Friday, September 23, 2016

Is being Anonymous safe for your financial activities?

Many people do not realize that when they use proxies and Virtual Private Networks (VPN) to access online brokerage and bank account websites, they are essentially entering these applications in disguise.  And what is worse, for those that are using FREE Web VPN services, public cloud environment or TOR browsing, they are essentially using shared IP addresses that someone else is using or that may have used in the past.  The illusion here is that Anonymity guarantees security because it hides your internet trail.  But this is not true.  What is actually happening is that one’s online activities are grouped under anonymity with no discrimination as to who is surfing, which can prove badly when you log into your financials accounts.  In this blog I will explain further why using anonymity for online personal or financial accounts is never a good idea. 
     
Imagine if you will that every time that you go to your bank or the ATM to access your account you wear a different disguise to hide your identity. One day you wear a wig to hide the natural color of your hair and another day you arrive dressed as a different gender.  You maintain this disguise for several months never allowing anyone at the bank to get a good look at your true appearance. You believe it’s your right to safeguard your personal identity from anyone trying to learn your identity who might want to cause harm to you.  People go to many lengths to remain anonymous, and this is just one of them and is a logical way of going about concealing who you are, regardless of your intentions. 
    
Obviously this scenario is unlikely and a bit farfetched, but just for the sake of explaining my point, let’s go ahead with it. 

So now let’s suppose that one day you are away on a trip outside the USA that you had been planning for weeks.  While you are traveling you cannot get to the bank to make your daily deposits or withdrawal, etc.  During this time the individual carefully monitoring your routine behaviors notices that you have not come to the bank in two days.  Since anyone can be you, as you change your identity frequently, they seize the opportunity to waltz into the bank with the credentials they have acquired for your accounts.  They know that no one at the bank really knows who you are, so for them they don’t even need to do much to disguise themselves as you.  Once they go in, it’s a success, and it means they’re likely to do this several more times before you are even home to do something about it. Then he or she does something even more drastic using your “disguise” and robbing the bank at gun point for a whopping $150,000, then disappearing without a trace.  The only clue surveillance cameras catch at scene is a disguised individual, and the bank tellers who witnessed the crime can only give a visual description of a person dressed in disguise.  And when they check the prior historical surveillance they see you coming into the bank matching the exact same disguise. Take a guess whose door the police will be knocking on? That’s right, yours, as the long trail of animosity leads directly to you, the bank’s very own mysterious client.   
    
When it comes to your financial information it is for your own safe guard that your institution knows who you are. In the financial industry this is known as KYC, which stands for Know Your Client. All financial institutions are required to follow this procedure to protect the client against identity fraud and the institution against doing business with known criminals. This practice keeps the entire industry safer for everyone. This same logic also applies to when you access your accounts online. You should not attempt to hide your computer identify and location when you login to your online accounts, as your institutions do maintain an audit of your login history to ensure that access is not being accessed by hackers.
    
Technology is becoming more advanced and mainstreamed, and with that comes a higher risk of vulnerability. Hacking is becoming a legitimate profession that is attracting the good (i.e. those that use hacking for good reasons) and the bad. Companies work very hard and often spend a lot of money to find vulnerabilities in their system in order to prevent clients from being hacked. However, the hackers work even harder to find the slightest crack in a back door to sneak in and cause harm.  They carefully plan their heist for months before they actually commit the crime and use anonymity to protect themselves from being discovered.
   
Very often we see instances in which one of our brokers reports a client stating his account has been compromised.  Yet when we investigate the situation we unfortunately cannot always differentiate from the access log who is the client and who is the hacker. When this happens and you are an unfortunate victim, you must hope your institution operates on good faith and believes that you are being truthful about which access is yours versus the reported hacked access.  Then you need to ask yourself who is at fault when the security breach is the result of you hiding your identity online.

With this in mind, I have compiled a list of the top 5 practical tips for keeping your online financial accounts safe:

  1.             Use Strong password string -   Your password should be as unique as your fingerprint and not easily guessed by your email or name. There are many free strong password generators which can randomly generate a string. My favorite is Lastpass.com, which offers an app that runs on smart phones and in which you can store all your login credentials.  If you prefer to not use a strong password generator, then you should use words or phrases replacing letters with numbers and special characters that make sense to you.  
  2.       Do not repeat the use of your login credentials for multiple websites – it is critical that you understand that once your password has been hacked, that hacker is likely to attempt to login to multiple websites, which leaves you vulnerable to multiple entry points being hacked.  Using the same password or username, or combination of both, in your email or social media website accounts for 90% of all point of entry hacks used by hackers to gain personal information.
  3.             Monitor your account activities often – Most financial firms offer mobile access so that you can login from your smart phone from anywhere. Some firms also offer the ability to email you if they receive alerts of suspicious activities emailed. You should subscribe to this service if it is available.
  4.       Do not share any portion of your financial website login credentials with 3rd party websites – Understand that if you do, you are essentially giving them access to your finances or other personal information that could potentially be hackable by one of their personnel.  The other danger is them having this information and meanwhile their own computer systems have vulnerabilities (remember headlines that “Target will pay customers who suffered from a 2013 data breach up to $10,000 each in damages.”)
  5.       Having Multiple Emails - Create a separate and secure email account for your online financial portals which is separate and different from the email account you use to access social media accounts or use for junk email.  Most experts recommend having at least 3 different email accounts such as business e-mail, personal e-mail and a junk email. We suggest having one email which is you use exclusively for financial accounts. 


