New partnership with Tradier Brokerage--unlimited commission-free trades

Portfolio123 is pleased to announce a partnership with Tradier Brokerage. If you open an account with them, you get unlimited commission-free trades using our platform.

This has several advantages besides saving you per-trade commissions. Through our “Invest” interface, you can place your trades directly from Portfolio123, which will keep track of your account and do everything your current broker does–and more.

If you have a Tradier account, you can get the up-to-the-minute current price, best bid, and best ask for any stock. You can place multiple orders at one time, a feature that few brokers allow. You can place automatic limit orders at the bid, the ask, or the midpoint, or you can choose one of our automated limit orders–assertive, conservative, or patient–which are calculated based on the average true range of the stock and the average bid-ask spread.

Our “Invest” platform offers a variety of other features that your current broker may not offer:

  • You can see which of your stocks are doing best and worst today;
  • You can download all of your transaction and holding information;
  • You can divide your accounts into different strategies and manage them separately;
  • You can keep track of your performance and compare it to a benchmark of your choice;
  • You can click through to information about any stock you hold or are interested in from any page;
  • You can import past transactions from your current broker all at once rather than typing them in separately so that you have a record of your buys and sells.

Here are the details. No matter what, your first three months on your first account are free. You’ll pay $10 a month thereafter ($20 if you have two or more accounts). If you have a Research membership, the $10 a month will be deducted from your membership fee, thus making your first Tradier account free for as long as you maintain your membership.

Unlike RobinHood and Webull, Tradier supports IRA accounts; unlike Interactive Brokers, there are no per-share-traded fees; unlike Folio Investing, you can determine when and how your orders are filled. We feel confident that Portfolio123 now not only offers the best stock research on the Internet, but offers the best trading experience too.

Please tell your friends to check us out. We think you’ll find the process easy and intuitive, and will make trading a pleasure. And we’d be more than happy to answer any questions or give you any help.

That sounds great! While I don’t have a need for Tradier now, I will consider it when I move my IRA.

Any thoughts on adding paper-trading? While it won’t exactly mimic actual trading, it may help evaluate the various order types. Just a thought.

Kudos, P123!

Walter

Do they have VWAP / adaptive algo’s like IBKR? Also can you do international stocks witht hem?

Tradier is limited. But:

Looks to me like P123 might supplement what Tradier provides with its own algorithm. I defer to Yuval/P123 for any details (or corrections on my inference).

-Jim

Jim that’s right. Tradier only offers basic order types. Currently our automated limit orders only help you setting the limit price. Once submitted orders do not change. The plan is to implement our own orders that change throughout the day. Initially they will be relatively simple, like altering the limit price to be more aggressive after some user configurable time.

We’ll add more complicated algos like vwap if there’s demand. The initial goals are 1) make trading multiple stocks very easy (like a rebalance) 2) allow setting up your trades the day before without using market orders.

NOTE the unlimited orders fee structure makes this possible since there’s no cost to cancel and replace orders.

Cool, will try it out!

Marco,
I trade with VWAP orders at IB.

I tested smart limit orders by adding this buy rule to one of my 20 stock models:

Low(-1) <= (Close(0)-(ATR(15,0)/15))

When the simulation was priced with “previous close” there is a huge performance hit
VS the avg of next high,low with IB commissions.

Is there a better way to test this?

BTW It would be better if simulations could be priced with daily VWAP.

Not sure what you mean by “tested smart limit orders”. The simulated execution price is still limited to one of the choices we offer. All you did is add a buy rule with a look-ahead component which just screens out more stocks. Can you elaborate?

To simulate sims with daily VWAP we would need intraday prices historically. All we have is EOD historically. I believe we do have access to recent intraday with Tradier API. Not sure how suited it is for VWAP algos.

My limited experience with complex order algos is that they are geared for large orders that take days to fill. So maybe not even necessary for our clientele. IB is obviously the leader in this space , but did they do too much? THere’s so many with so many options, I’m paralyzed by the choices. I find them very overwhelming and the traders I talk to don’t like to use them. They just use limit orders and change them throughout the day.

