Brokerage Review: Guardian Trading
Guardian Trading is a brokerage for day traders looking to save on the daily costs and expenses that
come with trading as a business.
With more people wanting to make money from home since the Corona Virus pandemic, stock trading has
become increasingly more popular. This rise in popularity has led investors and traders to become
aware of the behind-the-scenes operations of popular brokerage firms like WeBull which can encourage traders to search for something more transparent like a direct-access brokerage.
Depending on your strategy, there are many options available, but Guardian Trading is worth looking into.
Guardian Trading Costs
Guardian Trading is a direct access broker, which means when you purchase a stock, you are purchasing
it directly from the exchange with no third-party involvement.
Commission fees at Guardian Trading cost 0.0015/share. This is about the industry standard when
comparing to other popular direct-access trading platforms like Centerpoint Securities and Cobra Trading.
There are brokerages that offer commission-free trading,
but as most in the financial industry learned during the Robinhood/AMC debacle, there is an opportunity
cost that you pay when choosing a commission-free brokerage. When trading with a direct-access brokerage,
you receive quicker trade executions and no selling of order flow that you would get when trading with
Robinhood.
If you are serious or professional trader, you can call customer service and negotiate a lower
commission rate based on your daily trading volume. Brokerages want to satisfy their higher volume
traders since a significant amount of their income will be coming from commissions. They will be
happy to keep you on board by negotiating lower commissions.
Guardian Trading Paper Account
Guardian Trading also offers a 14-day free trial with a paper-trading account (fake money), to get you
more familiar with the tools and services it offers, which is a win-win situation if you are shopping
for the best broker that fits your personality.
Guardian Trading Das Level 1
In order to see what you are trading, you will need a trading and charting platform to display quotes
and to execute your trades. Most direct-access brokers use Das Trader which is included when you sign
up with the broker.
The Das Level 1 package at Guardian Trading is $60/month, but it is waived if your commissions add up
to $199/month. If you are a professional trader that is trading every day, this is a fine deal because
you will definitely have commission fees greater than $199/month.
Level 1 add-ons include a fee of $15/month for Pink Sheet stocks or OTCs (Over the Counter stocks), $20/month for news and 30$/month for the full news body.
Guardian Trading Das Level 2
For higher-volume traders who want access to more markets, Das Level 2 is more favorable. With access
to more markets, the software package is $150/month, but can be waived if your commissions add up to
$599/month.
With this package, you also get $100 in additional add-ons waived, so if you want to add Options (50$), news ($20), and newsbody ($30), those fees get waived. The additional add-ons for Das level 2 are listed below.
Guardian Trading Routes
When you use Guardian Trading as your brokerage, you get access to 44 different routes which allow you
to direct your trades to different exchanges based on your desired outcome. Some examples of these
routes are the industry standard like ARCA which can be used all day from 4AM to 8PM and EDGX which
can be used from 7AM to 8PM.
They provide dark-pool routes like GADR, GDMX and SMRTD which allow traders to place larger than normal
trades on the exchange without displaying this data to other traders. This could be a significant
advantage if you have a large daily trading volume, and you feel as if traders are taking advantage of
your large orders due to the transparency of your trades on Level 2.
Other routes they provide are trader specific, designed to lower execution costs, increase fill rate,
maximize liquidity access, and they also have routes for trading OTCs.
Guardian Trading Margin
Guardian Trading offers 4:1 margin, which is high in the industry. Other brokerages like TD Ameritrade
typically offer 2:1 margin.
The margin required for each position is dependent on the stock you are trading and volatility of that stock for the day. Guardian has the right to change margin requirements for certain stocks if they think an asset could be riskier due to market conditions. This was common for brokerages to do after the Robinhood situation as brokerages started placing higher margin requirements on stocks that were short squeezing like AMC and GME.
This prevented traders from buying or shorting a significant number of shares on borrowed money, decreasing volatility in the stock and also preventing major account blow-ups across the board. Some may say this is fair and some may say it is not, but when trading on borrowed money, you should always be cautious. Plus, you agree to these rules when you open an account with the firm.
Guardian Trading Short-Locate Fees and Availability
One of the most important aspects of direct-access brokerages is their short-locate fees. Most traders move to one of these platforms because they want to short stocks that are hard-to-borrow instead of buying them. This means that they want to bet that the stock’s value is going to decrease.
In order to that, a trader needs to borrow the stock on the front-end and buy back the shares of the
stock when they want to close out the position (hopefully at a lower price).
Shorting hard-to-borrow stocks on TD Ameritrade and commission-free brokers is almost impossible as
they will only let you short these stocks if you have a significant amount of capital and negotiate
this with them beforehand. On platforms like TD Ameritrade, you are only allowed to short easy-to-borrow
stocks which are the stocks that no one is interested in shorting. Sometimes, there may be stocks you
can short that are easy to borrow on commission-free brokerages, but if you are trading for the long run
and are interested in playing both sides of the stock, you will need to have a brokerage that provides
a short locate tool.
The reason some stocks are hard-to-borrow is because there is a great demand from traders looking to
short these stocks usually from a release of negative news or an overvalued stock price.
There are many
risks to shorting but if you are a professional trader, Guardian Trading offers low-priced stock locates
for traders to borrow and if you are a member of a trading community like TradeLikeMike (tradelikemike.com)
who has a partnership with them, you can get 50% off of short locate fees. The price of locating
shares in Guardian is typically lower than Centerpoint Securities which is a very popular brokerage
among high-volume traders.
