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Why I have multiple brokerage accounts

Innoware
Why I have multiple brokerage accounts

Innoware's Blog - Why I have multiple brokerage accounts!


January 2018 has started great for me & my portfolio has grown by a whopping 20% in 4 weeks – actually in only 18 trading days.

You can follow my real trades at

https://docs.google.com/spreadsheets/d/12AE6bP_SaSKSzvTZSx9AMkPhdzf930In3J0h5fxi0cY/edit?usp=sharing

and the disclaimer – these are for you to analyze and learn. No investment advice is being given here!!

In this blog, I will cover why I have multiple brokerage accounts. Simple explanation – each brokerage allows me to do something specific and I attribute my handsome ROI to this. Of course, each investors profile is different and this blog does not necessarily mean that you need to rush and open 9 different accounts like me. But I am sure this blog will give you insights on why I am doing what I am doing!!

Scottrade Account # 1

This used to be my primary account and had the maximum amount of my portfolio. Major advantage – low brokerage fees. I called them up and negotiated that I can’t pay 7$ per trade fees. The negotiation was successful. Now, they charge me $3.35 per trade. This is a fantastic deal if I am buying 500 or 1000 shares per trade. Even for 100 shares, the $3.35 fee works. For options, they charge me $6.61 for 10 contracts or $3.35 for 1 contract and this works for me. 

Another great advantage is pre-market and after hours trading. Many times, after the market closes or before the market opens, we get tremendous opportunities to buy or sell shares (Note that we can’t do options when market is closed).

Also, I can “reserve” my short shares for UVXY or TVIX (if they are available with Scottrade). What this means is every day morning when I get up, I input multiple orders to sell (i.e. short) UVXY or TVIX or even VXX at prices much higher than current price (so that they won’t get filled). The idea is during the day, if there is a price spike, I just need to amend the order and don’t have to worry that shares are not available to short.

2 main disadvantages with Scottrade. They won’t allow me to sell “naked” calls or puts. Also, no index futures. One has to call in to get a withdrawal check. I have to drop in the deposit check at the local branch.

But all this will not matter as TD Ameritrade has bought Scottrade and in 2 weeks, I will be forced to use TD Ameritrade’s platform – Think or Swim. I am told this platform is very good. I am look forward to it. But they have UVXY & TVIX classified as “hard to borrow” and I am not a big fan of this policy. If they give me trouble in my trades, I will not hesitate to close this account.

Scottrade charged me approximately $160 short fee for the 4 weeks of trading in January 2018 - for 5,500 shares UVXY short, 400 shares VMIN short and 700 shares VXX short. I am sure this will increase 10 times at TD Ameritrade. Mentally, I am prepared to shake hands and bid good bye to TD Ameritrade in February as I don't see it working out because of high short fees and the hard to borrow policy. But I want to try them out for sure.

Scottrade Account # 2

This is primarily an account for my son (who is in 11th grade) and is a custodial account with me also being in the account. The idea is to not overtrade here but invest in tickers like TQQQ and SVXY for longterm – 10 year timeframe. I am hoping that he can become a millionaire in 10 years!!

TastyWorks.com Accounts

I am most happy and satisfied with this account and I am moving more funds here. They are very cost effective in terms of fees. You can look at tastyworks.com for their attractive low pricing. To open an account, you need a referral and you can use the below link:

https://start.tastyworks.com#/login?referralCode=GC66YJ2VTQ

I can sell naked calls and puts. I can also do index futures. The beauty about index futures is –

a) Per contract, investment needed is a very low sum of $5,000 
b) Can trade practically 24 x 7 
c) Tremendous tax benefits.

Along with Brennan, I am writing a book on Index Futures and you would find the strategies on Index Investing very interesting, when that book is out (and as is with our books, this one also will be available for free download from our website). In January 2018, Index Futures have had a great share in my ROI.

Linking my bank account to my tastyworks.com brokerage is easy. If I transfer funds from my bank account before 2 PM, it reaches tastyworks.com the next day. Many times, when my swing trade profits are good and I need money for expenses, I just withdraw funds from this brokerage and it is available in my checking account the next day.

The only disadvantage in Tastyworks.com is, I can’t do premarket and after hours trade. One of my friends told me that we can make a phone call to tastyworks.com support and have them execute trades in premarket and after hours. I have not tried this though.

I am also excited that they have put me in their wait list for their API (Application Programming Interface), which will allow me to get multiple software algorithms developed to automate my trades.

Recently, they raised their margin requirements for short volatility tickers. After a friend advised that I speak with them, I made a call. They said that they grand-fathered the older UVXY calls sold. Meaning the new margin requirements would affect only new calls sold. The way they spoke to me and the way they address such issues, is simple tremendous!!

Normally, Tastyworks.com does not have UVXY shares to short. But I have found a very good work around. Every Friday (or even earlier during the week), I buy weekly deep in the money UVXY puts or sell deep in the money UVXY calls, get them assigned and am short UVXY as many shares I need. This works like a charm.

