[October 2014] A software error in the Thinkorswim trading platform, which one trader says the Firm knew about more than six years ago, remains uncorrected, and could potentially be causing thousands of traders to lose millions of dollars every week and every month.
Donald Evans (not his real name) is a retail options trader who claims he lost large sums of money as a result of relying on the false information. “One of the reasons people trade options is because options have a theoretical value, which roughly translates to ‘If the price of ABC is X on a certain date, the option will be approximately worth Y.’ Y is a number derived from a complex pricing model that takes into account the number of days until the target date, the difference between the option’s ‘strike price’ and the price of the underlying asset or index, and the current and expected volatility of the market.”
“Obviously, it’s not a simple number that you could bang out in your head, especially in real time”, he added, “but a computer can. And so traders make their decisions based in part on what the computer is projecting.”
But what if the computer is not calculating that number correctly? What if the number is not just slightly wrong, but WAY WRONG? What if the system is projecting a profit when in reality the options will expire at a loss?
“That is exactly what the Thinkorswim platform is doing,” said Evans, “It is showing us, for example, that when the options expire they will yield a profit of say $2,000, but in reality they will result in a loss of $500.”
“I cannot imagine how many other traders have been, and continue to be burned by this error.”
“Thinkorswim should have immediately dropped all new development to fix this error”, Evans said, “Instead, their traders are programmed like robots to blame everything on the customer, even when their system is at fault, and so I was ‘scolded’ for having based my trading decisions in part on their system’s misinformation, and reminded that all information, etc. is provided ‘as is’ and with no warranty as to [its] accuracy.”
“Two senior people at Thinkorswim acknowledged the calculation error six years ago, but here we are, hundreds of software releases later, dozens of new bells and whistles added, yet the most fundamental options calculations are still giving grossly erroneous results under certain conditions.”
“It saddens me to see how many people are victimized by this abominable corporation every day. They focus on adding more “gadgets” and offering free trades to attract new customers, instead of providing timely, accurate data to their existing ones. But no matter how many devices you can trade on, or how slick the software looks, if it is providing false and incorrect data, it is less than useless.”
Disclaimer: Nothing on this page is to be construed as investment advice of any kind. We are not professionals or licensed investment advisers. We are real people who have been “burned” by TD Ameritrade and Thinkorswim, and we share our stories to help you avoid becoming their next victim.