Guardian Trading has been gaining attention over the past two years due to the increase in popularity
in stocks and traders discovering that Guardian Trading’s short locate fees are very competitive to
the market. The subscription with Guardian Trading comes with a short-locate tool that allows you to
locate shares to short starting at 4AM and ending at 8PM.
Their short inventory list is sometimes not as extensive as you would get at Centerpoint Securities
but they do have the majority of shares to short that you would need to be a successful short-focused
trader.
In order to locate hard-to-borrow stocks, your brokerage needs to hold these shares in their
inventory or have relationships with institutions that do. If a brokerage is more connected in the
industry, there is a higher likelihood that they will have the inventory you are looking for.
The price of borrowing shares to short all depends on the demand of that stock for the day and if the
demand is high, the price to hold these shares is also higher, so beware of the cost to borrow these
shares as well as the cost of holding these shares overnight. Depending on the day of the week, it
will cost more to hold the shares.
At Guardian, if you hold the shares overnight on Thursday and Friday, it costs double than you would
pay if you were holding them overnight on Monday, Tuesday and Wednesday. If you hold it on Friday
night, you will also be paying for Saturday and Sunday!
The majority of traders that are short focused are looking for quick moves in these stocks and usually
cover their position or close out their position the same day so this is not huge concern to them.
Interface & Other Tools
The interface of the platform is customizable and has everything you need to be successful. It includes
charts, watchlists, a list of daily gainers and losers in the market, the short locate tool, your account
summary as well as hot-key customizations.
Hot-key customizations allow you to configure a set up to select certain keyboard buttons to execute a
specific type of trade you would like to make. This makes executing your trades much quicker and more
efficient if you need to get in and out of a stock fast.
The watchlists are not as user-friendly as TD Ameritrade since it is difficult to scroll through them
and you will need a lot of screen space to see all the tools at once. Switching between watchlists is
also difficult as the platform opens a new window for each watchlist. Overall, the watchlist on Das will
get the job done if you are not looking at too many stocks at or you have enough screen space to view a
large watchlist or multiple watchlists.
Many traders will utilize Das to execute trades as well as another platform to keep track of their
watchlists.
Also, if you are looking for price alerts, you are able to input your email into the alert box, set the
alert and an email will be sent to your email once the stock price hits your target price.
The Guardian Trading/Das interface provides the standard Das Level 2 configuration as well as the time
and sales display. Das is made for traders to be able to retrieve and send data quickly which is why it
is used by most traders in the industry.
Ease of Access to Your Funds
Guardian Trading is working on ACH transfers which allows you to put in a request deposit your money
from the portal. This would not require bank visits or wires which could be a tedious process.
Centerpoint Securities does have ingoing and outgoing ACH transfers which is definitely a pro to
have with a brokerage. With technology changing how we perform our everyday routines, going to a
bank to wire in money to fund an account takes up more energy and also takes a significant amount of
time to go through when compared to ACH transfers that are done from home.
Guardian Trading does have ACH outgoing transfers which means you can put in a request to their
support team that you would like to withdraw funds. They require you to fill out a sheet every time
you would like to withdraw while Centerpoint Securities does not. When filling out the ACH outgoing
transfer sheet, it still feels like you are wiring money instead of just going to the portal and
entering the amount of money you would like to withdraw and pressing “send”.
Customer Service
Since Guardian Trading is not as popular as other direct-access brokerages but is gaining in popularity
over the last two years, their customer service team does not seem weathered and fatigued. You will
most-likely create a relationship with an individual at the firm and will be able to email them whenever
you have a question or problem.
The team at Guardian Trading always replies quickly and pleasantly and is very open to providing
information. Centerpoint Securities serves more individuals and their customer service team could
sometimes be cold and less willing to help.
Depending on the type of trader you are and what you are looking for in a broker, this may not
affect you, but in the investing/trading profession you want to have a relationship with people that
are willing to help, respond quickly and provide more information and guidance than you need.
Trading is a difficult profession and whenever there is a way to keep yourself more emotionally
balanced and have your day made more efficient and easier, then you should do it.
Pros of Guardian Trading
• Cheap short-borrow fees
• Helpful customer service
• Waiving of software fees based on trading volume
• Industry standard commission fees
• Increased access to margin
Cons of Guardian Trading
• Availability of short-locates are less than Centerpoint Securities
• No ACH deposit (yet)
• Beware – increased access to margin
Awards
Guardian Trading Review Summary
Overall, Guardian Trading is a great broker to open an account with and to give access to your funds. Their short locate tools and cheap borrow fees make it worth it for traders that look to capitalize off parabolic moves of stocks on the short side and their customer service is pleasant and open. They give you the feeling that you are not just someone to charge at the end of the month but that you are someone to assist during your trading journey. Wiring funds into your account in order to trade instead of completing an ACH transfer could be less efficient but that may change in the future. They do have the majority of the popular stocks of the day that traders are looking to short but once in a while they may not have locates on shares when other direct-access brokerages like Centerpoint or Cobra Trading might.
Daniel Colantonio is a writer and entrepreneur from Long Island, New York. He has an IT and real estate background and he enjoys traveling, exercising and spending time with his family in his free time.
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