Is Thinkorswim Now Charging Fees On Hard-To-Borrow Stocks?

Posted by Timothy Sykes on Tue 23rd of Sep, 2008 05:12:26 PM

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A few readers have discovered the broker I love, use and recommend, Thinkorswim, is now charging fees on borrowing hard-to-borrow stocks. For a while I heard rumors of this, but like their decision to disallow shorting stocks under $3, I never gave it much thought cuz it turned out to be just talk.

But now if you search their FAQ HERE, you’ll see this passage:

In order to short a stock at thinkorswim, our clearing firm has to borrow it from someone i.e. another clearing firm who holds a long position to deliver to the buyer on the other side of your short sale. If you wish to short a stock that is in short supply because of volatility, small float, etc. there is an additional charge depending upon demand for that particular stock. Thinkorswim, Inc. passes that Hard to Borrow fee along to you from our clearing firm. This rate will vary based upon market rate to borrow the security requested. Again, this fee is passed on to you from our clearing firm. Sorry.

Just like the no shorting under $3, they’re saying it’s their clearing firm, Penson’s, new rule. But just like that $3 rule, for some reason, the few dozen traders with whom I’m in daily contact and I haven’t been affected…yet.

That’s right, we see no fees on our accounts–whether it’s calculated monthly or yearly, it depends on who you talk to. the few that have emailed me have been charged $12, $33, just stupid little numbers like that.

Who knows. Just the latest gray area in a niche known for gray area and a joke of an industry with constantly changing rules and regulations.

My advice: deal with it. It’s nice and easy to reserve shares of hard-to-borrow stocks every day, but if you’re gonna truly stick to only playing the most volatile of the bunch and waiting for technically confirmed breakouts and breakdowns, you’re not gonna be trading more than a few times/month so paying fees on shares you don’t use is just a waste.

That said, even when I do reserve hard-to-borrow shares, it’s only for a day or two in a row so the fees, if they ever do charge me, would probly be negligble (I am up $14k+ so even a few hundred in fees would still have made it worth my while).

This obviously isn’t the best news, but it isn’t the worst either because my PennyStocking strategy works so well that its promotion made it inevitable that it would become popular and there’d be consequences to that popularity.

So go on and get angry at me, but then again, be happy I’m even blogging cuz without this strategy, you’d still be stuck with shitty odds and wondering just how to turn a small account into a larger one. It’s the gift and the curse people…

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Related Reading

Thinkorswim Just Got Acquired By TD Ameritrade For $606 Million, What Now January 9, 2009
The Exact Process By Which It’s Possible To Short Sell Hard To Borrow Stocks March 10, 2009
How To Reserve Shares To Short On Hard To Borrow Stocks June 1, 2008

Benny

Sup Tim, I was looking at this new broker and heard some good reviews about them. Zecco.com Have you ever heard of them? and If so what do you think about this broker? They seem to have a good setup offering 10 free stock trades per month for $0.

adam

Zeccos interface is super slow and all web based, use TOS or IB.

Also never been charged a hard to borrow fee from TOS

marmaladeskies

zecco is shit, unfortunately, because they have a good commission structure. i've just heard so much garbage about their service and execution that i would never fuck with it.

NOVA

has anyone been charged? how much is it? are you still charged if you dont use your borrows?

jerry zoom

zecco and TOS uses the same clearing firm: Penson Financial Services

Reaper

Still can't access the new TimAlerts. Is this enough whining for you Timmay?

cokers

cocky eh?

bobbymapp

Zecco is fine for buying, not good for shorting. Actually, I've haven't been back to Zecco since being restricted for PDT. TOS is best I've used so far.

loser

tims performance is a crock.

Lets say I manage money for a living. lets say Tim is my client.
he has 1,500,000 broken down as follows:

lets say Tim has 300,000 in cash. 200,000 in t-bills. and 850,000 in diversified vanguard mutual funds. YTD the cash/t-bills are up 2.5% and his vanguard funds are down 15%.

In addition to this, Tim and I implement an alternative strategy. We put 10% of his liquid net worth, $150,000, as follows:

$75,000 in commodities, up 20%
$50,000 in a market neutral fund, up 10%
$25,000 in short selling stocks, up 110%

as a manager of Tims money, would it be fair for me to market myself and talk about the performance of his $150,000 account only? Of course not. It would be misleading, manipulative and probably illegal.

But since Tim is not a money manager or an investment company, he can talk about being up 116%, but when you weight the return of this account with his total liquid net worth, he is probably down year to date on his investments. Sorry, Timmy, you cannot include your BLOG money in on your investment return, as that is EARNED income.

If you are truly OPEN for all to see, as you repeatedly say, show us all your investments and calculate the return. Dinner at your favorite sushi restaurant says you won't do it.

loser

Timmy, also, your followers are a bunch of non-producing sallies.

they supposedly can make 100% of your strat, but complain about a POTENTIAL $30 fee on their brokerage account.

hysterical. that must drive you NUTS.

