BROKERAGEAMERICA.COM
In line with the dotcom mania that brought you online trading, BrokerageAmerica (www. brokerageamerica.com) seeks to provide an even more streamlined e-trading service. Nowadays, various companies provide a whole slew of services: floor access, direct access, online broker access; so how, you ask, can it possibly get simpler?
BrokerageAmerica believes it can eliminate the middleman. While current online trading companies can provide brokerage services at a discount, customers must still go through a broker to get to the market maker. On the other hand, BrokerageAmerica is set up simultaneously as a broker and market maker. You get the benefits of direct customer-to-dealer trading. By "providing liquidity through large-scale market-making operations" as the website claims, the traditional give-and-take among the market maker, broker, and customer is gone. More important, so is the broker's commission.
BrokerageAmerica.com seeks to eliminate the middleman -- the broker.
WHEN THREE BECOME TWOBrokerageAmerica's concept is innovative -- but not new. Direct access has existed in other business models, though perhaps in more mundane forms. For example, your local community probably has a factory clothing outlet somewhere, or a furniture warehouse, maybe even a diamond-direct dealership. All these businesses use the concept of direct trade. Whether the "middleman" is a nice showroom, a mall, or your broker, their absence results in the same thing: cheaper buys and savings for you.
To get a clearer idea of BrokerageAmerica's business model, you need only go to the icon titled How We're Different on its homepage. There, you'll find flow diagrams of trade and a savings calculator, where you can type in your trade information and calculate your potential savings.
The company is the brainchild of a group of veteran Wall Street executives. They list their bios, licenses, and positions in the Who Are We? section of the website. The execs also have a section entitled How We Make Money (this is the way Wall Street proves legitimacy). There, they describe the role they play as market maker and the differential between the bid and offer prices that constitute their profit.
The rest of the website is divided into two broad areas: investor resources and account services. In investor resources, you will find exactly that -- resources of every kind. There are charts, a glossary, help manuals, and analysis, as well as news and links to real-time market information. The area is well structured and handy for quick-referencing. For those who have decided to take the leap, the Trade Now icon leads you to your account login. Existing clients can access with their login prompt and new users follow the general online application. BrokerageAmerica also sweetens the deal with benefits such as commission-free market and stop orders, flat fees on trades, and low-commission mutual funds.
SUMMARY
While not as flashy as some sites, the BrokerageAmerica homepage gets the job done. The business concept is clear and the services application is readily accessible. Little touches like the savings calculator and the comparison tables are helpful for making an informed decision. If you'd like to take advantage of this innovative business model, give BrokerageAmerica.com a try.-- Amy Wu
WALLSTREETREALITY.COM
One of the biggest complaints that investors make about analyst ratings is that they rarely give sell recommendations. But those who trade actively in the markets know that a sell recommendation is just as important as a buy.
The folks at Wallstreetreality.com have put a tremendous amount of work -- I say "tremendous" because more than six months have elapsed since the website's scheduled launch date -- into creating a system that provides not only buy signals but also sell signals so you can make timely decisions. The research behind the creation of this system has --without a doubt -- a technical bent to it, making it a quantitative and objective model. A quick glance at their home page confirms this suspicion (Figure 1).
Nor is the analysis limited to stocks. It also includes commodities, currencies, US credit markets, indices, and Dow Jones industry groups.FIGURE 1: Here's wallstreetreality.com Wallstreetreality.com contains a unique feature called the WSR Market Timer, which analyzes trends within minor, intermediate, and major cycles. They also combine these cycles into one cycle that is considered to be more responsive to trend changes. From this they create the up and down rankings and then select stocks to either add to or delete from their model portfolio. The returns of the securities in the model portfolio are displayed -- and needless to say, the returns on the trades are nothing to complain about.
In the 30-day free trial (premium service costs $49.95 per month or $495 per year plus additional fees for consultations), you get a daily commentary of the US stock market, a weekly analysis of industry groups, WSR's up and down rankings on a weekly basis, and weekly commentaries on commodities and currencies. You also get a weekly update on idea stocks and a look at the WSR model portfolio. That's a lot of reading, and if you're like me you may prefer to digest the content through a visual presentation.
Fortunately, Wallstreetreality.com has addressed this need by incorporating action charts similar to the one displayed in Figure 2. This particular chart displays the minor cycle of the British pound continuous contract. You can see the buy and sell signals, price channels, and the cumulative volume flow line. The subchart at the bottom (displayed as a histogram) is the WSR market timer. It is this histogram that triggers the buy and sell arrows on the price chart. The rules for the various market timer components are all stated on the website. You can also get the action charts for any security, just in case you wish to consider any that are not in the WSR model portfolio.
FIGURE 2: ACTION CHARTS. Here, you see the minor cycle of the British pound continuous contract.
