Thestreet.com had a little article about some of these programs.
Trade-Tracking Software: No Package Is
Perfect
By Tracy Byrnes
Staff Reporter
1/22/99 1:00 PM ET
Editor's note: Day traders have some
unique needs when tax time rolls around.
In this series of stories, which runs
through Monday, TSC tax reporter Tracy
Byrnes, with some help from TSC
contributing editor Gary B. Smith, guides
traders through the maze. Be sure to
read the introduction to the series, and join Byrnes and trader tax
expert Ted Tesser for a Yahoo! chat Tuesday at 5 p.m. EST.
Whether you're a trader or an investor, you need to closely track
your trades so that, come tax time, you're not scrambling to sort
though the paperwork.
We've received many inquiries about which software programs
are geared to traders' needs. With the help of readers who have
emailed in their suggestions, as well as the manufacturers of
the software packages, we'll sort out what works and what
doesn't.
In a nutshell, you'll be hard-pressed to find a software program
that can handle all your needs. For example, some software
company representatives we contacted have never even heard
of the wash-sale rule. Some of the programs also have trouble
with short sales and margin accounts.
Let's take a closer look at your options, beginning with the most
widely used consumer finance programs and working our way
up to programs for advanced investors and professional traders.
Remember, I'm not a day trader, and I haven't tested these
packages. These profiles are based on readers' and
manufacturers' comments.
Software for Investors
Intuit's Quicken: The most popular financial software package,
Quicken costs around $60 for the basic version and is great for
tracking the trading activity of an investor. But if you start to get
fancy, you'll quickly hit some limitations. The wash-sale rule is a
good example. Quicken 99, the latest version, won't alert you
when a trade you make violates the wash-sale rule. The
program "was not designed to do that kind of trading," says Intuit
spokeswoman Cecilia Denny. The program also can't handle
short sales or margin accounts.
Microsoft Money: Quicken's main competitor, which also costs
around $65 for the more deluxe Financial Suite, doesn't support
the wash-sale rule either, "though it is something we are aware
of," says Peter O'Hara, a tester for the investments area of
Money.
The program can handle short sales, says O'Hara. "If you go to
the Answer Wizard in the help section and enter 'short sales,'
you'll get a ton of information on how to do it," he says.
Money also trumps Quicken in handling margin accounts. When
you set up your investment account with Money 99, the latest
version, you need to set up an associated cash account that'll
monitor your margin interest. If you don't, the program won't
calculate your margin interest as part of your profit or loss.
By the way, most online brokerages will allow you to download
your account data directly into Quicken or Money. Here's a
breakdown:
Direct Downloading of Trade Data to
Software Programs
Brokerage
Into Quicken?
Into Microsoft Money?
Datek
Yes
No
DLJdirect
Yes
Yes
Discover
Yes
Yes
Schwab
Yes
Yes
E*Trade
Yes
Yes
Fidelity
Yes
Yes
Software for Advanced Investors
Captool: "The best software, bar none," raves reader Bob
Hockenhull. The package acts like a portfolio manager. It'll help
you keep track of your transactions and generate reports and
graphs. For $250, you'll get a running tally of your capital gains
or losses that you can just plop onto your tax return.
Though some day traders love the program, Robert Hobbs,
president of Issaquah, Wash.-based Captool, says he
discourages them from using it. "We prefer to sell to long-term
investors," he says, because day traders expect a level of
support the firm can't provide.
LiveWire: This program is designed primarily as a research tool
for day traders, says Robert Krupnick, president of CableSoft,
which makes the $600 program (the price rises to $1,295 on
Feb. 1). You can't execute trades with this software, so the
hard-core day trader might not be happy with it. But reader
Ronald Papa likes the tax reports the program generates. "The
Cash Transactions Report is a chronological audit trail that is
essentially an ongoing cash balance account, similar to your
checkbook, that accounts for gains, losses, interest, dividends,
margin interest, and so on," he says. "The Tax Report
summarizes your investment transactions, associated gains
and losses, dividends and interest. Both reports can be
generated for any period stipulated, such as daily, weekly or
monthly. It does not account for the wash sale, to my
knowledge."
The software will generate a Schedule D-like form for you, but it
won't differentiate between long-term and short-term trades,
adds Krupnick. Neither will it alert you if a transaction is subject
to the wash-sale rule. But when you make a sale, you can pick
the lot you're selling to avoid violating the rule, he says.
Software
Package
Web site
Money
www.microsoft.com/money
Quicken
www.quicken.com
Captool
www.captools.com
LiveWire
www.livewire-cablesoft.com
Trade Tracker99
www.pcstartups.com
CyBerTrader
www.cybercorp.com
Software for Professional Traders
RealTick III: You need to be a client of a day-trading firm -- which
is essentially a brokerage firm that allows its clients to execute
their own trades -- to get access to this program. You can't
simply buy it from a store or Web site. Depending on the broker,
it'll cost you as much as $300 a month, or as little as nothing if
you make more than a 50 trades a month.
RealTick III offers real-time quotes and news, and it links to your
brokerage account and allows you to execute your own trades.
RealTick III offers an additional software package called Trade
Tracker99, which automatically logs all your trades and keeps a
historical record, says Baron Robertson, founder of the Elite
Trader Web site, who has done extensive reviews of trading
software. You can hit "print" at end of the day and get a profit or
loss figure that has your commissions and Securities and
Exchange Commission charges already factored in. "And it
definitely tracks your shorts, for sure," says Robertson.
The package costs from $50 to $100, depending on whether you
buy it from your broker or directly from the manufacturer, and
includes three other trading programs. You must have RealTick
III in order to be eligible to buy Trade Tracker99.
CyBerTrader: You also need to be a day-trading-firm client to
have access to this program. It's a stock-trading package --
much like RealTick III -- that offers you real-time quotes,
charting, positions management and daily profit-and-loss
balances. And the cost, again, depends on your trading volume
but can range from nothing to $250 a month.
CyBerTrader doesn't offer a neat little add-on package like Trade
Tracker99, but help is on the way. Currently, the company offers
a spreadsheet for free that allows you to sort raw data in many
ways. For instance, for capital-gains purposes, you can sort by
dates to determine which trades are short-term and which are
long-term. The software won't alert you when you're in danger of
the wash sale, but again, you have the ability to pick which lots to
sell. And it handles short sales and trades on margin.
One other big piece of the puzzle is tax-filing software. In
Saturday's Tax Forum, we will take a look at how the two
best-selling packages, TurboTax and TaxCut, handle traders' tax
returns.
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