Meta-Trader - Top 10 reasons ..

Welcome back Meta-Traders.

It's customary for old-timers like myself to complain about how bad things are. People seem to place a value on negativity since it shows a certain dissatisfaction with the status quo. What can we learn from someone who is happy and satisfied? After all, complacency never got anyone to the top of anything in life, right?

Well I have a slightly different take. Despite vast government dysfunction, record deficits, and new all-time high prices in energy and the cost of a college education, I think things are actually better now for active traders and investors than they have ever been in the history of the world.

With this post I'm going to take you through a David Letterman-style top-10 list of why these are the good old days for active traders and investors. And here we go:

10) The Internet

This one seems like a no-brainer, but the vast majority of the world's knowledge is available in seconds from your PC or hand held device, and most of it for free! The importance of this cannot be understated, and opens a world of self-development for information workers such as myself. Back in the bad old days, we had to read books and magazines, go the library and call companies for them to send information via snail mail. Yes it worked, but progress was much slower.

9) Regulation Fair Disclosure

This law applies to US-Based investors and was enacted back in 2000 and it says that important market-moving information has to be disclosed to everyone at the same time - not just the big boys. Of course the vast majority of market-moving information comes out real time favoring those who pay attention. Not huge but clearly levels the playing field.

8) Decimalization

Back in the bad old days, stocks were traded in fractions, halves, eights, quarters and sixteenths. You needed to be able to calculate your profit on 500 shares purchased at 38 1/8 and sold and 39 9/32'nds. Worse than that, the spreads were also shown in fractions, so a quote would for MSFT would look like bid 38 1/2 ask 38 3/4. On 100 shares, the spread was $25, or 1000 shares, $250. What a mess.

7) Disintermediation

Back in the bad old days, every security had a human making a market in the security and collecting the bid-ask spread all day, every day in exchange for making a market. This is still the case today to some extent, except that multiple market maker's compete to make a market in the same securities on electronic platforms. Add to that the requirement by the US SEC that all market makers must execute at the NBBO (National Best Bid or Offfer). This along with decimalization has killed the livelihoods of an entire generation of market makers to the benefit of the investing public.

6) Discount brokers

Charles Schwab pioneered this category back it the 1980's and broke the hold of the big brokerage firms on the retail brokerage industry by reducing the average trade to the $20 range and below for 100 shares of stock.

5) Exchange Trade Funds

Back in the bad old days, if you wanted to buy the entire S&P 500, you had to go industry leader Vanguard, or another mutual fund giant. Now, I can buy the entire SP-500 or Dow-30 in a single ETF traded with my discount broker and collect the dividends. ETF's SPX, DIA are still among my core, long-term holding in my equity accounts.

4) TC2000

Back in the bad old days, you had to pay for real-time quotes and only 30-minute delayed quotes were available free to the public. Now you can get free real-time quotes from a multitude of web sites including your own discount broker. And with TC2000.com, you can get real-time quotes charting, scanning, etc for under $300 per year.

3) Options

Puts, Calls, Leaps, Strangles, Straddles, you name it. You can benefit from up, down flat or sideways markets. Imagine if you could walk into a retail store and find something that wasn't selling and nobody wanted. And imagine if you could take that item to the counter and sell it to the store and collect the sale price, and then just walk away and wait for that item to expire worthless and collect the entire sale price. That goes on all the time in the Options Market. Consider the possibilities.

2) Deep Discount Brokers

Refer back to #6 and ask yourself, instead of paying $20 or $10 for 100 shares of stock or 1 option contract, imagine if you could pay just $1. That's what deep discount brokers TradeStation and Interactive Brokers do for professional traders. I'm still paying $10 a share with E*Trade, so I'm gearing up to take advantage of this probably next year.

And the #1 reason why these are the good old days for active traders an investors ...

1) Easy money from the Fed

And endless flow of free and easy money from the US Fed and nearly every other major central bank in the free world.

Count your blessings and enjoy your weekend.