My broker’s website appeared online but orders weren’t being accepted. I tried and tried again until I really needed to exit the trade. The loss was growing quickly and I risked assignment on a big position.
The majority of the big online brokers are fairly safe. I use TDAmeritrade.
However, don’t think all the discount brokers are made equal. I have to share my story as a word of caution.
My second discount broker was even cheaper than the first and offered all the options trading levels I desired. I was in love with the fees and thought I could increase my yearly return with the discount. Boy, was I wrong.
Why was I wrong? Well, I had a bad experience years ago when I was day trading options at expiration.
Note that this isn’t a strategy I use anymore, but I read a book on it (“Trading Options at Expiration - Strategies and Models for Winning the Endgame” by Jeff Augen) and was playing around after a couple successful months. In short, it doesn’t fit my trading style as it requires too much invested - I prefer small mechanical positions.
Anyway, back to the broker horror story:
So, near the end of the trading day, I was looking at a loss on a position and was approaching the close (also the expiration).
I Put In My Closing Order... And… Nothing
My broker’s website appeared online but orders weren’t being accepted. I tried and tried again until I really needed to exit the trade since the loss was growing quickly and I risked assignment on a big position
Ugh, so I had a pick up the phone and dial the broker. After calling the broker, waiting on hold for what felt like an eternity, then having the slowest trade desk rep confirm my order 3 times, I finally got my closing trade-off – for a $12,000 loss. He may have confirmed it another time but by the third time I screamed: “I just lost another $1000 while you were confirming the order!”
For some that will sound like a lot and for others it will sound like a little. But that’s not the point – for me, it was enough to be upset.
The point is that it was enough to pay for the difference between the best-in-class and the super-discount broker commissions for lots, and lots, of trades. I've been with TDAmeritrade ever since and never once had a problem. Plus, I seem to get better pricing and more fills than my last broker.