One last point that I would like to make clear is that there are times when remaining anonymous online is a good thing, for example on social media sites.  However, being anonymous follows the dictum that there is a time and place for everything.  Entering your financial accounts – including your stock trading accounts – is not an appropriate time to be anonymous.  We at DASTrader.com sell state-of-the-art stock trading software and know all too well the dangers and consequences of clients hiding their online identity.  One great project we have completed and released is a high alert system for our client that notifies us and them of unusual or suspicious activities.  We want nothing but the best for you while using our products, and strive to maintain security for your financial accounts.  

Thursday, July 18, 2013

The future of Algorithmic Trading

Recently I have been pondering whether there is still a future in algorithmic trading in the US markets for new players. Several months ago I feared and forecasted that we may have reached the algorithmic precipice. Last year the SEC passed Rule 13H-1 which requires large trader whose transaction in NMS securities equal to or exceeding 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month, to identify itself to the Commission and make certain disclosures to the Commission on Form 13H. The question is why does the SEC need to identify large volume traders in the markets if not to later overregulate, fine and shutdown? Or do they see a new trend in this business and wants to make sure they get their hands on it before it spirals out of regulatory control? In the past, we have seen that new regulations and requirements typically herald the eventual end of certain business (see my blog on the CBSX Series 56 requirement ending prop trading: http://dastrading.blogspot.com/2011/08/future-of-prop-trading.html). Their white paper clearly stated their goal of the new rule in Release No. 34-64976; File No. S7-10-10: “The large trader reporting requirements are designed to provide the Commission with a valuable source of useful data to support its investigative and enforcement activities, as well as facilitate the Commission’s ability to assess the impact of large trader activity on the securities markets, to reconstruct trading activity following periods of unusual market volatility, and to analyze significant market events for regulatory purposes.”

Another thought that came to my mind is whether there is enough volume in the market for the survival of any black boxes to continue to be successful. When you see Goldman Sachs, Barclays and other large investment banks who have formerly dominated the algorithmic space begin to offer tools to retail clients, you have to wonder what this means to the markets.  I read it to mean that they don’t have enough retail flow naturally because of an excessive saturation of black boxes and algorithms that have entered the markets. Now they have to compete against each other as well as with the smaller black boxes. You might be wondering how the average algorithmic trading strategy consistently makes money and what factor affects its longevity. The answer is simply mathematics (pun intended). If we all had the same formula for success then there would not be any successful people but just mediocre people. Success is measured based on someone winning or being ahead of the game. If we are all running in the same race, at the same speed, using the same technique and we all reach the finish line at the same time, are we all winners? For some to win, it seems they need to have prerequisite criteria in place to limit who can be allowed to run in the race and who can be allowed unfair advantages.

There does seem to be a correlation with the big banks’ decision to offer their strategies to retail clients and the US regulators’ new policies regarding algorithmic trading. Despite these indicators, algorithmic trading still sparks the interest of traders who have had some success at day trading or proprietary trading who want to transition into automation. Many of these algorithmic traders are looking for ways to enter the game via easy to program algorithmic systems. In response to that there has been a remarkable trend of the box trading automation firms emerging in the last two years, notably Trades Ideas, CoolTrade and most recently Equametrics. In the past it was really difficult for retail traders to transition to automation. There were so many variables in order to run an automated black box such as having the right collocation, coders, quants, data, equipment, capital invested, exchange connections, etc. Formerly most successful strategies needed to be collocated within the major exchanges in order to reduce latency on market data and order executions. The cost to collocate can be become very expensive and eats into the profit margin of this business model. However, firms, such as DAS|Inc., provide low latency solutions that reduce these costs for black boxes.
The exchanges have also decided to move in this direction by offering open source cloud based solutions. One such product is NYSE Euronext’s HD Tickerplant which was recently only offered to the European markets. We believe this product will be well received in the US Markets because of the change in the demographic of algo traders. The following are the key features of the product which will be offered through our networks:
• High density servers with at least 32 cores to be deployed at client site.
• NYSE Technologies Market Data Feed Handlers for ultra-low latency performance.
• Seamless integration with SuperFeed® for global market data.
• Data Fabric Middleware to publish data onto the client’s market data backbone.
• ITRS to monitor and manage the server and software.
• SFTI VPN for NYSE remote access and management.


