Trading Brokerages – Why they Shrink and Go Out of Business!
Intro:
The markets have changed, The players have changed. The investing and day trading game have all change to the detriment of small and large brokerage houses alike. And you wonder why trading volume is off no longer; it’s all about change. And for those who refuse to change with the times – you lose, yes, you will get you’re a$$ kicked big time.
Traders Magazine Online News, December 27, 2012
John D’Antona Jr.
“A three-year decline in trading volume and investors’ continued migration to computer-driven and algorithmic trading may mean the end of an iconic fixture on Wall Street: the small brokerage firm.”
“…the relentless forces of dropping trading volume, especially in U.S. equities, and the loss of business to more popular electronic trading platforms have contributed to the continual grinding down of firms’ capital base, choking off many of these smaller firms.”
“The average daily volume for U.S. equities has fallen 36 percent since 2009, and volume hit just 6 billion shares traded in the third quarter, the lowest level since the onset of the financial crisis.”
“Worse yet from the brokers’ perspective is the toll all this is taking on commissions. Indeed, the average fee to trade a share of stock fell 31 percent over the past three years, according to Investment Technology Group.”
“It is definitely a challenge for some of the smaller brokerages, especially those without the scale to get them through the tougher times,” said Packy Jones, chairman of JonesTrading Institutional Services LLC, a brokerage based in Westlake Village, Calif.
Packy Jones
Credit: TradersMagazine.com
My comments:
Volume may be down, but as long as companies have stocks there will always be opportunities to day trade individual stocks for big money wins.
The key is learning to trade the new day trading game, but not on your own. You need a NEW School day trading coach.
As far as investing is concerned, that game, in my opinion, carries with it unacceptable risks – particularly risk of major price action against your position, while holding overnight.
This is when any number of market, news, company performance changes, and big money trading tricksters can pop the price against you 5%, 10%, 20%, seemingly in a flash, no matter your stops, especially your stops getting triggered post normal market hours, or get jumped over completely – getting you killed, when least expected.
Don’t even think of holding past 4 pm!
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