Anyone out there using LiveTrade.Com?...came highly recommended in this article (see very end) that speaks to probs at Schwab in that sometimes smaller, lesser know houses more reliable due to less vols:
November 7, 1999
Service Outages at Online Brokers
Steal Precious Time from Traders
By REBECCA BUCKMAN and SUSAN PULLIAM
Staff Reporters of THE WALL STREET JOURNAL
When you trade stocks online for a living, every minute counts -- and even a minor technical glitch at your online broker can cost you money. For serious traders, longer outages are almost unfathomable.
Gary Reed doesn't have to think about it. He lived it. As one of the millions of customers of Charles Schwab, the nation's largest online broker, he was left stranded last month when computer problems sent key parts of Schwab's Web site down for parts of three consecutive days, including a near two-hour outage on Oct. 22.
Mr. Reed, a full-time trader from New Orleans, says he had to wait about 90 minutes to close out a short position in a stock that was shooting up in price every agonizing moment he waited. (By selling shares short, Mr. Reed had placed a bet that the stock's price would decline.) He also believes that and another trade he completed Oct. 22, after an hour-and-a-half wait on the phone, would have been more profitable if he could have placed them earlier on the Web.
"It was extremely frustrating," says Mr. Reed, 37 years old, who manages money online for several clients. "After I got done, I literally put on sweats and went out and jogged for half an hour because I was just so stressed out. I couldn't even think straight."
Since his client still made money on the Schwab trades, and he's always had good service from the firm, Mr. Reed isn't switching brokers or filing a complaint. But "I'm sure if I would have lost ten grand on this thing, I'd be crying foul," he says.
'Brittle' Technology
In a broader sense, Mr. Reed's experience illustrates how dependent many Internet investors have become on complex, Web trading systems that frequently break down. It's something for which investors should always be prepared, experts say.
"Technology is brittle," says Jaime Punishill, an analyst with consulting firm Forrester Research Inc. in Cambridge, Mass. "Stuff breaks. It happens."
That's why Mr. Punishill says it's important to have the ability to place trades with a real person over the phone or at a branch office when a Web site is on the fritz.
Of course, the typical Web outage of just a few minutes doesn't affect the vast majority of online investors who aren't active traders. But for active investors who have made Web trading their livelihood, any outage can turn into a big headache.
Take Mr. Reed. He had gone to bed Oct. 21, a Thursday night, quite proud of the complicated hedging strategy he had set up for one of his clients. He planned to close it out on Schwab's Web site first thing Friday morning.
Mr. Reed was convinced that an Internet-networking company, Level 3 Communications, would report good earnings Friday morning, so he had bought 1,500 shares of the Omaha, Neb., firm at about $57.50 each. But in case technology stocks plunged, he also sold short 500 shares of EMC, getting in when the stock was trading at about $62.5625. EMC is a computer data-storage vendor.
As he fired up his computer Friday morning, Mr. Reed's plan looked pretty smart. Level 3's earnings had indeed been strong, and pushed up the stock around $4; if he could sell the stock quickly and close out his short position, he could net a nice profit for his client, a local attorney.
But things didn't go according to plan. When Mr. Reed tried to log into the Schwab Web site shortly before the stock market opened at 9:30 a.m. Eastern time, he says he was met with "some screen that said, 'Our servers our down. Please call this 800 number to do trades.' "
No one picked up. Mr. Reed was put on hold. And he stayed on hold, he says now, for nearly 90 minutes. Schwab officials -- who blamed the outages on software bugs -- say the average wait time for callers that Friday was only about five minutes. But "sometimes, there are unfortunate spikes," says Beth Sawi, Schwab's chief administrative officer. Schwab also mobilized about 200 extra people to answer phones and says it is "very sorry" about Mr. Reed's experience.
All the while, Mr. Reed was frantically cruising Internet message boards looking for any hints on another way -- any way, as the minutes ticked by -- to get through to Schwab. Finally, he struck gold: Another investor on a message board had posted a different toll-free number. "Within 60 seconds I got on" with a customer-service representative, Mr. Reed says.
He sold the Level 3 shares for about $60.75 apiece and covered his EMC short position at about $66.0625, netting his client about $3,200.
Protecting Yourself
Most Internet-brokerage experts advise investors to keep good records of their trading activity, so they'll have ammunition if they ever have to file an arbitration complaint against their broker over an outage-related issue. Others also recommend that investors keep another account at a second firm as a backup. But clearly, a backup account doesn't help you close out open positions at a firm whose Web site is down.
And investors shouldn't necessarily think the best Web service comes from the biggest online brokers. Some of Mr. Reed's customers, for instance, keep accounts at a little-known broker based in Garden City, N.Y., Livetrade.com, which he says has a good service record. "You would think being a small firm, these guys would have the most down time, but they've really been top-flight, Mr. Reed says.
--To contact Rebecca Buckman and Susan Pulliam, write: The
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