Trading Stocks Without a Wire


Ten years ago, professional stock trader Stephen Vita, never one to hang around the office, would go on bike rides around New York City carrying a book-size box with an antenna sticking out and stock tickers flashing across a display screen. "People would come up to me asking what it was," Vita says. "They thought I was nuts."

Worse yet, this stock-quote-serving device, called QuoTrek, liked to show how temperamental it was by refusing to work behind certain buildings. Whenever that happened, Vita had to pedal fast to reconnect to the service before he missed a big market movement. "It was ancient times in terms of wireless technology," Vita says.

Today, Vita, now a hedge-fund manager in Pittsburgh, receives his QuoTrek feed on his BlackBerry personal digital assistant (PDA). This month, the service has even begun allowing investors to execute trades over their mobile devices, right from the QuoTrek interface.

THE ACTIVE MINORITY. Welcome to stock trading's wireless future. Tens of thousands of Wi-Fi Internet access points with broadband connectivity now allow globe-trotters such as Vita, who travels 30% of the time, to sign onto their brokerage accounts on laptops and PDAs at hotels, airports, and cafés. "It's so much easier now to be in touch with the market," says Vita. And that, combined with lower costs and improved security, is precisely why the popularity of trading via wireless is expected to soon skyrocket.

Though exact numbers are hard to come by, this upswing is clearly under way. Today at discount brokerage Charles Schwab (SCH), fewer than 10% of trades are completed wirelessly, says Andrew Salesky, senior vice-president for e-business at San Francisco-based Schwab. Still, that's about three times higher than the figure for 2001, when Schwab launched the service. And Schwab forecasts that it'll keep increasing in the coming years.

It's not your average investor -- an airline pilot or a lawyer trading shares a few nights a month -- spearheading this move. It's active, mostly professional and big-bucks traders. Take thinkorswim.com, an online boutique brokerage that specializes in stock-options trading. It has about 15,000 retail customers, and about 2% of them perform wireless trades. This figure is expected to double or triple, to 5% to 7%, in the next year, says thinkorswim.com CEO Tom Sosnoff.

NEVER CLOSING. "This is not for everyone, but that doesn't mean this service won't be big," says Chuck Thompson, president of eSignal, a division of tech researcher IDC (IDC) that provides real-time market and stock data, including the QuoTrek service. In fact, eSignal expects its wireless service to be one of its biggest sellers in the coming years.

Several factors are behind the increased reliance on wireless. First, trading is increasingly becoming a 24-hour-a-day job, and wireless access supports this flexibility. Those who invest in commodities, for example, often have to stay up late or get up early to follow the Asian and European markets. Electronic trader Archipelago (AX), which has a deal to merge with the New York Stock Exchange, is talking of opening at 4 a.m. "People just can't sit in front of a quote terminal 24 hours a day," says Thompson.

Moreover, wireless security -- once a big concern for many traders -- has improved. This month, FactSet Research Systems (FDS), a financial research concern, started a new service that allows it to shut down users' accounts if their devices are stolen. Many FactSet customers tend to create their own customized tables and data analyses based on the company's research, which they store in their accounts on their devices. The information can affect markets, so it's crucial to prevent it from getting into the wrong hands.

MORE ROBUST. Brokerage E*Trade (ET) has gone even further, introducing security tokens from tech-security specialist RSA Security (RSAS). The size and look of a large key, each token generates a new six-digit code every 60 seconds, which users have to punch in, along with a password, to log into their accounts. While these tokens have to be worn on a key chain, RSA also makes software-based tokens that can be downloaded onto a cell phone to perform the same function.

Also pushing the increased use of wireless technologies in trading: dramatically lowered costs. QuoTrek now costs $25 to $50 per month, less than half of what it cost when Vita was lugging his trading box around New York. And with increased memory and computing power, today's cell phones are as powerful as the PCs of a decade ago. Launched 18 months ago, thinkorswim's wireless service lets traders execute complex trades. Whereas before you would have to buy an option and then fill out all of the fields again to sell an option, a user now can execute several trades simultaneously.

thinkorswim also allows users to listen to real-time audio commentary from a trader while simultaneously buying or selling shares. "Until recently, we couldn't get enough memory for these applications to work," says Sosnoff. "We can do pretty much anything now."

REMAINING CHALLENGES. Ultimately, wireless technology improvements have pushed these developments. Sure, an occasional dead spot is still a fact of life. But Verizon Wireless, for one, already offers digital subscriber line-like coverage in some cities. Data download and upload speeds have skyrocketed elsewhere as well. Even just a year ago, traders experienced 15-second delays in getting stock quotes, but services like QuoTrek now offer real-time streaming, with the ability to see trades as they occur.

Many more capabilities are in the works. True, much still needs to happen for wireless trading to go mainstream, from improvements in cell networks to further enhancements in end-user devices. Yet most of the technology to make wireless trading less of a torture and more of a convenience is here now. And it won't be long before more investors give it a try. By Olga Kharif in Portland, Ore.


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