Virtual Mentors Cater to Active Traders

Online brokers strive to provide active traders with the most sophisticated analytics and charting tools. But with so many bells and whistles thrown at active traders, and with market conditions changing on the fly, using the tools and interpreting market data can be overwhelming.

CyberTrader - the direct-access brokerage subsidiary of The Charles Schwab Corporation - wanted a better way to deliver content to and support its customer base of active traders. So, last year, CyberTrader teamed up with PalTalk.com, a New York City-based provider of voice and video conferencing, to develop a proprietary solution.

In November, the brokerage launched CyberTrader Live, an interactive, streaming-multimedia chat application that allows traders to receive text, audio and pictures over the Internet. Trey Robinson, director of acquisition marketing at Austin, Texas-based CyberTrader, says the purpose was "to make an education and training commitment to our traders, to help them become more successful, to help them implement their strategies."

CyberTrader already offers strong analytical and risk management tools, momentum indicators, and advanced point-and-figure charting, according to Adam Josephson, analyst in Celent Communication's securities and investments group. However, "It is exceedingly hard for their day traders and active traders to be profitable," he adds. "So what they are doing is offering their customers resources to help them maintain profitability."

CyberTrader Live consists of two-way access to a dedicated, secure chat room where traders can discuss the markets, share ideas and test trading strategies. Then there are Web-based trading courses, offered during post-market hours, on such topics as how to use electronic communications networks, interpreting market data and understanding trader psychology.

The most unique offering, says CyberTrader's Robinson, is MarketCasting, an interactive market forum conducted by two market specialists - one an expert in technical analysis, the other well versed in futures and options. Together, they act as mentors, offering streaming market commentary, as well as pre-market and intra-day evaluations.

Broadcast from CyberTrader's studio in Austin, Texas, MarketCasting and its experts are available from 9:00 a.m. to 12:00 p.m. and from 3:30 p.m. to 4:30 p.m. EST to answer traders' questions. In response to a query, the mentors may highlight certain market data on a stock and then "push" it to the traders with accompanying analysis, explains Robinson. Questions are typically fielded in an open forum.

Because PalTalk.com utilizes Voice over Internet Protocol (VolP) technology, it's much cheaper than regular phone lines, says Jason Katz, PalTalk's CEO.

Meanwhile, for PalTalk, a company founded in 1998 that has survived the dot-com bust, renting virtual conference rooms to firms that want to communicate with their subscribers is turning into a booming business. According to Katz, 400 small businesses utilize the virtual rooms.

CyberTrader was one of those businesses when it raised the idea of creating a customized version of the software to make CyberTrader Pro, its trading platform, easier to learn and easier to use, according to Katz. "The CyberTrader users are their heaviest online traders. The better they support them, the more business they're going to mean for Charles Schwab," he says.

Celent's Josephson agrees: "Really, what they are trying to do is help their traders succeed. Online trading courses, market testing and community chats will certainly do nothing to hurt their clients," the analyst concludes. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio