63 ms·

Ask HN: How could I sell stock online

5 points by xaevir 16y ago

I realize the selling of stock is highly regulated. However, is it possible to use an existing broker's api? I am thinking something like paypal but for stocks? If thats not possible, is there some other way to do this without incurring more costs than a startup could handle?

veyron 16y ago
IB: http://interactivebrokers.com/ http://interactivebrokers.com/ they have matlab, java, etc. connectors You can also work with some of the larger banks and boutique firms, either in a DMA setting or routing through the exchange. Generally you need 100-250 to get that solution going, and you need to use FIX or the exchange proprietary protocols (e.g ITCH/OUCH for nasdaq)
- xaevir 16y ago
  Could you list one of the larger banks or boutique firms that allow this?
- xaevir 16y ago
  Or, better yet, you just taught me a new term called DMA which I can now google and get to understand better. Are there other terms I could be googling to find this solution?
  - veyron 16y ago
    I apologize for the jargon [I'm at work now and the markets dont close for another 100 minutes] -- I can give you a more detailed explanation later if you are interested.
    - xaevir 16y ago
      Thank you for being so kind while the market is still open. I am researching DMA now. If I have questions its great to know that I can get some guidance from you.
    - xaevir 16y ago
      I am not sure DMA is my best route (not to mention 10k min balance to start for Interactive Brokers). So if its ok with you, I will try to explain what I would like to do and maybe you can point me in a direction. I would like to create a game that teaches beginner investors how to invest with real money by looking at a company's strategy and basic financial data. To do this, I would like to use the otc market and about 50 companies that I will provide analysis on. I would like the transaction cost for the trades to be low, as low as possible to reduce barriers to entry in playing the game. So maybe with 5 dollars you could buy stock and start playing. If it would make sense and be more cost effective, I would do non-realtime trades, and maybe just run a batch of orders once per night. Do you think DMA is my best move? Is there another option that might be better? Thank you.
      - veyron 16y ago
        I'm confused by your goal. If your goal is to "teach beginning investors how to invest", then why not set up a paper trading system? Basically, you can build a simulation engine that lets people try to trade with paper money. If your goal is to "teach beginning investors how to invest with real money", then you need to go through all kinds of legal hoops: - Lets say you are just giving investment advice (there are a bunch of companies that just generate trading signals). You need to pass a few Series tests in order to be legally authorized to give advise e.g. Series 7: http://www.finra.org/Industry/Compliance/Registration/QualificationsExams/RegisteredReps/P011051 http://www.finra.org/Industry/Compliance/Registration/Qualif... - Lets say you just want to be a broker, allowing others to trade through your platform. This is not a bad idea, so long as you can ensure that investors seed money before they start and that they dont short. There are a few snafu's regarding SIPC compliance (your operation will be considered an investment activity, and as such investors may expect protection). At the end of the day, though, you can find discount brokerages with low costs to trade. For example, Zecco Trading has $5 trades. So that gets back to the question: What are you teaching investors? If you are teaching general signals that can be implemented in an all-active strategy (i.e. if your signal is strong enough, you can afford a penny slippage costs), then DMA does not matter. You can do it with matlab hooked against IB or some other platform. If you are teaching specific execution mechanics (market making, rebate capture) then it makes no sense to run the system from a proprietary infrastructure [the investors have to be able to use it] unless you make it accessible for them to use after the learning period is over. In that case, see the discussion about brokerage. The main regulatory body is the Financial Industry Regulatory Authority (FINRA). Sucks that HN has no private messaging feature.
