I recently had the pleasure of speaking with Dan Raju, CEO at startup broker Tradier. Tradier launched last summer and is all about opening up choice for traders by housing an extremely flexible, well supported API.
Tradier’s API enables any developer to directly tie into Tradier, allowing for easy trading from any tools, websites, services, etc. For traders, this means flexibility to trade not only through Tradier.com but also through dozens of different platforms connected to the broker. Raju notes that the end product allows Tradier to, “truly democratize the retail brokerage.”
Since the heavy lifting of the platforms, tools, research, etc is all handled by 3rd parties, Tradier can keep its costs much lower and focus on a quality customer experience. This also means discounted commission rates.
Regular stock trades cost $3.49 flat with options running $.35 per contract coupled with a $5 minimum ticket charge. OTCBB stocks are currently not supported. View the full commissions schedule.
Creating an account was a straightforward process. I was impressed with the application which was cleanly designed and easy to fill out. Once completed, I waited for verification of approval then proceeded to establish my username and gain access to my dashboard.
The website client area provides the core functionality you need to manage your account, maintain a watch list, and place basic trades.
To link your account to a 3rd party platform, you head over to the Platforms page. As I write this post there are 21 platforms active and approved for client use. Raju noted that this number will be climbing throughout the year as a variety of well known brands work on launching platforms for the network.
While the main client dashboard is easy to navigate, the platforms area is easily overwhelming for the casual or newer investor. Each platform contains a decent summary of information about the product and any associated costs (not all platforms are free), however there are no filters or rankings for platforms to simplify the selection process.
Tradier certainly has potential to stir things up in a positive way. APIs are extremely powerful and Tradier has done a terrific job at making its API extremely flexible and 3rd party friendly.
Maintaing an API is far less costly than maintaining code for its own platforms, tools, etc. Also, while Tradier does offer free real-time streaming data, the broker saves on the costs of providing robust 3rd party research from the likes of Morningstar, Thomson Reuters, and others. All in all, this allows Tradier to keep costs under control, resulting in lower commission rates for clients.
Positives aside, Tradier has some big hills to climb. The broker’s business model is currently not new or casual investor friendly, and the the vast majority of approved platforms are designed for active, seasoned traders.
Tradier has branded itself to target active and professional traders, and while active traders do turn over volume, most already are using the platforms Tradier offers coupled with a different broker. Cost alone isn’t going to convince a professional trader to switch firms, especially when they are currently clients at brokerages such as Interactive Brokers or Lightspeed.
To build its client base, Tradier will need to evolve into an easy to understand, easy to setup brokerage that offers a strong mix of free and paid platforms that can appeal to casual as well as active retail investors. Otherwise, the broker will be forced to try to monetize its fantastic open and currently free API (platforms currently receive 100% of the subscription fees from Tradier client referrals) which is hardly ideal long term.
One final note, Tradier is venture backed. The brokerage raised $3.1 million in April 2014 from Devonshire Investments which is a venture capital arm of Fidelity Investments. Looks like Fidelity is interested enough in Tradier’s API and potential to put some money behind the brokerage.