Open letter to Owners & Managers of Datek Online.
I have been a customer of Datek for almost a year. I am a very active trader, and I have paid thousands of dollars in commissions to Datek.
I used to curse Datek's busy servers which have cost me many thousands of dollars in outright losses, because I was not able to exit positions due to technical problems at your end. Even more was lost because of lost opportunities. The first 1/2 to 1 hour in the morning, and the last 1/2 to 1 hour trading, are prime trading times. In the last 3 months (but especially Nov, Dec of 98) it's busy even during the middle of the day. My anger and frustration was tremendous.
Yet today, I am no longer angry – just disappointed. Why am I no longer furious? I did a lot of research, and I have come to some conclusions.
Datek, with all of it's problems is one of the best brokers in the market today. Once you are able to actually place an order, I believe the executions to be second to none. I repeat – second to none. The very, very best. Even compared to daytrading direct entry platforms. What a lot of customers don't realize, is that the existence of ISLD (Datek's creation) was a tremendous boon to traders. And Datek's executions of ISLD orders are simply the best. What that entails, is that you will not have AON orders – but that's the nature of the system, and I don't think anyone should expect these. It also means that NYSE orders cannot be handled as efficiently – but Datek does an excellent job of these as well, all things considered.
The fact that you can enter almost any order into Datek, and it will be handled intelligently (I believe Datek has the best routing software in existence), is a great advantage as well. You don't have to think about routing your order. The advantages in speed of execution are unmatched.
Other things to consider: you don't have the kind of nightmare clearing houses that many daytrading brokers do (I will not mention any names), and, at least in my experience, there never really are any accounting errors (my apologies to those whose experiences may be different in this regard). Unbelievable as it may seem, accounting mistakes are not uncommon with other brokers (or their clearing entities).
All this for a flat $9.99 commish – no fees, no hidden costs.
You guys have a winning combination here. And yet, it's all useless, if one can't place orders in a timely manner. I understand the limitations of a browser-based online brokerage, and I have taken steps to maximize the efficiency at my end: I have a cable modem, I have independent LII quotes (and so don't have to rely on the streamer), and I am using a wonderful third party software utility to speed up the entry of orders into Datek – it interfaces with Datek's order entry system and it is a fabulous time saver when I want to skip the endless “order entry+next page+password” rigmarole. In fact it makes the express order entry that Datek already has even better (it's called daSlinger, and can be found at sapphirebay.com ; and no, I do not work for them, nor do I receive any compensation – I'm just a happy customer). It goes without saying, that I have a 450 PII top of the line computer.
I have thus done everything in my power to access Datek as well as I can. And, since I go through the express server, I'm doing about as well as one can.
And yet, it's still so slow in the morning (PRIME TIME), that I am actually discouraged from trading. Or by the time my order hits Datek, the price has moved away, and I find myself chasing the stock, which I hate to do – cancel, re-enter, grind, grind, grind, grind, grind, FINALLY went through – of course now the price is outside again – and again, cancel, re-enter etc. Mind you, I don't use market orders, because I understand limit orders get faster execution.
Thus, despite my best efforts, I am still seriously handicapped due to the slow/overloaded servers at Datek. This has caused me to reluctantly migrate to a direct entry daytrading broker. It may be worse from many points of view, and the commissions may be more, but the speed of execution make it a necessity.
Thus, I, just like many other traders am moving the bulk of my money out, and I think it's a lose-lose proposition. Datek loses a large volume of commissions, and I lose out on all the good features of Datek.
This brings me to my main point. Why oh why, can you not put the resources into solving the problem of slow servers, so that you retain your most active (read: money generating) clients, and gain many more clients from the other worse brokerages (E-trade and almost all others).
The payoff would be tremendous. Active daytraders account for a significant percentage of income generated for brokerages (especially that you don't sell order flow – which is great), and you could gain many clients who now trade with daytrading brokerages – we are talking significant money here.
Or how about at least setting aside a special group of robust servers for active traders (and make it a condition that a client have a certain size of portfolio, or be specifically involved in daytrading), and a separate order entry system (perhaps along the lines of daSlinger)?
Am I just naïve? Is it that actually what you are hoping for, is not any money made from profits generated by Datek, but rather by an eventual IPO? In that case, indeed, there would be no incentive to upgrade – look at what a crappy broker like E-Trade fetches on the street these days.
However, I would think that solving this problem, which is agonizing for your customers, particularly the active traders, would be if nothing else, a point of pride – you already have built one of the best brokerages out there… why not make it indisputably the best, with happy, satisfied, enthusiastic customers?
Are the problems technical? Are the barriers financial? I don't understand it – perhaps you can explain. I ask these questions not as an enemy – I do appreciate all of Datek's good points; I rather ask as a well-wishing client, who would much rather stay than look elsewhere; I know Datek can be great – Datek was great up until early 98. What changed? More customers. Why not upgrade the system? Any honest explanation? This has been going on for months – nothing but empty promises of ‘solutions', ‘silly fast', ‘just in a few weeks', etc. – I finally gave up.
Why not take the steps to be the very best? |