    - xaevir 16y ago
      I have a b.s. in finance and I still do not understand how to invest and years ago I was ripped off by a penny stock. I wanted to clean up the otc market by applying the broken window theory bc I believe it does not have to be as wild, and at the same time teach basic investing. I do not know it my desire to teach investing in realistic however. Anyway, if I were to do it, I would want to do it by emphasizing a qualitative factor, specifically the companies strategy for growth and then ratios that support this strategy.
    - xaevir 16y ago
      the reason I dont like paper trading systems is one bc without real money transacted, I cant make money and two bc I think having some skin in the game changes everything. But I realize after talking to you that this may be an unrealistic dream.
      - veyron 16y ago
        I have a lot of respect for the idealism underpinning your motivation. That's partially why I got into finance in the first place. You can also 1) charge for the advise. Something relatively small but accessible to most people. THAT would be a game changer :) 2) pitch the idea to fidelity or some other consumer facing brokerage. If you have good material, brokerage companies love it. 3) fake the trades. For example, Lehman Europe [LBIE] used to allow for infinite leverage by simulating each position (withdrawing money from the account when clients bought, and replenishing when they sold again). So you could do the following: - hold the positions that you advocate - when people want to "buy" the signal (buy when you say buy, sell when you say sell), then basically sell the exposure to their account - when people want to "sell" the signal (opposing you), then just take a naked position. Ostensibly, if your signals are good, then you should make money :) I would highly recommend learning about finance via a trading job or internship. There are a lot of subtleties involved. Not that you couldn't learn by reading a bunch of books, but finance is highly regulated and its important to understand all the ins and outs :)
      - veyron 16y ago
        I have a lot of respect for the idealism underpinning your motivation. That's partially why I got into finance in the first place. You can also 1) charge for the advise. Something relatively small but accessible to most people. THAT would be a game changer :) 2) pitch the idea to fidelity or some other consumer facing brokerage. If you have good material, brokerage companies love it. 3) fake the trades. For example, Lehman Europe [LBIE] used to allow for infinite leverage by simulating each position (withdrawing money from the account when clients bought, and replenishing when they sold again). So you could do the following: - hold the positions that you advocate - when people want to "buy" the signal (buy when you say buy, sell when you say sell), then basically sell the exposure to their account - when people want to "sell" the signal (opposing you), then just take a naked position. Ostensibly, if your signals are good, then you should make money :) I would highly recommend learning about finance via a trading job or internship. There are a lot of subtleties involved. Not that you couldn't learn by reading a bunch of books, but finance is highly regulated and its important to understand all the ins and outs :)
    - xaevir 16y ago
      > If you are teaching specific execution mechanics (market making, rebate capture) then it makes no sense to run the system from a proprietary infrastructure What you are mentioning above, seems too complex. If this concept were to grow more, I would focus on elements from Discounted Cash Flow.

