You wrote this:

“Alternatively, you could look into a TFSA, but I would only recommend that if you are building a long term portfolio (not trading).”

Why would not you recommend TFSA for trading?

I logged in to my platform at 7:55AM and found an open long position 100 shares and open short position of 100 shares sitting together in my account box both at the same price. Since i did not hold any positions in my account from the previous day, i called the trading desk and a trader said that they will take care of the problem and not to worry. I called back at 9:22 AM and spoke to another trader about the situation and asked why nothing had been done yet. He put me on hold. Few minutes after waiting on hold the shares disappered from the account box and a minute later the trader came back on the line and said that it has been solved by the back office, i confirmed that.

Later in the morning, i encountered a system error that cost me $703. Here are the details: On Nov 22, 2011 at 10:26 AM i bought 100 shares of pcln (open long). At 10:43 i tried to get out of my position and sell my pcln shares and the system kept rejecting my order for ” NOT ENOUGH SHARES” even though i owned 100 shares in my account. I tried that eight times but the orders were all rejected on the groung that i dont have enough shares.

I realised that there is a system problem and called the trading desk and explained the problem. I was on hold for over ten minutes while the stock kept going down before the trader came back to tell me : ok sir we solved the problem and now you are able to sell your shares, so i asked what happened(sold the shares while talking with a loss of $703) and he said that the shares were allocated and that he had to contact the back office to solve the issue. I asked him who’s fault this is and he answered that it is an error on their side.

The trader explained that i have to speak to customer service to see if they will take responsibility of the system negligence.Long story short, after begging the unexperienced customer service representative to transfer to a supervisor, i was FINALLY transfered to a supervisor who disappointed me more than the system error. During our long conversation the manager was talking nonsense and was making things worse not better by blaming me for the error and that i have to wait a duration of time after cancelling an order in the account box to place another one (he did not specify but said definitely more than one or two seconds) and came up with a conclusion that this is why the shares went allocated. I asked for a credit of $468 supposing that if things went well and my order was placed, i would have lost $235 and not $703 and to consider the number of trades i have excuted since i joined questrade about a month ago(paid approx.$1400 in commission fees) . He refused and offered me $50 instead.

I would strongly recommend you open a TFSA account.

There is always the option of a registered account, but I’m assuming you are young and you’ll eventually establish your retirement strategy, so there is no need to rush into “locking” your money at this time.

With the TFSA, should you need to take out your money for an investment, such as buying a house, you can take it out and pay NO fees, taxes on capital and capital gains.

I believe that a TFSA is MUCH superior to the RSP crap (which the government will be broke by the time people attempt to collect).

- Pay interests when purchasing US stocks with Canadian dollars (Questrade assumes you are borrowing the US dollars which is nonsense). If this is the case, there should be at least a popup warning when the user is purchasing US stocks. Apparently, there isn’t any warning and user have to pay heavy interest fees after the stock is sold.
- Heavy currency commissions when you are trying to convert one currency to another currency (I asked them and they told me its around 1.5%). You have to pay another 1.5% when trying to convert back to the base currency…ouch?
- $4.95-$9.95 is just the commission that you have to pay to Questrade. If the exchange requires other fees, you are responsible for it.
- Balance is not in real time.

The commission is reasonable but there are insufficient notices for other fees (hidden fees?). Many fees can be avoided if they provide notices to users but they didn’t.

Best

Dear client,

As a result of new limits on OTC bulletin board (OTCBB) and pink sheet securities, at least one order in your Questrade account will be cancelled prior to market open on October 13th.

Trading restrictions

The restrictions below apply to all OTC bulletin board (OTCBB) and pink sheet securities, and are subject to change at any time:

On any given day, a client cannot trade in excess of 10% of the average trading volume over the previous 20 business days.
On any given day, a client cannot trade more than 25% of the current day’s trading volume for securities trading below $1 per share.

Any trades that exceed these limits may incur additional charges.

Please check your orders on the 13th, and enter any new orders that stay within these restrictions.

