By some definitions, you're an active trader if you make just three to four trades a month. If that sounds like you, then a lot of name-brand brokerages want your business.
and others have devised active-trader platforms that are a little edgier than what they give their regular customers.
They include things like real-time streaming watch lists and the ability to trade multiple stocks with a single click. Active-trader platforms also frequently come bundled with lots of handholding, plus other perks you'd expect from a full-service online broker -- the ability to pay bills online, bank or access non-English help lines.
Over the next several weeks, I'll be comparing the active-trader offerings at mainstream brokers. This week we'll look at two platforms:
Schwab Velocity (follow the links under "Trade") and
Fidelity's Powerstreet Pro. In the weeks ahead, we'll take a look at Power E*Trade and
offerings, and peruse the active-trader program now
rolling out at
. We'll also examine two popular, no-frills active-trader platforms from
If you've had experiences with any of these brokers' active-trader platforms, good or bad,
drop me a line, with your full name, please. Also, a good site for further comparison is
Don't Try This at Home
Active-trader platforms aren't quite as feature-filled as the software direct-access brokerages such as
give their mostly daytrading customers. Unlike daytrading platforms, most active-trader programs at mainstream brokers don't allow you to direct orders to a particular ECN, for example. And not all come with Level II quotes that list all the current bid and ask prices from ECNs and market makers. (For more on ECNs, see this
Which makes active-trader platforms better suited to swingtraders, not daytraders. As a swingtrader you won't be focused on 1/8-point gains made over 10 minutes -- something daytrading software is designed for. Rather, you're looking for gains of 3% to 10% over several days or even weeks. If you're tempted to try daytrading on a mainstream active-trader platform, remember this: You'll be up against people with a lot more technology and speed at their disposal. Without those benefits, you're bound to lose money.
But if you're not daytrading, these mainstream platforms have their place. They're not as intimidating as the daytrading offerings. With real-time quotes and streamlined order entry, they give you the exhilarating feel of cruising in synch with the market -- but with a degree of comfort. It's sort of like driving a Jaguar instead of a stripped down Dodge Viper.
Powerstreet Pro vs. Velocity
These platforms from two premium online brokers are designed to put a friendly face on active trading. They have a lot in common. The tutorials are professional looking and jargon free. Their navigation is highly intuitive. They both use a series of tabs that let you go from researching stocks to placing those stocks on a watch list and then actually making trades. You won't need to put in a couple of days learning your way around as you might with a high-end daytrading platform.
Both programs also give you flexibility in how you arrange individual windows that control various applications. With multiple windows, you can watch charts move while news stories appear along with streaming real-time quotes. Schwab's Velocity lets you actually move windows around and adjust their size. Fido's Powerstreet Pro comes with several default settings that automatically arrange windows for you.
Both brokerages let you place phone trades, something not all daytrading brokerages allow. In particular, several
readers have told us that the extra handholding they receive from Schwab is worth the higher costs. As
, who has nine Schwab accounts, wrote: "I can do online, high-volume trading, yet have immediate access to actual people when I have complex issues."
Powerstreet Pro, but not Velocity, allows you to execute orders right from a watch list. That's a far cry from the static order screens used by some online brokers that force you to go through an agonizing series of steps, from calling up a quote to executing a trade.
Both Powerstreet Pro and Velocity let you set up complex orders in advance, then save them as a file the same as you'd save a word-processing file -- and call them up later when you're ready to trade. This feature can be very useful if you're the type of trader who likes to plan your trades the night before the market opens. Then, when the circumstances appear right, you can execute them quickly. Powerstreet Pro and Velocity also let you set up multiple orders. With this feature you could rapidly jump into a couple of second-tier stocks, for example, if the sector leader jumps on some good news.
Now for the Differences
Velocity is set up as a thin client. That means you load a program on your computer and it'll build the screens used for watch lists, order entry and so forth, right off your hard drive. There's even a Mac version, a true rarity in the trading world!
Powerstreet Pro's trading screens download off the Web. Web-based trading platforms are normally slower than thin-client platforms. That's because the server downloading data to you is also sending data to other customers. However, the time difference -- critical to daytraders -- may not matter so much for swingtraders. And many people prefer Web-based platforms, since they can trade at work, or from any computer for that matter.
Where ever you trade, you should hook up to the Web with a high-speed line, like a DSL or cable-modem connection, to take full advantage of either platform. Schwab further recommends that the computer you use possess at least 100 mb of RAM. Powerstreet Pro's Web-based software can run on as little as 48 mb.
What You Pay
Both Fidelity and Schwab want you to jump through some pretty lofty hoops before you can use their active-trader platforms. Fidelity requires Powerstreet Pro users to make 36 trades over a 12-month period. You can start using the software as soon as you open an account. But you'll be expected to meet that quota. If you want to receive streaming real-time quotes and Level II quotes, you need to make 72 trades annually. Contrast that with some daytrading brokerages, which charge as much as $300 per month for the use of their higher-octane trading platforms but waive those fees when you make roughly 50 trades per month.
Schwab's Velocity imposes higher hurdles. According to the brokerage's Web site, to qualify you must make 12 trades within a year and have $10,000 in your account. Then Velocity is activated. But to get streaming real-time quotes you need to make 48 trades within a year before the application kicks in. And your account balance must be $50,000.
If you are completely new to online trading, then streaming real-time data might seem like a gift. But a growing list of brokers now offer streaming real-time watch lists for free, among them
, Datek and
National Discount Brokers
. Or you can sign up at sites like
www.money.net and Medved
QuoteTracker and get streaming watch lists with no strings attached.
Commissions also tend to be high at these two shops. Fidelity's normal minimum is $25. For Powerstreet Pro users, the $14.95 market order rate applies if you make 36 trades a year. Add $5 for limit orders. With Schwab the base rate is $29.95. You must make 31 trades a quarter before the price goes to $19.95. However, that lower rate's good for both market and limit orders.
The Envelope Please
Given these higher costs, should you move your portfolio to either Fidelity or Schwab just to get their active-trader platforms? If you're a newcomer who's thinking of easing into active trading, the extra handholding you get at Fidelity and Schwab would make either a good choice. Of course, if you're already signed up with either, then give their platforms a try before moving on. In fact, these platforms' main purpose might be to keep current customers from defecting. Schwab, in particular, seems to have adopted this strategy. If you outgrow Velocity, you can move up to the company's affiliate brokerage
, with its full-fledged daytrading platform.
On the other hand, if you're an experienced active trader and are not interested in full-service features like mutual funds and banking, a switch to Schwab or Fidelity doesn't seem worthwhile. Numerous cheaper alternatives exist. Datek and Interactive Brokers (as you'll see later in this series) have similar platforms, but charge lower commissions. And you don't have to make a minimum number of trades to qualify.
Mark Ingebretsen is editor-at-large with
Online Investor magazine. He has written for a wide variety of business and financial publications. Currently he holds no positions in the stocks of companies mentioned in this column. While Ingebretsen cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send it to