The short fee that tastyworks.com charges appears to be reasonable. For 2,000 UVXY shorts, they charge me $7.5 short fee per day. By mentioning these figures in this blog, I have made a reminder to myself to monitor the short fees.

All in all, I will say, Tastyworks.com is the account that I like the BEST.

TradeStation

This is an interesting brokerage. Brokerage fees are reasonable. They allow selling naked calls and puts. Margin requirements are reasonable. I can even trade in M1 and M2 – the VIX current month and the next month futures. I have not really traded them because I don’t see an inherent advantage in this.

The reason is these VIX futures are cash settled. What it means is, on the Tuesday in the middle of the month (or February 13th, 2018 to be exact in the current cycle), you take cash as profit or give cash as loss on your trades involving VIX futures. You do not get VIX shares or do not end up having short VIX shares, unlike shorting UVXY, where I can be short UVXY for 1 year, 2 years or till perpetuity. I like UVXY / TVIX short better than the cash settled M1 and M2, only for this reason.

TradeStation allows trading in Bitcoin futures as well but let me admit, I have not tried this. Maybe one day, I will.

You can look at TradeStation.com website for their pricing. If one is doing a lot of trades, we can choose their “Tiered Plan” which gives volume discounts on increased contracts.

Rohinhood

I have 2 Robinhood accounts only for the simple fact that the account is a no fee account. I started my “Index Investing” portfolio (based on my Index Investing book) in this account with tickers like TQQQ, SVXY, VMIN, UPRO, SPXL, DDM etc. I engage in swing trades in other brokerages, move small amounts to Robinhood each week or month, and buy 1 share of TQQQ or 5 shares of SVXY. I intend sticking with this long term approach for 10 long years.

As time goes by, we indeed will see dips or correction. Those are very good opportunities to buy TQQQ or UPRO or SVXY or SPXL at a discount. Over the next 10 years, we indeed will see 1 recession – which probably will last 9 to 12 months. I am determined to stay the course and continue adding on these long-term bullish tickers, even when we are in a recession - when ever it might be!!

Soon Robinhood will have these major advantages

a) Robinhood web version 
b) No fee Option Trading 
c) No fee Bitcoin and Cypto Trading

In my opinion, if one is not having a Robinhood account, one is missing to become a millionaire. Why would someone drink 5 starbucks a day costing 25$ per day? By cutting down on a packet of cigarette or cutting down on 2 Starbucks per day and moving that money into Robinhood, one can attempt to become a millionaire in 10 years (More info in our book on Index Investing available for free download at http://IndexInvesting.xyz)

Interactive Brokers

This is a very big name and my least favorite. I recently opened an account here. I tried funding my account by sending money to them. Twice the money got returned back to me. I called their support. I was on hold for 55 minutes!!

Anyway, some one told me I should initiate transfer at the brokerage where they will get my funds via ACH. I did that and indeed my account was funded. But it took 5 full days for me to start trading. I am waiting for XRP (Ripple) to enable money transfer in 4 seconds and this is the reason why I have bought over 10,000 coins of XRP in binance.com.

I tried shorting 300 shares UVXY at IB, when UVXY was around $10. For a $3,000 transaction, they wanted to block my $9,000 as margin. Ridiculous!! So I cancelled my order. I respect their approach that they are doing all this for their safety and the safety of their investors. But for a “responsible” investor like me, these margin requirements are a big hindrance to investing.

They have extremely good account security and by installing the IB Key app on my phone, I need to validate on my phone every time I login. This feature is great.

Still I am sticking with this brokerage only because they have a API (Application Programming Interface) where my software algorithms can “print” money while I sleep or do my other work. I have close to a dozen algo ideas and my first algo is on track to getting developed and tested soon!!

Coinbase.com / GDAX

This one is fine as it allows me to invest / trade in Bitcoin, Bitcoin cash, Ethereum and Lite Coin.

Binance.com

I am extremely impressed with this crypto currency exchange. I can trade in over 50 crypto currencies including XRP, XVG, LEND, IOTA, XLM and so many more of them!!

I cannot transfer US Dollars to binance.com. I have to buy BTC or ETH in Coinbase/GDAX.com and transfer them to binance.com and then use the BTC and/or ETH, to trade in alt coins.

I am amazed how fast and professional binance.com site is. In my opinion, it is better than any US brokerage platform.

Also, they have 2 factor Authentication (including Google Authenticator) which is good account security.

HashFlare.io, Genesis-mining.com and crypterra.net

These are not brokerages. They are cloud mining sites for mining bitcoin, Ethereum etc. Many cloud mining sites are scams. Till now, I am invested in these 3 and so far so good, I am getting my mined coins properly. I hope these companies stay strong and grow.

Thanks for reading this long blog. I hope you had an insight on why I have so many brokerages. If you have any questions, feel free to email me at 
info@TradingVolatility.info 
or message me on stocktwits (handle Innoware) or Twitter (@TradeUVXY)

Good Luck investing next week and days to come!!

The material contained in this blog is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. As an investor, you are fully responsible for any investment decision that you make.