Cobra Trading Review: Direct Access Broker for Day Traders

About Cobra Trading

Cobra Trading is a direct-access broker that offers equities, options, and futures. The firm is registered with FINRA, SIPC, and NFA (the National Futures Association). Securities are protected by a private insurance policy beyond what SIPC offers. Let’s take a look at the brokerage firm and see how it performs. In this Cobra Trading review, we will attempt to quantify the value of the broker for various types of brokers.

Pricing

Commissions

The commission schedule for stocks is tiered. It starts at $0.004 per share and decreases to $0.002 for accounts that trade more than 2 million shares a month. All trades have a $1 minimum. Using a live broker over the phone is free, a rare gift in the industry.

Options

Option contracts at Cobra Trading are 50¢ each. Accounts with high volume (more than 2,000 contracts per month) get a 10¢ discount. Accounts that trade more than 10,000 contracts pay just 30¢ per option.

Account Requirements

The broker-dealer has a $15 quarterly inactivity fee. It can easily be avoided by placing one trade. Cobra requires a $30,000 deposit to open an account. Because it caters to day traders, $25,000 must be maintained.

Software Fees

Cobra Trading has several trading platforms. All of them come with monthly fees, ranging from $125 up to $350. The monthly charge can be avoided by placing enough trades. The required level ranges from 250,000 shares to 500,000 shares per month.

Market Data

The broker-dealer charges for all market data. A basic package costs $25 per month for non-professionals, while pros must pay $79.

Trading Platforms

Sterling Trader Pro

Cobra Trading offers Sterling Trader Pro for stock and option traders. A selection of windows shows a large variety of trading information. These include positions with profit/loss data, current orders, market news, Level II data, watchlists, and a charting section.

For equities trading, the software comes with hot keys and hot buttons. In addition to the US markets, it provides access to global exchanges. Trading alerts can be set up, and there are portfolio management tools available.

What I thought was really sophisticated about this platform was the inclusion of API functionality. This allows traders to user their own software to connect with a Cobra Trading account.

Option traders can buy and sell multi-leg strategies on Sterling Trader Pro. What I thought was very useful here was a Level II-style window that displays bid-ask data from each exchange.

DAS Trader Pro

Investors who need basket trading, advanced order types, or multi-account management may want to use Direct Access Software Trader Pro. It also has advanced analytics and multi-instrument trading. Real-time streaming news is another helpful feature.

What I really found useful on this platform was the ability to incorporate multiple monitors. This could be really advantageous for traders who use the platform with multiple accounts or trade multiple asset types. Live streaming of Bloomberg Business News is another nice feature. It pops open in a separate window.

Heat maps are also integrated into the platform, which is a quick way to see how an index is doing. Charting comes with more than 30 technical studies, and there is a real-time market scanner. The platform offers some customization, with the ability to change colors to create a unique look and feel.

RealTick

The third and final platform is RealTick. I was impressed by the inclusion of real-time global data, which would be useful for traders who have global investments. There is also a multi-account feature that institutional investors may need.

The interface is customizable and there are hot buttons and keys. Charting includes technical studies, and there is a stock screener. The software is also available in an Express version, which has fewer features.

Mobile

What disappointed me about Cobra Trading was the lack of a mobile trading platform. However, all three programs discussed above have add-on mobile features. Sterling Trader, for example, offers apps for both Android and Apple devices.

Customer Service

A representative at Cobra Trading can be reached anytime during the week from 7:00 am until 4:30 pm, Monday through Friday. Unfortunately, the broker is closed on the weekend. A feature that I did like was the fact that during regular hours there is no automated phone system. The Cobra website also has online chat.

Executions and Routes

Cobra Trading offers direct-access routing. There are many market makers, ECN’s, and exchanges available. ECN fees and rebates are passed on to the customer. Some of the venues that can be chosen include CHX, NITE1, and ARCA-PMKT. CHX offers a rebate of 0.15¢ per share for adding liquidity, while removing liquidity costs an additional 0.3¢.

Shorting Stocks

Cobra Trading has multiple short locate sources to make sure that its customers have plenty of shorting options, including on hard-to-borrow stocks. Short-sell locates can be requested right on the trading platform.

The primary clearing firm for Cobra is Wedbush Securities. Cobra also utilizes Interactive Brokers for customers who request this option.

Type of Trader Cobra Trading is Best For

With its direct-access routing and ECN rebates, Cobra Trading would be ideal for day traders who need to send orders to specific exchanges and would like to receive rebates on trades. Due to Cobra’s commission schedule and software fees, only high-volume traders can obtain a great value here. Traders who make just a few transactions per month might be better off at Fidelity or TD Ameritrade.

Pros…

• Over 70 venues for direct routing.
• Cobra charges a very low 4.00% on margin balances at all levels. This APR is lower than many of its competitors, including Schwab and Lightspeed Trading.
• Deep discounts for active traders.

…and Cons

• ACAT transfer out fee is a rather steep $95.
• Cobra charges $2 for hard copies of statements and trade confirmations.
• Infrequent traders could easily spend over $300 per month in software fees, inactivity charges, and market data fees.

Judgment

Cobra Trading offers a lot to day traders who make many transactions with thousands of shares on a monthly basis. High-volume traders can also receive discounts via ECN rebates by sending orders to specific venues. Customers who trade less than 250,000 shares per month will pay the broker’s highest fees.