| 22 February 2010

TradeStation Securities (TRAD) has had a rough go of it over the last year. We recently reported how they missed their own lowered guidance for Q4, a result of the broker price war, we assume. Other firms, such as optionsXpress (OXPS) and Interactive Brokers (IBKR) recently turned in promising results -- especially with an increase in trading activity.

But if there's one place where TradeStation shines, it's with its dedicated users. You'll have to remove the trading platform from their cold, dead hands, we think. We say this because the results of the latest user survey are in, this one from Technical Analysis of Stocks and Commodities Magazine. Among its readers, the TradeStation platform was voted "Best Institutional Platform," and "Best Professional Platform." The firm also won awards for best in category in "trading systems" in stocks, options and futures.

Now, we don't want to take anything away from the hard-working team at TradeStation. They know their audience and they deliver the goods. But, the cold, hard truth is that these awards also tell you a lot about TradeStations problems: they are catering to market with a business model that isn't quite working anymore. Their DARTs dropped 35% last quarter while other brokers saw an increase in trading activity.

The company continues to generate positive net income, but at only about half as much as historical levels. Meanwhile firms like tradeMONSTER and thinkorswim are rewriting the whole approach to brokerage platforms and, while they are clearly catering to different audiences, their impact cannot be denied.