Trade-Tracking Software: No Package Is Perfect
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 InvestorsIntuit'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
Software for Advanced InvestorsCaptool: "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 for Professional TradersRealTick 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
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