In conclusion, I don’t think it is too late for the successful active trader to jump on the algo trading bandwagon. The keyword here is “successful.” The stock market is not a ride for the faint of heart or someone who may have an obscure strategy in his head that he believes will make money without a real history of success and back testing. This is a space where you must know that capital and human investment should not be discounted once a strategy is successfully implemented. Strategies needs to be as flexible and adjustable based on small changes in the market such as a new rule. And this can only be done by human interaction. 

Monday, June 3, 2013

Where Are the New Traders?

If you haven’t noticed yet, daytrading has been contracting a bit in the last few years. Some decide to blame algorithmic traders making it impossible for human traders to earn a profit; others blame the economy and shrinking middle class. Both are valid explanations, but a third possibility, that is often overlooked, is simply that new traders are not attracted to the stock market, brokerages, and other types of trading firms!
            As a software vendor and service bureau, DAS|Inc primarily operates in business to business commerce. There are only so many trading firms in the world who trade US equities and options, and there are many hurdles in spurring people to start new businesses, so often we find ourselves depending on our existing clients to expand their operations and attract new clients in order for us to expand our business. However, keeping abreast with the trading community, we have come to the conclusion that there are very few new traders. It appears that we and our clients have been attracting customers that have already been trading, but at different firms. This strategy may seem fine as we get new users on our system, but it also shows the users how easy it is to switch platforms and brokers, so what we perceive as customer loyalty may diminish. Nor does this create more human volume on the exchanges, which is necessary (in my opinion) for a better trading experience. Acknowledging that new customers are needed lets us and our competitors focus on productivity and improve our uniqueness rather than soliciting each other’s customers. It also generates more trading volume, which is good for everyone. We, as an industry, must do something to get completely new customers.
            So how can we go about getting new traders? First, we should acknowledge that people outside of the trading industry do not understand the stock market; some may even think it is an evil institution. Thus, advertising our specific services may be ineffective in attracting new clients to the trading industry. We should be advertising the fact that trading can be a wealth generating endeavor. The key term here is endeavor: despite what you may think about people of average intelligence, most people are savvy enough to ignore get rich quick schemes. Also, advertising advanced tools that are available is not helpful to those who do not know what they can be used for. Keeping this in mind, when starting new marketing campaigns, we should avoid trading jargon and also avoid seeming predatory. Then what would a new marketing campaign even involve? Well, if the aim is to get more people interested in this industry, advertisements aimed at creating awareness of the possibilities on the stock market while also emphasizing brand recognition should be the most effect. Using this method, new consumers will either come to you to learn more about the markets, or do their own research. Looking on the bright side, if the new traders you attract to the US exchanges ultimately choose to not employ your services, they become traders that your traders can trade against! If nothing, your new marketing campaign will at least create more profitable situations for your existing traders.

Friday, May 17, 2013

We have made it and it is a special thanks to our all DAS Supporters!


Dear DAS Supporters,
This year marks ten years of providing direct market access technologies to online traders. By offering low latency tools which empowers traders to execute orders on most exchanges, dark pools, market makers and smart order routers, we give our traders the edge high frequency traders use.
We pride ourselves in being one of the pioneers in the direct access trading industry. Before there was Direct Access Software, the average trader’s order took minutes to execute, today it can be done in microseconds, which is truly amazing innovation of our DAS Trader system. DAS Trader combines high speed orders with essential tools that will assist traders in getting best price executions and faster fills in the market than a regular online trading platform. Our trading platform was designed to give the active trader the same advantages as the big hedge funds, investment banks and their stock brokers. One of the most unique advantages to our infrastructure is our colocation in Nasdaq OMX’s datacenter and having high speed connectivity using fiber lines to all the major North American exchanges.

I have watched our company grow from having a few servers in our office to now having over 100 servers in the NASDAQ datacenter, with hubs and connection points throughout the tri-state exchanges hot spots.

I am happy to say that our first client who we has been on board 10 years ago with the DAS Trader platform is still a client with us today and it is a testament to our success.
I’m very honored and blessed to ring the closing bell at NASDAQ to celebrate this milestone in our company and technology’s history.
Thank you,
Karen Gentile
CEO & Founder

Friday, March 22, 2013

Network Issues


Dear Valued Clients and Friends,

We understand that you are extremely frustrated with our failures this month. We are very aware of your concerns, losses, and general frustration. This is a very serious situation for us as we pride ourselves on providing excellent tools for our traders to make profitable decisions every day, and we need to continue providing these tools to you. Here are the steps we are taking in the next week to resolve future issues:

1. We are in the middle of switching our backup internet providers as our current backup, as you know, cannot handle our volume of traffic. We have previously acknowledged it was inadequate and will have the new line in place next week.
2. We are getting a new networking staff. We hear your concerns and feedback, we are taking this seriously and are already in talks with networking professionals who have years of experience with networks similar to ours.
3. We are restructuring our network. The new network structure will seamlessly integrate our backup connections so you will not have to do anything on your part when there are network issues.

We sincerely thank you for your continued patience and dedication to DAS Inc.

Sincerely,

Karen Gentile
CEO & President

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