Timothy Sykes

LOL, who says I have $1.5mil? guy, i just have about $600k to my name, most of which is money market, CDs, swiss frances, PRPFX and VWELX. i never said this strategy was scalable, but its easy to make 100% on your money each year if your account is between $2k and $500k. that is valuable.

u forget 90% of traders lose $, u forget that 99.9% of trading techers/gurus/newsletters are frauds/underperformers. i can do this in my sleep, perfection isn't required, just solid/honest information

Timothy Sykes

and fees add up...those who arent concerned with fees are overspenders, not my peeps!

AP

Interactive Brokers shows 350,000 shares of SIL available to short, but I can't get filled on a short.. hmm.

loser

never said you did.

that was a hypothetical example.

wow. 4% of your account is up 116%. outstanding. you can't (at least, honest/solid information traders can't), segragate accounts and claim the best performer as your total return.

this has nothing to do with your strat being scalable. I know you've save it isn't. Just becasue your honest in saying you cannot scale this up, doesn't mean you can say the performance of a $20,000 account represents the performance of your $600,000.

Timothy Sykes

guy, i'm not trading as someone who has $600k to is name, i'm trading like somebody worth $12k...somebody worth $12k at the beginning of 2008 would be more than happy to be worth $27k right now. u friggin dumb haters dont understand that millions of people would love ot know how to make a few easy thousand...thats what pennystocking is and since it only costs $300, its a deal:

http://www.timothysykes.com/dvd

Reaper

Yeah, I like how he says that you are managing that $600k when you clearly put it in passive investments. I bet Victor Niederhoffer wishes he'd done that with some of his money.

BTW, I had access to the new TimAlerts server this morning and now I don't. I know there isn't much you can do about that now, but that is really annoying.

StockMan

Hey Tim. How come you never post on TheLion.com anymore?

loser

so your saying someone worth $12k should go buy your DVD for $300 (2.5% of networth), than pay $360/year (3% of networth) and trade like you suggest? that is worse than farsing your rate of return. youwould be better served by saying this strat is for someone worth 250k+ who wants to take 10-15% of networth and risk to to make 100%. now you are saying someone whould throw everything they have on the line and go for it.

great advice. one bad trade and they could lose 25-50% of what they have accumulated.

wow. honest. ethical. you should be proud.

Timothy Sykes

Stockman, cuz all my alerts are for premium members only as are my premarket watchlists...when u know u got something of value, u dont give it away free :)

Timothy Sykes

new post:

http://timothysykes.com/2008/09/24/11-hot-stock...

Timothy Sykes

correct, if someone cant risk losing $300 on a product that might or might nto help them, they shouldnt be trading....moreover other trading DVDs by non-traders, are $2k-$5k...do some research hater before u make assumptions...Ps just made $800 today, lots of subscribers made $400-$2k right alongside with me

loser

.13 %. good job.

Timothy Sykes

loser, as i've proven, these small gains ad up..they're perfect for poor people!

Jeff C

Timmay, love when you call people guy...love that shit....btw I can't l need your admin to e-mail over my TimAlerts log-in so I can chat in there, I've tried e-mailing already...I'm still in SIL...late

Jeff C

Thanks Pallian! Takin Care of Business as usual...

loser

reaper, I don’t agree.

I don't care where his money is passive, active, indexed or up his ass.

If he started the year at $600,000, adds 100,000 due to his blogging income, and ends the year at $700,000 he lost money. I dont give a shit how much his short account is up. The fact that you do proves your ignorance on this subject. You know nothing.

Emotion is such a huge part of this. Don't tell me he feels the same thing when shorting $3,000 worth of stock as some guy who has 13,000 to his name. It is impossible. Timmy forgets to account for how his followers feel when making the same moves he does. Than he calls them bitches for not parting with $300, when it could mean the difference between little Johnny getting a b-day gift this month. But, he says it's because he's honest, yada yada yada.

He knows how it feels to lose 1/3 of his money. He ain't ever going have that feeling again. The real reason he went back to his roots, he may not even realize that. How can he lose it if he's only playing with 12,500? He felt it and never wants to feel it again.

the sad part about this whole conversation? I love Tim.

He is a marketing genius. Very smart man. However, he is no different than the guy selling videos on how to buy foreclosed properties for $672 and than selling them for $150,000.

His selling a dream. His selling a result.

If you think he is selling a process that is going to give you MEANINGFULL returns, I've got a bridge to sell you.

He's not going to pay off your mortgage, he's not going to send your kids to college, he's not going to put you through retirement.

You, however, will do all of that for him.

Good day and good luck to you all.

Timothy Sykes

your right pennystocking wont pay off your mortage, but it'll help u make mortgage payments :) that is worth 300 easy...not to mention its returnable/sellable on ebay so the risk is like 60...get your facts right dude, then come at me

loser

PA-lease.

you ain't up 116%, you know it. deal with it. truth hurts.

I got props to the guy who IS up that. ain't no way you'll ever risk what it takes to make a true 115% the rest of your life. you learned that the first go around. Frist go around, you were 20 and in college...had no clue. made a shit load than lost 1/3.

you're smarter now. you'll NEVER risk what it takes to make a TRUE 116%, yet you ask your lemmings to risk it all.

maybe you dont realize it. this whole going "back to your roots" thing just means you dont want to deal with the emotions of losing 1/3 of it again.

