Damn It brokers

I always thought if you trade a plan, you get the results but I didn't realize the importance of a good broker until this past week. Markets were volatile yes, but the more important thing is how your broker is reacting to those situations. My broker has just been ridiculous, the spreads between bid-ask has gone as high as 50-70 cents on options which has made not only profit making but also breakeven trades impossible. (the spreads on options and stocks can be manipulated by your broker)

I will give you a simple example of what I mean.

Let's say I am trading AAPL stock and its price is at $374 and its August 12 2011 $370 call options had quotes 4.50-4.75 (which means you buy it at 4.75 and sell it at 4.50). Therefore, when I expect the price to go up I buy August 12 2011 $370 call options for $4.50. Hence, just when I entered the trade I am down 25cents per share (if  I am trading 10 contracts which is 1000 shares, I am down $250 bucks).
Here is what I have noticed with my broker, as the the price of AAPL goes up, the bid-ask spread starts to widen , let's say now the price of AAPL is $376 and August 12 $370 call options would have quotes of 5-5.60. (which means you buy it at 5.60 and sell it at 5).

Honestly, I am a day trader who's looking for $2-$5 moves in a stock which corresponds to $1-$3 moves in options. Hence, wider the bid-ask spreads , I would need a bigger price movement just to breakeven.

A lot of people ask me why I am noticing it now.I noticed it only after reviewing my last two weeks of trade which have been total disaster. I decided to sit and down and review my trades and this was my observation.

My broker's trading platform at times is not able to send my trades to the exchange and yes, sometimes their trading platform would be down for a couple of minutes during trading day ( but never before or after market hours). --when I spoke to my broker the response I got is trading has 'TECHNOLOGY RISK', my response 'the only job of the broker is to have the technology up and running so that they are able to send the order I send, so I guess my BROKER is a RISK'.


I have been put on Platinum list by my broker effective August 1, 2011 and my profits have gone down and losses have accumulated to a large extent since August 1, 2011. Is there a coincidence, its for the reader to decide.

I will be out of Toronto for a few days, will try to update my results by next week.

dchsn6