Why I live in a tent and run my computer off a car battery
Written: Aug 21 '00 (Updated Sep 14 '05)
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Product Rating:
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Pros: low commissions; easy to use; decent customer service
Cons: difficult to see total worth at a glance
The Bottom Line: Ameritrade is good. In fact, the service has improved since I originally write this review.
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| Horswispr's Full Review: Ameritrade |
I had a regular broker who was an absolute disaster. You may have had a similar experience. My broker was so bad that I started using what I called the "reverse-broker rule." Anything he recommended buying, I'd wait on (like when he recommended AMZN at 100 a few months ago). And anything I wanted to do that he was hesitant about, I'd do (like selling some CMGI before the recent dip). Last year, he had recommended ATHM at 170, and got me to sell my GICOF at 10 right before it ran to 40. He also had said to avoid AMD and ORCL in the 20s. Check the charts for ATHM, GICOF, AMD, and ORCL if you want to assess the quality of his advice.
When I decided it was time for a change, I thought I'd try an on-line broker.
I went with Ameritrade because it's one of the least expensive out there. Why pay big commissions for advice that's no better than a monkey can provide with a set of darts and a stock page? Buys or sells on Ameritrade cost $8 if you buy at the "market" price. Limit orders (open orders) cost $5 more.
I got off to a rough start. It took Ameritrade forever to get my account up and running, and a similar thing happened to a friend of mine a few weeks later. If you sign up today, give yourself at least three weeks before you will be ready to trade.
Once I was up, I was able to learn the site quickly. I usually use open orders (letting the price "come to me," as they say) and I generally get execution if the price reaches my strike price. The few exceptions to this are with penny (OTCBB) stocks, which can have wild variations between bid and ask, and tend to be manipulated (or so folks say) by Market Makers.
Until about three months ago, you used to have to call an Ameritrade representative to trade OTCBB stocks (wait time usually between five and ten minutes). Now, you can trade OTCBB stocks on-line, like any other stock. However, you must use limit orders, presumably because of the wild intraday fluctuations of OTCBB stocks.
I've found customer service to be very helpful. If you send them an e-mail, they'll get back to you in a business day or two. If you call them on the phone (an 800 number) they are competent and helpful.
Overall, the Ameritrade website is relatively easy to navigate, once you get used to it, though it seems a little slow. If you want to buy, say 100 shares of ATT at $30, you click on the "trade" icon on the main menu. You are then presented with a screen with fields for ticker symbol and number of shares, and you are asked whether you want a market or limit order. If you click limit, you are presented with a new field that asks for a strike price. Once you enter all of the necessary information, you get to Review your order, and then you can either submit or cancel that order.
Doing research on options is also easy: At the "trade" page, you enter a symbol, click a button that says "Options," and are presented with a separate table for each month going forward. Each table contains a list of available options for that month (e.g., IBM September 130). Click on a given table entry, and you will see the current price of that option, along with the day's range. I am yet to actually trade options on line.
Something I find bothersome about Ameritrade is that it's not particularly easy to tell what you bought (or sold) on a given day when you come home from work. If you get home DURING the business day, and review your Open Orders, there will be notification by your order that says: Executed 50 shares IBM August 20 at 120 1/4, or whatever. But if you get home AFTER the business day, there is no trace of your Open Order. If you got involved in projects at work and forgot you had an Open Order in, you might not know you bought a stock until three days later, when the stock shows up in your Positions list.
To solve this problem, you must go to "refresh transactions," within the "Review (open) Orders" screen, looking back over a one- or two-day window. You will then be able to see any changes you made to open orders over that time period, and also any open orders that filled. A bit cumbersome, but doable.
Also, the part of the website that shows a quick-and-dirty summary of your stock and cash balance is highly inaccurate. You have to use all sorts of confusing calculations to figure out how much you're really worth at a given time. They told me (in an email) that they were working on this problem but it hasn't changed over the several months I've been signed up. The only accurate summary of your worth is on the page that lists all of your holdings, including your cash balance. It is called "Positions," I believe, on the main menu.
I am in the process of gradually shifting funds from my (soon to be fired; see above) broker to Ameritrade and some Mutual Funds. Overall, I'm satisfied with Ameritrade, but I hope they remedy the problems I've mentioned in the near future. The responsibility of trading effectively, of course, is mine.
Recommended:
Yes
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