5 points by xaevir 16y ago

veyron 16y ago

IB: http://interactivebrokers.com/ http://interactivebrokers.com/ they have matlab, java, etc. connectors You can also work with some of the larger banks and boutique firms, either in a DMA setting or routing through the exchange. Generally you need 100-250 to get that solution going, and you need to use FIX or the exchange proprietary protocols (e.g ITCH/OUCH for nasdaq)

xaevir 16y ago
Could you list one of the larger banks or boutique firms that allow this?
xaevir 16y ago
Or, better yet, you just taught me a new term called DMA which I can now google and get to understand better. Are there other terms I could be googling to find this solution?
- veyron 16y ago
  I apologize for the jargon [I'm at work now and the markets dont close for another 100 minutes] -- I can give you a more detailed explanation later if you are interested.
  - xaevir 16y ago
    Thank you for being so kind while the market is still open. I am researching DMA now. If I have questions its great to know that I can get some guidance from you.
  - xaevir 16y ago
    I am not sure DMA is my best route (not to mention 10k min balance to start for Interactive Brokers). So if its ok with you, I will try to explain what I would like to do and maybe you can point me in a direction. I would like to create a game that teaches beginner investors how to invest with real money by looking at a company's strategy and basic financial data. To do this, I would like to use the otc market and about 50 companies that I will provide analysis on. I would like the transaction cost for the trades to be low, as low as possible to reduce barriers to entry in playing the game. So maybe with 5 dollars you could buy stock and start playing. If it would make sense and be more cost effective, I would do non-realtime trades, and maybe just run a batch of orders once per night. Do you think DMA is my best move? Is there another option that might be better? Thank you.
    - veyron 16y ago
      I'm confused by your goal. If your goal is to "teach beginning investors how to invest", then why not set up a paper trading system? Basically, you can build a simulation engine that lets people try to trade with paper money. If your goal is to "teach beginning investors how to invest with real money", then you need to go through all kinds of legal hoops: - Lets say you are just giving investment advice (there are a bunch of companies that just generate trading signals). You need to pass a few Series tests in order to be legally authorized to give advise e.g. Series 7: http://www.finra.org/Industry/Compliance/Registration/QualificationsExams/RegisteredReps/P011051 http://www.finra.org/Industry/Compliance/Registration/Qualif... - Lets say you just want to be a broker, allowing others to trade through your platform. This is not a bad idea, so long as you can ensure that investors seed money before they start and that they dont short. There are a few snafu's regarding SIPC compliance (your operation will be considered an investment activity, and as such investors may expect protection). At the end of the day, though, you can find discount brokerages with low costs to trade. For example, Zecco Trading has $5 trades. So that gets back to the question: What are you teaching investors? If you are teaching general signals that can be implemented in an all-active strategy (i.e. if your signal is strong enough, you can afford a penny slippage costs), then DMA does not matter. You can do it with matlab hooked against IB or some other platform. If you are teaching specific execution mechanics (market making, rebate capture) then it makes no sense to run the system from a proprietary infrastructure [the investors have to be able to use it] unless you make it accessible for them to use after the learning period is over. In that case, see the discussion about brokerage. The main regulatory body is the Financial Industry Regulatory Authority (FINRA). Sucks that HN has no private messaging feature.
  - xaevir 16y ago
    I have a b.s. in finance and I still do not understand how to invest and years ago I was ripped off by a penny stock. I wanted to clean up the otc market by applying the broken window theory bc I believe it does not have to be as wild, and at the same time teach basic investing. I do not know it my desire to teach investing in realistic however. Anyway, if I were to do it, I would want to do it by emphasizing a qualitative factor, specifically the companies strategy for growth and then ratios that support this strategy.
  - xaevir 16y ago
    the reason I dont like paper trading systems is one bc without real money transacted, I cant make money and two bc I think having some skin in the game changes everything. But I realize after talking to you that this may be an unrealistic dream.
    - veyron 16y ago
      I have a lot of respect for the idealism underpinning your motivation. That's partially why I got into finance in the first place. You can also 1) charge for the advise. Something relatively small but accessible to most people. THAT would be a game changer :) 2) pitch the idea to fidelity or some other consumer facing brokerage. If you have good material, brokerage companies love it. 3) fake the trades. For example, Lehman Europe [LBIE] used to allow for infinite leverage by simulating each position (withdrawing money from the account when clients bought, and replenishing when they sold again). So you could do the following: - hold the positions that you advocate - when people want to "buy" the signal (buy when you say buy, sell when you say sell), then basically sell the exposure to their account - when people want to "sell" the signal (opposing you), then just take a naked position. Ostensibly, if your signals are good, then you should make money :) I would highly recommend learning about finance via a trading job or internship. There are a lot of subtleties involved. Not that you couldn't learn by reading a bunch of books, but finance is highly regulated and its important to understand all the ins and outs :)
    - veyron 16y ago
      I have a lot of respect for the idealism underpinning your motivation. That's partially why I got into finance in the first place. You can also 1) charge for the advise. Something relatively small but accessible to most people. THAT would be a game changer :) 2) pitch the idea to fidelity or some other consumer facing brokerage. If you have good material, brokerage companies love it. 3) fake the trades. For example, Lehman Europe [LBIE] used to allow for infinite leverage by simulating each position (withdrawing money from the account when clients bought, and replenishing when they sold again). So you could do the following: - hold the positions that you advocate - when people want to "buy" the signal (buy when you say buy, sell when you say sell), then basically sell the exposure to their account - when people want to "sell" the signal (opposing you), then just take a naked position. Ostensibly, if your signals are good, then you should make money :) I would highly recommend learning about finance via a trading job or internship. There are a lot of subtleties involved. Not that you couldn't learn by reading a bunch of books, but finance is highly regulated and its important to understand all the ins and outs :)
  - xaevir 16y ago
    > If you are teaching specific execution mechanics (market making, rebate capture) then it makes no sense to run the system from a proprietary infrastructure What you are mentioning above, seems too complex. If this concept were to grow more, I would focus on elements from Discounted Cash Flow.