Reading closer though, it says MARGIN account…well, I don’t use margin and essentially never have. That being said, with IB and the ability to short penny stocks, I may very well find myself wishing I could short (you need a margin account for that right?)

Guess I review a little more here.
The 10k I assume is just minimum to fund the IB account, its a different matter.

I would get confirmation prior that is just penson brokers, but like I said, only penson people are complaining about it so doesn’t seem the case regardless the wording. Perhaps that broker stated that to ’scare’ the person into thinking no other options?

Personally I wouldn’t want to just trade options – I do options, big board, and pennies…I like to mix it up. Naz oils were stupid hot early in the year, pennies were hot late spring through late July, now options are the better plays these days with the big swings we see. Thats just me – you probably have more expertise in it.

Glad I have a real job – wouldn’t be sleeping at night if this was my livelihood.

But if you read:

“[...] recently increased illiquidity fees charged to them by The National Securities Clearing Corporation (NSCC), which provides clearing services for virtually all broker-to-broker equity trades in the United States.”

Doesn’t this sound like no one is exempt? Even if RBC has their own clearing house, wouldn’t that entity fall under NSCC regulations?

“I would definitely go to IB if you are over 25k, but if you are under, you are stuck with the silly US daytrading rule.”

I thought the minimum account was $10K for IB last I checked the ‘daytrading’ rule applied to various frequency patterns, etc. I don’t see how it can apply to your purchasing power?

Back to that: “The charges are designed to reduce unwanted trading behavior”

Funny that no one does anything about algo trading though! You’ve got GS and other big banks (who are hedged 50:1 in derivatives by the way) trading billions of shares each day… and that is ok? Just wait for the next flash crash… it’s a matter of time and it may not recover so well like it did the last time it happened.

“unless I just focus on trading options (which is pretty damn risky).”

With all of this volatility it pays well for short contracts (in and out fast), otherwise you get hit with time decay if it doesn’t happen fast. If your really, really… really are greedy and can handle the HUGE amounts of risk involved you can try this (at your own risks of course):

You probably heard that this year the S&P (and other indices) will break last years records for (I forgot what they call it, but I think it’s ‘all up’ and ‘all down’ or something like that). Meaning that on a regular day, of the 500 shares on S&P, 300 might be up and 200 might be down. Many years ago, you had ‘maybe’ 15 or 20 days where the large majority were up or down (ie: 400 up and 100 down). Last year I think there were like close to 60 days like that (to confirm numbers) and this year we are going to easily beat that. That means that if your good, you should be able to make good money betting those days. And even if your bad, there are 365 days in a year, minus the weekends (104 days), so lets assume there are 260 trading days. Let’s also assume there will be 70 of these ‘all in one direction’ days… that means almost 27% of the time (70/260) it will be one of these rallies. Starting to be pretty damn predictable! And even if you don’t get the exact day, just getting the right week will be profitable… assuming you buy a very short options contract.

And now for the risky part! Have you heard of the QQQ triple long/short ETF? That’s right, I said triple! Well guess what, they also have option chains. So if the Nasdaq (they also have it for the S&P) drops by say 3%, this ETF (ie: SQQQ) will really drop by 9%. And I don’t know if you’ve heard that when an option goes up/down by 10% you essentially double your money (too much math involved for me to actually prove that, but for short contracts it does sound right based on experience).

Anyway, just to say that that’s the kind of trades I’m looking at these days because the penny stocks have tried up for me in the last year or so and these new rules sure as hell aren’t going to help me. But let me warn you again… these are LEVERAGED ETF’s which means that you loose a lot of money if the underlying equity oscillates.

as for RBC – I have talked once to their trade desk and they ensured me their clearing house isn’t penson and he had no clue what I was talking about with this 10% rule. I will definitely get a followup confirmation on that. I would definitely go to IB if you are over 25k, but if you are under, you are stuck with the silly US daytrading rule. RBC…$28??? Well, not me – I will be at $6.95 based on my trade frequency, so thats no different than questrade but I do need to check the ground rules on when that takes place. If I have to pay $28/trade for 3 months first until thats active, with no rebate, then forget it as that would be about $17000 in commission….probably better off at IB and the daytrading rule…lol

Sucks as this is the year it all came together for me and I’m making more trading than working full time…now they are taking it largely away unless I just focus on trading options (which is pretty damn risky).