We want to be smart about what we add. Something like a VWAP is quite laborious to code & test. Initially we want to focus on order algos that are simple to code and understand and are useful. We’ll come up with more details soon as to what we think fits the bill.

Marco,
The purpose of my test was to compare IB VWAP trading to the new brokerage using one of my models that had the highest trading cost.
The new buy rule should buy stocks where the next days low was below my limit order.
If this was true I assumed that the trade would happen.

One would expect a performance hit with this strategy.

Fortunately, Marco is talking about something that may solve the performance hit for some (who, unlike James, use limit orders).

James is only exposing a general problem FOR ALL SIMPLE LIMIT ORDERS: through P123 or any other broker.

One reason this type of strategy many not do well is that it does not buy the best stocks. You know, the ones that take off at the open and never look back.

Marco offers a way to catch many stocks at a price lower than the open while adding aggressive or non-aggressive ways to capture those stocks that are destined to double or triple before they have risen too high at the end of the day.

Of course, what will work will depend on your port. Marco offers different options that may work depending on the behavior of your port. And one of those options includes a regular limit order. So he is only adding options.

In addition, with no commissions one could strategically place small market or limit orders throughout the day that could probably beat VWAP orders.

One reason a person may use VWAP orders is to avoid the multiple commissions of multiple orders (less of a reason for the commissions at IB). But if you do not have the multiple commissions there are better ways. Methods that alter the buying pattern based on the trend, for example, may be effective.

I assume the algorithm could be used multiple times during the day. If so, there is little doubt that a few simple algorithms could beat VWAP FOR SMALLER ORDERS.

Marco’s point is well taken about larger orders and market impact. VWAP can reduce the market impact and I use VWAP for that. Sadly, I do not alway have so much money to invest that I need a VWAP order: depends on the day, the port, the stock and how well the stocks I am selling have done (how much cash they provide).

In the end, all we can hope for is different options for different situations. P123 is helping with that.

AND NO COMMISSIONS!!! IB does not do that. This, by itself, is a clear advantage for many ports.

-Jim

Jim,
I also tested the upside case with this rule:
Low(-1) > (Close(0)-(ATR(15,0)/20))

You are correct these are the trades to do.
My model did 3X better with this rule.
The problem is how to test this.
Perhaps Marco could test his “dynamic limit orders” logic on a platform like Quantopian, and publish the results.

He could easily backtest standard limit orders. He would just have to set the transaction price at the limit price or the opening price (whichever is lower).

Maybe just an if, elif, else somewhere in the code.

More detail:
if:
the stock opens lower than the limit then buy price is at the open price
elif:
the stock opens above the limit then buy price is at the limit if (only if) the low is below the limit price
else:
do not buy (not really needed to adjust a transaction price if there is no transaction)

One adjustable strategy that could be tested would be buying at the close if the limit was not triggered (replacing the else with ‘buy at the close’). This probably would not tell you everything you would want to know (or maybe it would be a fine strategy as is) but it would definitely be something worth knowing.

This is great - thanks to P123 for continuing to innovate and improve the platform. Setting up trades on Sunday would be nice. Will this platform also allow for auto-trading?

I would like to add a few words about limit orders.

For years I have been setting limit orders before market open and adjusting them through the day until they get filled, except that if the price moves against me too much I abandon the order and try again the next day.

Since March I have been placing orders for the same stocks using IB’s relative NBBO peg algorithm so that I can compare the two approaches.

I have found that my limit order placement technique beats IB’s algorithm 55% to 60% of the time. The average difference is about 20 basis points.

Using 1 ATR to create a limit order won’t work: it’s simply too huge a difference, and will hardly ever get filled. For the conservative limit orders we’ve designed, we use 1/6 of the ATR, and for the patient limit orders, we use 1/3. We adjust the ATR closer to the current price by 5% of the bid-ask spread so that the limit order still makes sense for, say, tiny bank stocks, with their large spreads and low volatility.

