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StockTwits, a social media network for investors and traders with over 1 million registered members, plans to launch its own free stock trading app during the summer of 2019, capitalizing on its engaged user base. CEO Ian Rosen says they were approved by the Financial Industry Regulatory Authority (FINRA) in late February, and are currently testing the app with employees, friends, and family.
Rosen says, “Our customer base is engaged and likes to have fun. Investing doesn’t have to be hard or scary.” Rosen says their user base is demographically young, with approximately 80% under age 45, and extremely engaged, with a large percentage of their users spending 50-60 minutes per day on the site. StockTwits had connections to several trading sites, including Robinhood, TD Ameritrade and E*TRADE, through application programming interfaces (APIs), but they have shut those connections down as they prepare to launch their own app.
What is intriguing about this platform is that most new brokerages build their trading site and then try to build a community around it. StockTwits already has the community, and this summer will provide the app. “The ability to buy and sell used to be the thing you built a brokerage around,” says Rosen, “but now the real value is in the relationships with customers.”
One of the features of the site, the Heat Map, gives you an idea of what members are discussing as well as price movements of the stocks being talked about. You can click on a block in the heat map and drill down to the individual stocks, and then join the discussion.
TradeApp is clearing through Apex Clearing, one of the largest clearing firms in the United States. They are enabling trades of fractional shares of stock, which is a new feature for Apex, and could open the door to fractional shares for other brokers who clear with them. Apex clears for Ally Invest, tastyworks, SogoTrade and TradingBlock, as well as robo-advisory services such as M1 Finance, Betterment and SoFi Automated Investing.
Rosen wanted to enable fractional shares for the app so that investors with small accounts can own shares in some of the more active stocks, such as Amazon, Apple, Netflix, and Facebook, which have very high share prices.
Though trades will execute for free, there are fees listed for wire transfers, issuing checks, receiving paper statements, and a whopping $200 for outgoing account transfers. Most brokers who charge for transferring an account out have fees of $50-100. In time, Rosen says that TradeApp will offer margin accounts, but they are launching initially with cash accounts only.
Once the app is nearing the end of the beta testing phase, we will have a hands-on review.
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