What a week in and around the equity markets. While investors are starting to see more red than green show up, Canadians are also starting to see more action from the red, blue and now orange of the various political parties jockeying for supremacy in the upcoming election. Politicians aren’t the only ones thinking about gathering support and looking eagerly towards October – discount brokerages are also in the same boat as the road to supremacy in the fall begins with lots of campaigning (not so much baby kissing…yet).
In this edition of the roundup we take a look at a deal that one online brokerage has relaunched to keep things interesting through the final stretch of summer. Next, we’ll take a peek at some more data from a US discount brokerage that paints a promising performance picture for DIY investors. From there we’ll take a look at the latest cheers and chirps on Twitter, provide a highlight of the upcoming investor education events and close out with some very interesting forum thread discussions.
Stacking the Deck
As we had mentioned last week, August is slated to be a busy month for deals and promotions. This past week, Questrade added yet another offer into the crowded deals arena by re-introducing their prepaid Visa card promotion.
The promotion offers up a $50 prepaid Visa for individuals depositing at least $5,000. Of course with all offers, it’s important to read the fine print as sometimes the larger print paints a different picture. In this case the landing page for the offer has the following pitch:
While Questrade states that there four steps to obtaining the $50 prepaid visa, there are few things that it conveniently left out when comparing these four steps to the full description on the terms and conditions.
Specifically, that individuals need to make at least one commission-generating trade in order to qualify for the prepaid Visa card.
Another step not mentioned is the wait time between the deposit and when the card will arrive.
Questrade now has 14 concurrently advertised offers on their promotions page, which is substantially higher than any other discount brokerage. Digging a bit deeper, the offers reflect a diversity of attempts by Questrade to appeal to different potential clients. From ebooks to contests to gadgets to the more traditional free trades and cash back offers, Questrade is certainly casting a wide net when it comes to promotional activity.
Other discount brokerages, especially the independent brokerages and less-popular bank-owned brokerages, have their work cut out for them in the promotional mix. Trying to compete against Questrade’s promotional machinery will certainly be a challenge given their experience in this area. At the other end of the spectrum, competing against the well-established brands of the larger bank-owned brokerages who not only have deeper pockets but also much greater followings, won’t come cheap.
With a busy September on the horizon for many brokerages, it would not be at all surprising to see other brokerages starting to launch multiple concurrent offers as they ante up alongside Questrade for getting DIY investors’ attention.
Trading the Trend
Many seasoned traders know the phrase ‘the trend is your friend until it ends’. For Interactive Brokers, it looks like they’re still pretty chummy with the trend pushing their business value up and to the right.
Once again Interactive Brokers published its performance figures for the month that just passed (July) and once again there was a solid year-over-year increase in trading metrics.
Aside from the fact that they saw a year over year increase in daily average revenue trades (DARTs) of 23% to 652 thousand, what really stood out was that they grew their account base to 314 thousand, up 18% year-over-year and 1% higher than the previous month. In other words, Interactive Brokers continues to crush it when it comes to growing their client base, especially amongst the active trader segment.
Here is a screenshot of their average commissions and order sizes for those willing to indulge in a little bit of commission-price envy:
For Canadian DIY investors considering Interactive Brokers, it’s often a challenge to find coverage of them in many of the different rankings and ratings. Until somewhat recently, Interactive Brokers Canada did not offer registered accounts nor was the user base sufficiently high for many of the major rankings/surveys of Canadian discount brokerages. Going forward, however, there might be more coverage as a result of the new account offerings.
That said, there are indirect data points such as Interactive Brokers’ financial and performance metrics show that quarter after quarter, traders keep coming to Interactive Brokers at a rate faster than they’re leaving. That is a trend traders looking for an online brokerage may want to pay attention to.
Event Horizon
It looks to be somewhat of a quiet week ahead for discount brokerage-sponsored investor education events. Here are a couple of upcoming sessions that may be of interest to dividend enthusiasts, as well as those interested in technical analysis and trading strategies.
August 11
Scotia iTRADE – Dividends Are The Cake, Not The Icing with Horizons ETFs
NBDB – Introduction to Technical Analysis – Moving Averages – [Fr]
August 13
NBDB – Trading Plan and Investment Strategy for Mid and Short Term Traders – [Fr]
Scotia iTRADE – Using Volatility To Trade Options with Sarah Potter
NBDB – Introduction to Technical Analysis: Oscillators – [Fr]
Discount Brokerage Tweets of the Week
In this week’s discount brokerage tweets scan, it appeared that brokerages were offered a bit of a break from the usual barrage of technical and account issues. While there were still a few technical issues that got folks tweeting, the conversations seemed relatively tame and there were definitely fewer threats of people “going to take their business elsewhere”. Of interest, there was a posting from a recent winner of the Scotia iTrade selfie contest that offered a lucky break to the contestant. The original contest terms and conditions stated that there was only one movie pass to be awarded per person and it looks like they got two.
From the Forums
While Twitter may have been quiet there were more than a handful of very interesting posts from the Canadian investing forums. It was tough to cut any of the shortlist out so here is the “director’s cut” version of interesting reads.
Cookie Monster
If only the adorable Sesame Street monster were behind the scenes with browser cookies, the world would certainly seem like a less creepy place. Alas, in today’s online landscape nearly every digital touchpoint has some kind of tracking cookie or technology enabled. In this forum post from RedFlagDeals.com, Questrade is singled out as having a number of interesting tracking and measurement features that are keeping tabs on user behaviour.
Money in Motion
Qtrade Investor is not a name that a lot of forum users typically talk about, so it was interesting to spot this post from the reddit personal finance Canada section. What started out as a question about moving a large sum of money into the account turned into some intriguing insights as to why some investors look to Qtrade Investor as an online brokerage of choice.
Voicing a Concern
While we typically stay away from the drama filled commentary of disgruntled clients, sometimes it can be instructive to those looking around for an online brokerage to be able to separate the fact from the opinion with user reviews. Despite a relatively negative experience being shared about Questrade, it was interesting to see this post from RedFlagDeals’ investing thread in which the comments from other users of this online brokerage volunteer their satisfaction with this brokerage.
Into the Close
That’s a wrap for this week’s roundup. Timing in comedy and markets is everything. This past week was also the final show for one very great comedian and pundit Jon Stewart. As we head into yet another maelstrom of election nuttiness, his voice and vigilance for picking up on the nonsense will be missed. Here’s hoping we’ve all been good students to avoid learning some painful lessons.