Perhaps a better question would be is online trading ready for you? Based on my experience you might not think so. Granted a sample size of one is hardly a statistical tour de force but my foray into online trading demonstrates some of the pitfalls.
Ever since online trading and online banking services became available they have intrigued me. As an accountant I understand the allure of being able to review accounts online and as a banking customer I like the incredible convenience of being able to move money between accounts with a few clicks of the mouse. No trip the bank (which never keeps the same hours as I do), no parking hassles, no lines. It's great.
But I also understand all too well that the World Wide Web is definitely NOT designed to do the things we're all doing on it. Sales transactions, banking transactions, buying or selling stocks, and these types of transactions really require what's called a persistent connection. The Web does not support persistent connections and instead uses cookies (see TNPC #2.08) as a kludge to work around this problem.
What prompted my sojourn into online banking and trading was my recent move. In cleaning out the family files I came across some stock certificates from long ago and once settled in the new house I thought I'd use the online service E*Trade to sell them. Despite e-this and e-that the new economy still relies a lot on old-economy things like snail mail and the telephone. To open an E*Trade account I found that I could not do so online even though I had an online bank account with a bank that was "partnered" with E*Trade for electronic transfers. So I had to mail E*Trade a check. Actually, I had to fill out the E*Trade online sign up form, which I then had to printout and physically mail to them with my check. They wanted my signature on the dotted line.
Once the account was finally set up I called E*Trade to make sure I handled getting the stock for which I had the physical shares transferred correctly. I read them all the information and filled out the certificate as instructed over the phone and mailed that in to E*Trade too.
And a week or 10 days later the stock showed up in my online account. But when I tried to sell it I got the uninformative message that my trade "failed" and that I should call customer service. I call and was informed that this happens sometimes and that the company had put a "hold" on my shares but for $75 E*Trade would be happy to research it for me unless I wanted to call the company in Germany myself and see what was going on. I declined on both counts and asked to speak to the supervisor. After some shuffling around I spoke with someone at E*Trade who was able to determine that it was E*Trade that put a hold on the stock.
Seems that I did not fill out the back of the certificate correctly and I would have to send them a signed, notarized letter after which, in a week or 10 days, I could trade the stock. The wheels of e-commerce turn slowly apparently and I'm still waiting for the hold to be released some 15 days later.
Meanwhile, I decided to try to transfer some cash from my online banking institution (who you will remember is listed as a bank that E*Trade supports for money transfers). I fill out the form, which once again I have to print out and mail in. I wait the obligatory week or 10 days and noticed one day that when I clicked on the transfer option for my E*Trade it actually worked instead of telling me I wasn't eligible for that service. You'd think that E*Trade would have heard of email to let me know that I could now transfer funds, but I digress. I transferred a few dollars to see how it works. You fill out the form, review the details, confirm the transfer, and receive a confirmation that in 2 to 3 business days (depending on the time of day you make the transfer) the funds will be available. So far so good. I try again with a slightly higher amount only this time I don't get to the confirmation page.
The next day I'm overdrawn at my online bank. Seems that E*Trade make the transfer all right, in fact they made it twice. I call E*Trade and they offer to call my bank for me and straighten out the problem. I sit on hold for a while and am told that I'll have to call my bank myself. My bank is not perturbed at all and they say they would have refused the second transfer anyway since it overdraws the account. But it takes 24 hours or so for their Web site to reflect the adjustments so I shouldn't let the minus balance bother me. Un-huh. A day later they've straighten out the problem with my account balance and only charge me $15 for refusing the second transfer.
Despite all this I actually worked up the gumption to place a trade with E*Trade just to give them a chance to redeem themselves. I placed the order at 11:55 AM on April 25th. As of 6:00PM April 26th the trade order has not been filled. This was for a commonly traded stock and E*Trade's explanation is that "sometimes this happens."
This story serves to illustrate that while the Web and the Internet have indeed changed our lives, there's still a lot about the technology that's still sorely lacking. I don't think it's time to tear down the brick and mortar banks and brokerage houses just yet.
