Ustocktrade Review – A Unique Approach to Stock Trading

About UStockTrade

Ustocktrade is an online peer-to-peer alternative trading system (ATS), a non-exchange trading venue registered with the U.S. Securities and Exchange Commission (SEC). This means it doesn’t technically operate as a broker but a platform/facilitator that matches buyers and sellers of a stock within the retail member network. The platform only provides trading of stocks, exchange-traded-funds (ETFs) and exchange-traded-notes (ETNs).

A Retail Dark Pool

Just as electronic communications networks (ECNs) like Island (ISLD) and Archipelago (ARCA) were developed to facilitate peer-to-peer trades bypassing market makers and specialists, Ustocktrade embodies the same concept and makes it happen seamlessly with cash, not margin, accounts. It operates like a retail dark pool.

Bypassing the PDT Rule

Ustocktrade eliminates brokers and clearinghouses enabling direct peer-to-peer transactions resulting in same-day trade settlements (T+0). This allows cash accounts to use sales proceeds on the same day instead of waiting two-days to clear before re-deploying the funds (T+2). Similar to brokers like SureTrader and Tradezero, this helps traders avoid the Pattern Daytrading Rule (PDT), which requires a minimum of $25,000 to make more than three round trip trades within a rolling five business day period. Cash accounts are not applicable to the PDT rule. Ustocktrade is a solution that allows small accounts to make unlimited day trades in the cash account. On the downside, without margin, there is no ability to short-sell on the platform.

The Cainan Foundation and UstockTrade

Ustocktrade was the brainchild of IT entrepreneur Tony Weeresinghe with a compelling humanitarian social impact theme. Ustocktrade was formed to financially support the Cainan Foundation, a non-profit organization helping impoverished children by building schools and providing educational resources.

Ustocktrade Commissions and Fees

The fees are straightforward. There is a $1 per month membership fee and $1 per trade fee on buys. Sells are $1 plus any regulatory fees. Since there are no ECNs or market makers, there are no additional pass-through fees. Wire transfers both in and out are $6.

Minimum Account: There are no minimum account balances but there is a maximum of $10,000 on transfers. Accounts can only be funded with cash as there is no ability to transfer stocks you may already own. This can incur capital gains or losses if you choose to liquidate stock holdings to fund a Ustocktrade account.

Ustocktrade Platforms & Tools

Platform Options

Ustocktrade can be accessed via web on desktop, table or laptop and through the mobile app for both iOS and Android. The web version suits users who want more windows up simultaneously. The mobile app is naturally portable and convenient when away from the desk. The order window is simple with market or limit orders and real-time quotes. Fills are amazingly fast when the liquidity is there.

Ustocktrain Virtual Trading Platform

Users can practice on a demo simulator using virtual cash to kick the tires. The Ustocktrain demo is free for anyone who signs up to the network and comes with free real-time quotes. Fills are more realistic since there’s no “middlemen”.

Margin/Leverage

Ustocktrade doesn’t allow margin trading. This means no short-selling capabilities. However, the trade-off is the T-0 same day settlements which allow traders to redeploy capital/proceeds immediately on cash accounts, rather than must wait three days as dictated by regulations if trading through a brokerage.

Research Tools

No frills here. Ustocktrade should be considered mainly a transactional tool for order execution and portfolio management. Basic news for your stock can be accessed through the order window. Company notifications appear until Corporate Actions tab in the order window.

Portfolio Overviews

Ustocktrade provides three types of portfolio overviews with arrangeable table columns including last price, $/% price change, quantity, price paid and cost. The daily performance charts are useful for analyzing your trading results and progress visually. Unrealized Stock Portfolio reports the total market value of your portfolio. Realized Stock Portfolio provides a year-to-date accounting of profits and/or losses. You can click on any symbol to get comprehensive details on all trades executed year-to-date for that stock. The Taxable Portfolio provides a very useful accounting of year-to-date short term, long-term gains and wash sales (deferred-losses).

Candlestick charts were added in June 2018, but have no additional technical indicators for now. These charts are best used to gauge price action and history. Reversal candles like stars, hammers and doji can be tracked and multi-candle patterns like market structure highs and lows and three-line break. The platform is continually improving so users can expect more tools and upgrades moving forward.  

Customer Service

E-mail is the main support channel and is available around the clock. It would be nice to see Ustocktrade expand their support to include live chat and phone support as well.

Executions and Routing

There are no ECNs, brokers, market makers or specialists as would be found on a regular exchange. All bids and asks are provided by members of the network. Sometimes there may be a “Superuser”, deep-pocketed retail traders that may provide larger liquidity pools. However, they are not obligated to provide liquidity. While liquidity feels abundant for the large-gap and widely traded stocks, it can present liquidity problems with less popular stocks. All quotes are subject to correspond with the national best bid offer (NBBO) prices, so don’t expect to find any discounts when it comes to share pricing.

What Type of Trader Is Ustocktrade Best For

Ustocktrade is ideal for both traders and self-directed investors with smaller accounts ($10,000 or less). “Self-directed” should be emphasized here because the research tools are flimsy at best and require users to seek out more in-depth resources for better decision-making on trades. Since the PDT rule is moot (similar to CMEG), intra-day traders will appreciate the cheap commissions and same-day settlements.

Pros

• Unique retail dark pool concept empowers individual traders
• Same-day settlements frees traders from the shackles of PDT
• Very low fees at $1 per trade
• Multiple order window support through web access
• Cheap wire transfer fees at $6
• Rapidly increasing member network helps to improve liquidity

Cons

• No short-selling
• Limited trading instruments (IE: No options, FX or futures trading)