WTF is all this crap? I haven’t logged into my Questrade account in over a week or two but I had pending trades (buys) which I’m sure have gone through. From all this crap I’m hearing, I ‘could’ be charged a ton of money IF my stocks happen to trade on those exchanges (cause I know for a fact I had buy orders for more than 10% of daily).

I don’t know what this BS is all about, and when time permits I’ve got to read up on it because something don’t sound right! How can these regulative institutions/organizations sabotage this market like this. When I trade, I don’t want to go through a huge list of 2 hours of due-dilligence to make a quick $500 profit.

“We believe that the NSCC has raised illiquidity charges in response to regulators’ concerns.”

Which regulators? The same ones who let banks GAMBLE on derivatives? The same ones who let mortgages become as easy as joining a video rental store? The same people who let banks short MASSIVE amounts silver futures contracts? The same ones who allow dark-pools and allow for secondary markets to be created (and override the “National Best Bid”)?

“The goal is to improve trading in the OTCBB and Pink Sheet markets.”

I think they just killed it!!!! This is totally bogus and WAY too risky! I’m going to do some serious digging about this (when time permits) and if this is all the way it’s made up to be, I really hope that Questrade implements some algorithms to protect its clients. There is NO way I would ever pay fines larger than my whole trade and expected profit, simply because I bought more shares than I was allowed.

Have you called RBC to find out if it has affected them… or better yet does anyone know if it affects Interactive Brokers (I’d rather trade there than go to RBC’s $28 deal).

Dear Valued Client,

Our clearing firm, Penson Financial Services, has recently notified us of an upcoming change to their policies in regards to illiquid securities.

Penson has conducted further research into recently increased illiquidity fees charged to them by The National Securities Clearing Corporation (NSCC), which provides clearing services for virtually all broker-to-broker equity trades in the United States. Though it has been determined that the majority of these charges are derived from sub-penny transactions, transactions that are greater than 10% of the 20-day average volume within any security, regardless of its price, also result in charges from NSCC.

Effective October 1, 2011, you cannot trade in excess of 10% of the previous 20 business day average trading volume of any OTC Bulletin Board (OTCBB) or Pink Sheet security, on any day, regardless of the stock’s price. In addition, for stocks trading below $1 per share, you cannot trade more than 25% of the current day’s trading volume.

If you trade in excess of these restrictions, your account may be subject to closure and/or be charged interest during the three-day settlement period of the illiquid trade. The interest charges will be based on the illiquidity requirement imposed on the clearing firm, which could be many times the value of the trade. The interest rates charged to clients who violate these restrictions will be between 15% and 25% per year, assessed at a daily rate during the trade settlement period. In no event shall any rate be charged in excess of the maximum rate permitted by law.

These interest charges may be substantial and disproportionate to the value of the trade. We are therefore strongly urging our clients not to violate the trading limits listed above.

This is not a change made by Stock USA. These steps are being taken by our clearing firm to help reduce NSCC charges incurred by them. We believe that the NSCC has raised illiquidity charges in response to regulators’ concerns. The charges are designed to reduce unwanted trading behavior, such as unregistered distributions and manipulation. The goal is to improve trading in the OTCBB and Pink Sheet markets.

I suspect this is still only penson related though as any broker not clearing through penson isn’t having issues – i’d have heard by now (IE, Interactive Brokers say….)

Support I talked to earlier said we can buy all we want, but if we want to sell all at once, we have to call it in???? Uh, well, that didn’t apply to AERN a few days back when I wanted to buy 200% ago…it was just plain blocked even to buy.

It went into effect on 10.03.11. It’s rule 11-0256. It was written by Jamie Bulnes. You can call him to complain at 416-943-6928. I’m going to. Let’s get this rule repealed. It’s retarded.

Just waiting for RBC account to be activated and then bye bye penson and questrade forever.