The only way I’ve found to simulate limit order placement and fill is to actually sit down and manually look at the intraday bids, asks, and fills of particular stocks, a daunting task indeed. I attempted something along these lines a few months ago, and came to the following conclusion (I’m quoting from an article I wrote about slippage, which you can read here: https://seekingalpha.com/article/4256936-minimize-slippage; some of it–the part about market impact–no longer reflects my current thinking):

I estimate that if you use only limit orders and use them wisely, adjusting them in order to get a fill, you’ll end up effectively paying about one-quarter of the bid-ask spread per transaction. Some of your limit orders will get filled at a much better price and others will run away from you and you’ll end up paying more than you would have if you’d placed a market order. If you never adjust your limit orders, you’ll avoid paying the bid-ask spread altogether, but you also won’t get a lot of fills. If, on the other hand, you use only market orders, you’ll occasionally pay more than half the bid-ask spread if you get some partial fills at the bid or ask and then go beyond that for a complete fill, and you’ll never pay less than half the spread. . . .

It’s very important to realize that you cannot take advantage of a stock’s volatility by using wisely placed limit orders. You might think that you could come up with an algorithm that will get a better fill, on average, than you would have gotten if you’d just been filled at some random point in the day. But that is actually impossible, as I explain in my article. The best you can hope for with limit orders is to reduce the amount of the spread you’re paying. In other words, if your fills are 20 basis points better than IB’s fills, then that’s because you’re evading bid-ask spreads that would cost you 20 basis points, not because you’re actually beating the market.

There’s an easy way to calculate your actual slippage, including both bid-ask costs and market impact. Take a very large number of trades that you’ve made and compare your fills with the PREVIOUS DAY’S CLOSE. The reason you want to use the previous day’s close is that your overnight order will impact the next day’s open, and then your calculation will be far closer to 0 than it should be. When you do this, you need to weight your average by the size of the trade, as large trades will have much more market impact than small ones. My own actual slippage is around 37 basis points per trade. It would be far lower were I buying more liquid stocks.

From Yuval’s article (link above):

What would be really cool (and a potential game changer) is if you did not have to pay that commission for a partial fill.

Wait….You won’t have to if you pay no commissions at P123.

Maybe not for every single person in every situation but do not let the perfect be the enemy of P123’s very good idea.

-Jim

The Tradier link-up is appealing. Before I decide whether or not to try it, I want to understand a bit more.
My P123 membership is a legacy level (Lite). Does it qualify for the P123 Research discount?
Is there a reasonable likelihood of an automated Trade interface with Tradier, and if so, how soon?
My current trading is in IRA accounts that Tradier would charge an annual fee (not a big problem), but I need to understand the fees and methods for moving funds (primarily withdrawals and Roth conversions). I still have some questions after reading the information on their website.

Kudos to Portfolio123 for the expansion. I hope it works well! For what it’s worth a rough estimate of the annual drag on my actual trading of two ports due to commissions through TD Ameritrade is around 0.5% of port value. Enough significance to get my attention.

Absolutely.

It’s already there. Use “Invest” rather than “Trade,” which is being very gradually phased out. You can hook up any live “Research” strategy to an “Invest” strategy in any real account at either IB or Tradier and it will follow it seamlessly. For exactly how to do so, look at pp 34-35 of this PDF: https://www.portfolio123.com/doc/side_help_item.jsp?id=11

Ask away!

0.5% is a lot of money!

Thanks, Yuval, for your answers. Very helpful, and I am absorbing more detail from the Frequently Asked Questions section on the Tradier website.

Hi,

After reviewing the Tradier website it wasn’t clear whether it was limited to US residents or citizens so I sent Tradier an email and got a prompt reply: “we are unable to open accounts for Canadian citizens.”

That’s sad news.

Hopefully as Tradier grows it will eventually come to Canada (like Interactive Brokers did a few years ago).

Hi, I’m interested. A few questions:

  1. To sum up the offer, I can trade with zero commission and zero monthly fees if I have an ongoing research membership with porfolio123, is that correct?

  2. How does Tradier make money?

  3. Am I protected against a change in commission policy, i.e., can they rescind the zero commission rate?

  4. In your opinion, can I expect to have similar fill executions (and slippage costs) compared to say, Fidelity?

  5. I use the output from a screen (not a live strategy) for my trades, can I use Tradier for this?

Thanks, Doug