SUMMARYThe content certainly is of high quality, and it's evident that the WSR analysts know what they are talking about. They present a very objective analysis of the market. This is not a site for either the active trader or buy-and-hold investor; it's more suitable for the position trader, and if you are, you'll certainly find the results of the system attractive. But keep in mind that when you're following a trading system, especially one that was created by someone else, you have to follow it religiously if you want to reap the benefits.
-- Jayanthi Gopalakrishnan, Technical Editor
TRADERSACCOUNTING.COM
For even the most experienced trader, filing tax returns can be a harrowing ordeal. So what's worse than tracking those capital gains and losses, wash sales, and corporate actions? Perhaps it's discovering that you're going to be paying more than 50% tax on your W-2 income and then that much more on every aftertax short-term trade.
TradersAccounting.com refers to this as "criminal," and the powers that be there believe they can help you. Armed with an unnamed former IRS agent, TradersAccounting.com offers four services to combat overtaxing: accounting and tax preparation, entity structuring (creating a new legal device to reduce taxes), tax reduction planning, and trader status analysis.
For those of you who like to tackle those Schedule Ds on your own, TradersAccounting.com also offers plenty of online trading courses available for a fee. The topics offered range from common seminars such as "Trading as a business: Which entity is right for you?" to tempting titles such as "How to trade tax-tree." If you don't want to pay the fees, there are some free deals you can take advantage of. The homepage offers a TradeTracker spreadsheet that lets you keep tabs on your investing transactions. If you provide your tax information, TradersAccounting.com will also give you a personal tax reduction report. The website's Q&A section is also very helpful; there is information on Keoghs, corporations, and structuring that any trader can use.
TradersAccounting offers services to combat overtaxing.
TRADERSACCOUNTING.COMAccounting and tax preparation: If you choose this service, TradersAccounting.com first conducts a new-client strategy session and orientation. They will review your past tax returns and financial history and help you organize your current status. They will also make financial projections and show you how to use products such as TradeTracker. Thereafter, you will be expected to give quarterly updates on your finances in preparation for tax return filing. While this service is a fairly generic financial consultation and accounting, for traders, these services can be more germane to your finances than normal filing services. Entity structuring: Oftentimes, the tax code is very restrictive in terms of what you can deduct as investor expenses. For those who are active traders, deduction limitations can severely drain your finances. By setting up an entity structure such as a limited partnership or a corporation, you have far more flexibility in your deductions. Suppose you've spent money on trading equipment, seminars, office supplies. As an entity structure whose business is money management, these costs are all deductible. TradersAccounting will help you with details such as creating separate entities that can lower your tax bracket as well as filling out those nasty SS-4 forms. Tax reduction planning: Traders- Accounting's tax reduction planning consists primarily of the creation of entity structures. In addition, the website offers plenty of useful little gems of advice (for instance, "Write off your margin account interest to offset the income you earn from your investments, such as interest, dividends, short-term capital gains, and the like") that most traders aren't aware of, so you pay no more than the legal minimum. Trader status analysis: Full-time traders and part-time traders who make several trades per day are in luck. The Irs has a preferred filing status that allows you to deduct all investor expenses. If you qualify, TradersAccounting.com can also show you how to exempt yourself from the wash-sale rule. These "mark-to-market" traders can buy and sell on the last day of the year; at the beginning of the next year, they will be able to start the new year without realized gains or losses. This service identifies whether you fit under the legal terms that define "trader" and gives you the website benefits that come with the status. OPTION MONEY
Option Money is a portfolio management and tracking system also offered on the TradersAccounting.com website. You can use the system to keep track of stocks, options, and mutual funds. Option Money allows you to create stock and option strategies, analyze risk, and calculate your short- and long-term gains/losses. You also have access to a year-end Schedule D form so you no longer need to fill one out in a panicked rush on April 14, and you have access to updates too. Option Money also provides information on: average buy/sell, interest earnings, dividend earnings, splits, realized and unrealized gains.
Not only that, the website contains links to GainsKeeper.com, which provides a similar service with GainsTracker and GainsAdvisor. These services provide tracking of corporate actions such as stock splits, mergers, liquidation, and spinoffs (see the July 2001 STOCKS & COMMODITIES for our GainsKeeper.com review).
SUMMARY
If you plan to use any of these services, they are readily accessible on the homepage. And even if you don't, the Q&A and services information portion of the website can provide you with some new knowledge about tax reduction. The website also has free downloads for tracking software and online registration for seminars. In all? TradersAccounting.com will definitely give you a better perspective of where you will stand come April 15.
Amy Wu is a student at Princeton University, majoring in economics and financial engineering.
Originally published in the September 2001 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2001, Technical Analysis, Inc. Return to Table of Contents