It's OK. no one does. Not sure why you're asking other poeple to risk it all.

i'm done here. anyways, not trying to convince you this wont work.....you already know. you took 600,000, put it somewhere safe...somewhere a pussy value investor would put it.

yep. you've already learned at some point, it comes back to reality. you learned the only way I'm gonna get rich off this is to teach others how to do it for a fee. it seems to be working, which is why I like you.

Timothy Sykes

you're right, i'm not up 116%, i'm up 127%..i dont write about savings, just trading. focus haterson, focus

loser

ok, you're up 127%. congrats.

hope to see you in NYC someday. i'll buy you a drink.

Timothy Sykes

cool, i like free drinks :)

shane

LOL.......love the loving msgs between loser and tim.........tim I believe what you are doing is profitable BUT some key factors for all to consider is
1) when shorting, good luck getting those shares, even if you try to reserve it
2) the spreads can be brutal

cheers all

Paul

I started seeing short stock fees on March 18th. They show up daily, and when I calculate it out it amounts to an annualized cost of between 2% and 8% of the value of the short. For a day trader that might be negligible but since I take 3-12 month positions it certainly adds up. Here's the kicker I recently closed all my short positions except QQQQ and SMH and I'm still getting dinged in the 3% annualized range. Obviously those names are not hard to borrow!

Can anyone else confirm whether you started seeing fees on March 18th?

Bozak

TOS now charges short stock fees for all shorts held overnight, not just the hard to borrow stocks. The interest rates for the stocks I am shorting range from 2.5% to 9%. They also won't tell you ahead of time how much the interest rate will be, it is all day after charges. To get the list of rates you have to email and ask, nothing available in the software.
Tim, what is your take on this? I have used TOS for about a year now, but these fees are really starting to add up. Do you know how the TOS short stock interest fees compare to IB?

Timothy Sykes

I've paid $8 in fees over 6 months, its irrelevant

Paul

Tim ... both Bozak and I are seeing interest charges in the 2%-9% range (in today's 0.2% (3Mo) T-Bill environment that's quite a hurdle rate for shorting easy to borrow stocks. If only trade intraday and don't hold shorts overnight or of significant size that's a different story.

It really changes the whole equation if you want to short a stock or industry that you expect to trend down over the next 3-6 months...

Paul

FWIW, I stopped getting hit with this short stock fee as of 6/10/09. Not sure why but hope it's gone now!

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Who Is Timothy Sykes And Why Should I Care?

See Tim's full bio HERE. Tim turned a few thousand dollars into a few million by taking small gains time after time on hundreds of volatile penny stocks, discovering that his trading strategy, while consistently successful, works best for those with smaller accounts.

Determined to teach others this PennyStocking trading strategy (learn more HERE), he went back to his original $12,415 roots (already $58,000+ even though the stock market has crashed) to show everyone how to turn thousands into millions, even while having a life (somewhat) and making plenty of mistakes. Currently he is the #1 ranked trader out of 25,000+ on Covestor)

How Can I Consistently Make Money In The Stock Market?

Hard work, Determination and Know How.

Hard work to learn how the greatly misunderstood niche of penny stocks provides opportunities every now and then on which you should pounce.

Determination to seek those probable profits out and know how in order to actually profit from them.

Long story short, wait for stocks that are extremely volatile - for whatever reason - and then aim to take small profits (between 10 and 50% within a few hours, days or weeks) here and there, either from betting on higher or lower prices (yes, you can make $ betting on lower prices, it's called Shortstocking (learn more HERE).

Why Penny Stocks?

As Tim explains in several ALL-NEW instructional DVDs (see them HERE) and in over 2000+ blog posts, penny stocks are the most hyped and corrupt niche in the entire investment world. These two qualities make them the easiest to profit from (legally) because the vast majority of people who play penny stocks are suckers and all-around ignorant people. If you have any intelligence whatsoever, you have a clear advantage and it's like playing basketball against mental midgets.

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TIM Trades

View All

Date	Stock	Buy	Sell	Net
Nov 6	QXM	$4.31	$4.80	$1936
Nov 4	COT	$8.66	$8.88	$642
Nov 4	QXM	$4.61	$4.89	$822
Oct 30	DDRX	$25.70	$26.53	$812
Oct 29	CTDC	$4.00	$4.42	$781
Oct 26	AWSL	$3.24	$4.10	$2516
Oct 23	RODM	$5.27	$5.23	$301
Oct 22	AMLM	$2.69	$2.97	$820
Oct 22	USEG	$6.12	$6.09	$85
Oct 20	CBOU	$8.93	$9.06	$243
Oct 16	VRMLQ	$16.79	$18.65	$2773
Oct 13	YONG	$11.05	$11.66	$1202
Oct 13	NPHC	$0.59	$0.71	$583
Oct 12	IMGG	$0.60	$0.70	$682
Oct 9	ZAGG	$5.50	$6.10	$2380
Oct 7	GVBP	$0.03	$0.27	$702
Oct 1	NPHC	$0.70	$0.85	$1482

Total: $92,304 (644%)