My Fidelity Spartan Experience
I have heard varying posts regarding the viability of using a discount broker for daytrading. See my earlier posts regarding the possible advantages and disadvantages of this: #reply-9980801.
Earlier this summer, I decided to open a small account at Fidelity to test out the quality of their executions. Today was the first day I attempted any trades in this account. The following is a summary of my experience.
11:44 AM. My first order was a buy limit for 1000 shares of GOTO at 24 3/8. At the time, their was one market maker at inside ask of 24 3/8. I was hoping to take advantage of that market maker phenomena known as "autoexecution". Anyway, the inside ask remained at 24 3/8 for an additional ~10 seconds before backing away to higher ground... No fill. The stock went up 2 points in the next ~10 minutes. I subsequently cancelled my buy order.
1:26 PM. Placed buy limit order below the market at 69 1/4 in QLGC. Order took ~6-8 seconds to be displayed. Showed up as NLSC (?), Fidelity's market maker. Subsequently cancelled order. Order disappeared in 6-8 seconds from Level II. => Not bad. I was satisfied with how this order was handled/cancelled.
2:13 PM. Wanted to place a quick limit order to buy XLNX at the ask at 63 1/4. After I typed in the order, the website told me my login had expired and I would have to re-login. After an additional ~30 seconds, I am logged in once more. Although the stock is now above my entry price of 63 1/4, I place the order anyway, to join the inside bid. After ~15 seconds, my order shows up on Level II as SHWD. At this point, the bid on the stock is up to ~63 5/8 and I have missed any chance of a fill on the way up. The stock hesitates and begins drifting back down. Wait a minute! My SHWD order at 63 1/4 is now displayed as 100 shares, versus the original 1000 shares! What the heck happened to my order being fully displayed. I get filled for the full 1000 shares at 63 1/4 on the way down to 62 5/8. Fortunately, I subsequently exit the position, on strength back at 63 7/16 for a small profit.
I call Fidelity to find out why my displayed order size was reduced from 1000 shares to 100 shares. They say they'll call the market maker and find out. Later, they call me back to relay the market maker claim that they displayed the full 1000 shares and I must have seen their subsequent quote of 100 shares at 63 even. Hogwash! I clearly saw my order being displayed 2-3 levels below the inside bid as 100 shares at 63 1/4, after it originally was posted as 1000 shares. I have two independant Level II feeds which confirm this. The Fidelity guy says he doesn't know what to tell me, since they don't have access to Level II and can only see what the Time and Sales and Level I inside bid and ask were showing at the time. Basically, the market maker is free to screw Fidelity's customers and Fidelity has no way to even check up on them.
I am now becoming an unhappy camper. But, I'm here to learn and I don't feel I have enough data to conclusively decide that a Fidelity account won't work for me.
3:18 PM. I attempt to place another quick buy limit order to purchase QLGC at 71 1/4. The slow interface as well as possibly needing to re-establish my expired login cause me to enter my order too late, after the ask price has gone through each of the 10 market makers at 71 1/4. Once again, my order is filled on the way back down, as the price slumps to ~70 5/8. Sucks for me! Anyway, the stock begins to strengthen (71 bid, 71 1/2 offered) and I place a limit sell order at 71 7/8, and wait. And wait, and wait. Finally, after 36 seconds my order is finally posted at 71 7/8 and subsequently gets filled for a profit.
Once again, I call the Fidelity guy to find out whether 36 seconds to display my limit order was typical or an unusually long amount of time. Essentially, I get the run around. I interpret the answer as tactfully explaining that I can be screwed any and every time and have no control over it. At the end of the day, I make two Fidelity trades, both profitable (~$800 total), and will never trade with Fidelity again.
To sum up my experiences. I expected to gain four advantages from using a discount broker (#reply-9980801), the only advantage I found was a slightly lower commission of $14.95. I expected to suffer two disadvantages, and realized both of them and several others.
No thanks, Fidelity, I'll stick with my daytrading broker.
-Eric |
