Warning for Fidelity intraday traders

Author: heech

Creation Date: 11/13/2008 2:17 PM

Wealth Lab » General » Warning for Fidelity intraday traders

heech

11/13/2008 2:17 PM

Hey all,

Hopefully you guys will let this stay up, as it is very WL relevant (and isn't even your fault).

Let this be a word of warning to anyone trading with WL and/or looking at actively trading intraday with Fidelity. I've bumped up against a very serious, and apparently known, bug in their margin handling that makes any sort of active intraday trading basically impossible.

Basically, the "intraday buying power" parameter does not update correctly. Intraday buying power should swing down whenever you make a buy to open a position. But the value is designed to swing up whenever you sell/close out a position not being day-traded.

Currently with Fidelity, intraday buying power is not being restored correctly when you sell/exit; the release calculation is simply wrong. Reps in the AT group told me they've been aware of the bug for weeks, and that no one knows why/how it materializes... except that people will suddenly find themselves with very restricted intraday buying power.

That happened to me, this morning. Despite having large amounts of cash in the core account, despite having large amounts of buying power on cash/margin terms, despite relatively few intraday transactions... I had ZERO intraday buying power.

I've been using WL Pro to handle the equities side of a covered call, and when I could no longer buy... well, it basically meant I was exposed to huge losses on the option side. Fortunately this was all during the "test" phase of my process, so these losses are only "huge" in the relative sense (~$15k on $90k account). I don't even want to think about how life would've looked if I had already moved in 7-digit sums, as I had been planning to.

I can deal with bugs in Wealth Lab Pro, because I could at least (by hand) repair broken trades using ATP or Fidelity.com. There's nothing I can do when the broker itself is so fundamentally broken.

So (for now at least), goodbye Fidelity, goodbye Wealth Lab Pro. Thanks to WL Pro for a great back-testing and brain-storming tool, if nothing else. I think I'm onto something with my strategy, and I'll just have to find a different, more competent brokerage service (IBKR?) in order to implement it. It's a shame to throw away the code as written... but whatever, I've wasted more code than that. I'll probably build something from the ground up in Java. On the other hand, if WL Pro can integrate with Interactive Brokers' back-end + quote without too much work... well, let me know, guys.

Thanks to Eugene and Cone for putting in the time over the last few weeks in helping me struggle with this. Good luck and trading to all.

UPDATE: Someone at Fidelity is working with me on this. I'll see where it goes. And the answer is... no where. I suspect their "time and tick" accounting is some how wrong. No one has a clue.

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Hey all,

Hopefully you guys will let this stay up, as it is very WL relevant (and isn't even your fault).

Let this be a word of warning to anyone trading with WL and/or looking at actively trading intraday with Fidelity.  I've bumped up against a very serious, and apparently known, bug in their margin handling that makes any sort of active intraday trading basically impossible.

Basically, the "intraday buying power" parameter does not update correctly.  Intraday buying power should swing down whenever you make a buy to open a position.  But the value is designed to swing up whenever you sell/close out a position not being day-traded.

Currently with Fidelity, intraday buying power is not being restored correctly when you sell/exit; the release calculation is simply wrong.  Reps in the AT group told me they've been aware of the bug for weeks, and that no one knows why/how it materializes... except that people will suddenly find themselves with very restricted intraday buying power.

That happened to me, this morning.  Despite having large amounts of cash in the core account, despite having large amounts of buying power on cash/margin terms, despite relatively few intraday transactions... I had ZERO intraday buying power.

I've been using WL Pro to handle the equities side of a covered call, and when I could no longer buy... well, it basically meant I was exposed to huge losses on the option side.  Fortunately this was all during the "test" phase of my process, so these losses are only "huge" in the relative sense (~$15k on $90k account).  I don't even want to think about how life would've looked if I had already moved in 7-digit sums, as I had been planning to.

I can deal with bugs in Wealth Lab Pro, because I could at least (by hand) repair broken trades using ATP or Fidelity.com.  There's nothing I can do when the broker itself is so fundamentally broken.

So (for now at least), goodbye Fidelity, goodbye Wealth Lab Pro.  Thanks to WL Pro for a great back-testing and brain-storming tool, if nothing else.  I think I'm onto something with my strategy, and I'll just have to find a different, more competent brokerage service (IBKR?) in order to implement it.  It's a shame to throw away the code as written... but whatever, I've wasted more code than that.  I'll probably build something from the ground up in Java.  On the other hand, if WL Pro can integrate with Interactive Brokers' back-end + quote without too much work... well, let me know, guys.

Thanks to Eugene and Cone for putting in the time over the last few weeks in helping me struggle with this.  Good luck and trading to all.

UPDATE: Someone at Fidelity is working with me on this.  I'll see where it goes.  And the answer is... no where.  I suspect their "time and tick" accounting is some how wrong.  No one has a clue.

warren631

11/14/2008 8:50 PM

I gave up on Fidelity and moved my account to IB a long time ago. Fidelity is not for serious trading - just for company 401K mutual funds where the employee doesn't have any choice. Traders are obviously not an important part of their business. Eugene and Cone do their best to help Wealth-Lab customers.

My WLP5 locked up at lease 5 times a day before I deleted it - not nice if you need a fully automatic trading system. I went back to my old WLD4 (US support no longer available but not needed) to generate signals and IB TWS API for streaming data and trading. It runs all day unattended trading NQ futures.

mltrade2009

9/20/2009 7:52 AM

I agree that IB and TS seem to be better suited to serious traders. I am hoping that WL5 will change that. Last year when I was transitioning from Fidelity to IB, I was auto trading thinly traded stocks in Fidelity and IB accounts. More than once I was not filled with limits orders at IB but was filled at Fidelity. I called IB to find out why. They did not have an answer so I cancelled IB. (No fills is a big cost in my system). Presumably this is because of the much large trade volumes at Fidelity. I have heard TS has similar issues with fill on lightly traded stocks. If you are trading GS or AAPL I suspect it will not be an issue