘heads up’ that they might be a broker worth looking at. http://www.youtube.com/watch?v=JiLwPrHCShA Of the platforms I’m familiar with (Schwab’s, Fidelity’s, Scottrade’s, E*Trade’s, Zion Direct’s, TD AmeriTrade’s, and Interactive Brokers’), that offered by TradeMonster is clearly superior. However, at $15 per ticket, the costs to execute through them seem --at first glance-- to be a bit high. So these three questions would need to be answered.
QUES #1: Are you trading in a size that would overcome the costs?
ANS: A typical bond commish elsewhere is $1/bond, $8-$10 per ticket. On a 20-bond trade, an investor would be better off with TradeMonster. But Zions charges $9.95 per ticket. So you’d be better off there *if* commish were your only concern, and their search-engine is decent enough, plus it offers the ability to download the output of a search to Excel, which is where a lot of the analytical work is going to be happening anyway, not on the broker's platform. Also, these days, brokers who will execute bond trades for $1/bond without a minimum ticket-charge can be found.
QUES #1: Are you a skillful enough and/or patient enough trader that you’ll be able to buy under the ASK, thus mitigating TM's commish?
ANS: Let say --for the sake of argument-- that you’re trying to buy a single and that you’d like to split the spread. Purchase-minimums are set by the underlying desk actually holding the inventory. That desk is rarely is the broker through whom you’re executing, who is acting as agent, or in the case of shops like Scottrade, what amounts to agent and principal in the sense they don’t hold the inventory but do mark up by first buying the bonds and then passing them on to you at a higher price. Therefore, just because you bid at the ask doesn’t mean you’ll get a fill, and it is especially true that you probably won’t get a fill if you bid less than the ask. The underlying desks will sell (or not) as they please, and to whom they please (or not). On more than one occasion, I’ve bid at their price and at their purchase and have been ignored, because they suspected that if they delayed, the market would move higher and they could sell to someone else. This isn’t to say that pricing anomalies don’t occur throughout the trading day in which it’s possible to zip into the market and grab an odd lot that is fleetingly being priced under the prevailing national best. TraderMonster’s platform would seem to be well suited to monitoring prices and grabbing bargains.
QUES #3: How much are you willing to pay for ease and convenience of execution?
ANS: It is only idiots like John Bogle and his ilk who obsess over the impact of commissions/ mutual fund expenses, because they have nothing else worth saying. A serious investor/trader will pay whatever she/she has to in order to obtain what really matters, which is an ‘edge’ and greater total profitability than would otherwise be obtained. Part of the reason why so few investors buy their own bonds is that the process is difficult and messy. If TradeMonster’s platform makes bond investing doable for someone who would like to become serious about bond investing, then TM’s per ticket fee is cheap enough, and intended holding-periods are typically long enough that the slight premium over competitors could be easily amortized.
The ‘bottom line’ --as always-- with regard to selecting a broker is this. Who gives FF if the broker is well or poorly rated *if* the broker offers the would-be customer the tools he/she needs to conduct business efficiently and effectively? You choose for yourself the brokers who will the jobs you need doing, and you don't worry about what others think. You run your own tests and trials, and you make a decision on that basis, not on hearsay or on third-party reviews (such as this one. LOL)
Thank you again for posting the 'heads-up' about TraderMonster. They are a broker I overlooked, which is a failing I'll correct today.
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