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Coming from TOS, a Little Confused About What to Choose

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john5 View Post
Hello,

I have been with Thinkorswim (TOS) for about 10 years, trading futures only, but finally decided to try Ninja. The thing is, all the data/brokerage options are a little confusing. In TOS, there are no separate data feeds/brokerages, it is very simple, you just login and use it, and the data for continues contracts goes back more than 10 years.

I am only interested in US Index futures. The reason for using Ninja is to use the Volume Profile and some order flow tools, but not to execute trades. What would be the best option in terms of cost and data quality? In TOS, there is no fee for the data, but it seems that with Ninja, the cheapest data option would be to open a trading account. It is a little confusing.

Thank you very much in advance, I appreciate all the suggestions.

-John.

I can't give you a comprehensive answer to your questions, but perhaps I can help a little. Years ago I was on TOS, and I understand the difference. Basically, TOS is a complete package deal -- broker, data/charting and trading platform, everything all together for you.

Outside of the self-contained TOS environment, it is a little different, because you don't get everything packaged together.

So, for starters, unless you are willing to pay a hefty separate fee, in order to get access to CME exchange data (which is where the index futures are traded), you must have a brokerage account (you can get a short-term demo data feed from many brokers, but for a two week period. Sometimes you can get another two weeks after that.) When you are with TOS, they are your broker, so that qualifies. But the exchange wants you to have a broker account from someone.

(Actually, the exchange will let you get a datafeed without a brokerage account, but there is a CME charge of, as I recall, $105/month. Plus, if you need to use Ninja Trader, I don't believe this option will be available, since NT also operates a brokerage and the only way to get the NT trading platform is to have a brokerage account with them or some other broker, such as Interactive Brokers or a few others, who have an arrangement with them.)

So we start off with the problem that NT, as a platform for data and trading, is tied to NT Brokerage and a few others. This was not always the case, but it is now. You can go onto the NT website to see who they affiliate with.

To confuse things more (sorry), NT Brokerage is an "Introducing Broker," meaning that they don't actually have your account -- if you open an NT Brokerage account, you open an account, through them, with what is called a "Futures Commission Merchant," (FCM) which is your actual "broker" in the sense that they have your money and process your trades. If you go through the steps to open an account on the NT website, at some point you will be confronted with making the choice between two FCM's: PhillipCapital and Dorman Trading (both are fine, by the way.) The way NT puts it is "NinjaTrader Brokerage partners with the following firms to deliver access to the futures markets," which is true, but not entirely clear to the uninitiated . The simpler way to put it would be that "NinjaTrader Brokerage offers to open your account with either of the following firms." If you plan to use the NinjaTrader data/trading platform, you will need to have an account with one of these firms, or one of the few others that NT allows to use their trading platform.

OK, so suppose you pick one of these and then open a brokerage account with them. They will want an initial deposit, I think around $1,000, in order to open the account. You are stuck with tying up this money with them. Any broker will want an initial deposit, which is money lying idle if you are not trading with them.

Now, to finish going down this path, when you have an account with an FCM, you will also have a data provider (data source) and a trading service (network that connects to your FCM and the exchange and gets your trades executed), which may be different electronic entities. If you are using NT, usually (not always), NT itself provides the historical data and the trade service provides current quotes and trade executions. With the two NT FCM's, you will be using either CQG or Rithmic for trade executions and current quotes (both are fine -- and I don't remember which FCM uses which, but it doesn't matter much). I think I recall that NT provides the historical trade data in these cases, but it will also be fine for either. I wouldn't worry much about the quality of the data, especially if you're used to TOS data. (Ahem... see below.)

You may be feeling overloaded now, but let me add one more thing, which is that you can choose different trade data providers (at a significant cost). IQFeed is well thought of, and NT offers their own private-labelled version of it under the name "Kinetick." Do you need it? I don't know, never used them. Other people may have better info than I do on that. There also may be differences in the range of non-price data, such as TICK, Adv/Decl, etc. All that is bundled in TOS, of course. You will need to look into this if you're interested.

You may already know all this, and if so I apologize for taking up your time. But if you don't, these are some of the ways that the world outside of the TOS cocoon operates. I will say that the advantage of TOS is that everything is included and all this complexity is hidden. On the other hand, (1) TOS data aggregates trades and so don't give a true picture of what is happening, and (2) TOS commissions are high (or at least they used to be, I don't know where they stand today, so this may not be right any more.) With that said, it is quite possible to make money trading on TOS; it depends on what you do with it, which is true for any broker, data source or trading tools.

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I feel I am just piling stuff on, and it may not be helpful. Much more could be said, but would it help? If this is not clear, let me know and I will try to add what I can.

One more thing is that, while NinjaTrader is an excellent platform, there are other good ones as well. But NT is only available through a limited number of brokers. If it's what you want, you don't have many choices. Also, if you're looking for the volume profile and order flow tools, they are (at present) only available for a lifetime license (for a thousand bucks, or 4 easy payments of $299 each https://ninjatrader.com/BuyPlatform )

I don't want to undercut NT here, but in fairness to you, you can also look at other platforms (Sierra Chart is one, which I use) that offer similar functionality (some, including Sierra Chart, don't cement you to one broker. Also, Sierra will let you connect to a CME data feed without needing a brokerage account -- I think they charge $115/month for the CME fee and $35 or so for the platform with Vol Profile and order flow stuff. Others may as well.) But this opens up a very wide vista, way beyond your question and my answer.

Good luck. Once you get your head wrapped around it, all this is all actually much simpler than it appears. But it takes some time to get there.

Bob.

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