Trading with Datek, is like living with cancer.
I have tried to do everything that's humanly possible, to daytrade with Datek. I'm failing. As I said before, I have a fast cable modem, top of the line 450 PII computer, independent LII quotes, and a special order entry interface for the express server.
I have also adjusted my trading to the special requirements of Datek, even though that puts me at a serious disadvantage in the market. I have concluded, that it simply is not possible to daytrade with Datek, at least not at this point in time.
Here are my experiences, and my conclusions:
I trade mostly stocks like MSFT, i.e. stocks that have the requisite intraday volatility, volume (liquidity), and reasonable spreads. I don't trade nets as the execution is just too dicey for me (not Datek's fault).
Since it takes an average of 20 seconds from the moment I send the order for it to actually slog it's way through Datek's busy servers, I find I can no longer use limit orders. I absolutely hate using market orders, but unfortunately, it's impossible to use limit orders – by the time the order reaches Datek, the price has moved away, and canceling and resubmitting is just not practical – you will chase it forever, and with the slow servers, you will lose every time. I could put a limit far ahead of the stock at the time, but that's just silly, since if I'm going for 1/4 to 1/2 moves, it makes no sense. Thus, I really have no choice but use the hateful market orders. Of course, it means that most of the time, you get the worst price possible. But at least you get in, (or out) rather than hopelessly chase it with limit orders.
Now, I absolutely LOVE Datek's executions. I've said this before, and I'll say it again – better cannot be had. But now that my order has been executed, Datek has another weapon it pulls out to kill the daytrading client.
It is an absolute NIGHTMARE to get confirmations. After the order is entered, and goes through, I immediately click on the “Daily Activities” page. I must know what I have been executed at – because I have a market order – I must know the price. BTW, this would apply even if it was a limit order, because you don't know if the shares were there to be executed. Furthermore, sometimes my order sits for 1-2 minutes without execution (not Datek's fault – shares must be available, even at market), and so I cannot simply put in the counterorder without knowing if I've been executed at all.
And here the real nightmare starts. For some G-d damn reason, it takes an average of 3 minutes for me to get the Daily Activities page to come up (remember, I've got cable modem) – meanwhile, in choppy trading you MUST be able to react fast – cancel an order, or change direction (short), or get out with a profit. What happens instead, is that I get in OK – I rarely make a mistake about the direction, but by the time I get to check if I've been executed, and at what price, the position often has reversed direction, and the stock is plunging, and I'm going out of my skull waiting for the “Daily Activities” page to tell me where I stand – by the time I manage to get the information, and put in a counter order, my winning trade turns into a rout – sometimes by as much as 1 point.
Today I executed 18 trades – 36 tickets (some $360 in commissions). I had several wins of 1/8 and 1/2 points, but also a several horrible situations where I lost 5/8 or 1 point. For the day, I ended up with a slight loss (though there have been days where it's been worse).
Now, you may say: bad trading. But that is not the case. Every time, it's the case, that if my orders just got confirmations in time, all of them would have been winning trades. Every one of them. I'm counting in MARKET risk, that is execution risk – that's fair (you cannot assume execution if shares are not available), but this has NOTHING to do with market risk. It's purely “busy servers” risk. Just to emphasize - it's not so much the 20 second delay in the order reaching Datek (though I'd prefer the way it was in early 98 - 3 seconds), and not the time it takes to execute the order (which remains excellent) - what KILLS is the confirmation page delay! 3 minutes! It prevents me from acting to take a profit or cut a loss.
The proof is in the pudding. Last year, before these problems started (boy that's reaching far back), I was making good money in every market (up and down); executions were great, as always, and my confirms came in immediately. The only risk was market risk. If I messed up (which thankfully was not often), it was my bad judgement. But I NEVER had to compensate for DATEK's way of operation.
I can trade and make money in the market – I have done it, and I've done it consistently. Unfortunately, at this point, I cannot daytrade with Datek.
I analyzed all my trades today – in every case, I gave it enough time to execute, and given the average EXECUTION times, I could have easily made profits. What prevented me from doing so, was not knowing where I stand, for minutes on end – simply and purely “Daily Activities” page hold-up (or mugging).
I suppose Datek is still good for slow position trades, or long term investing (great margin!), but volume daytrading? Forget it!
I really wonder what Datek is thinking. After all, I would have thought that it's in Datek's interest, to keep people like me daytrading (at $300 – $400 in commissions a day), rather than have me do 1 trade a month.
Won't the investment in more and better servers be paid for by extra commissions? I really, really don't understand it.
I thought of another possibility. What if they front run the orders? I swear it would be the perfect setup: grab the order, but don't let the customer know how it was executed until you've had time to trade ahead. It seemed so often today as if there was absolutely no justification for 3 minutes for the Daily Activity page to show up – that was throughout the day, not just the obligatory crawl in the morning and at the close. And today (and yesterday) was not a heavy volume day in the market. However, in the end, I don't believe that they would do it (or I don't want to believe such a thing).
Which leaves me in a quandry. Why? Why? Why? Why not invest in more/faster servers? It's not like this is a new problem – it started deteriorating over the summer of 98, got bad in the fall of 98, got catastrophic in Nov-Dec 98, and while a bit better now – I can't really use it for daytrading. Haven't they had MONTHS of time to upgrade? Didn't they know more customers means they have to upgrade? Why not upgrade ahead of time? No money? They'd have more money if they let me (and people like me) trade more often.
As it is, trading with Datek is like living with cancer – can't get rid of it (still the best outfit in the market), can't control it, must suffer. Every day, with trepidation, I approach my computer wondering what Datek has in store for me. How will I get smashed upside the head today?
I feel like I'm put in sack and beaten with a baseball bat – I can't see where the blows will come from, all I know, is I'll suffer.
So, maybe position trade? Well, that's not my temperament – and I feel confidence in the control daytrading gives me – properly done, I believe it's actually safer, than position trading (which strikes me as just gambling). Of course there's long term buy and hold, but I believe that it depends on the person, For most, it may be safer. For a skilled daytrader, it's more risky to buy and hold – I can make money in any market. But I can't have my broker against me.
What to do? |
