Brothers William and Rafael Cruz came to the United States together. They trained to become award-winning classical violinists together. And in 1982, they abandoned promising music careers together to launch Omega Research, a Miami-based producer of the stock-trading software known as TradeStation.
Now, together, the Cuban-born pair are orchestrating the company’s transition from software maker to full-service online brokerage.
For years, Omega Research prospered by selling programs that allow users to design, test, automate, and execute their own trading strategies. By the late 1990s, however, it became clear that such software was giving way to direct-access trading on the Web. So last year Omega Research merged with Onlinetrading.com, a leading Web-based brokerage for active traders, in an all-stock deal valued at $300 million. The company acquired WindowOnWallStreet.com, another online trading site, for $16 million in assumed debt and newly issued stock. Omega Research also launched TradeStation.com, a subscription online trading service.
In December, the company changed its name to TradeStation Group Inc. William Cruz Jr. remains president of the company, and he and Rafael are co-chairmen and co-CEOs. Each owns 20.6 percent of the company (Nasdaq: TRAD). The Cruz brothers control approximately $124 million in equity, based on an average trading price of about $2.57 per share.
With each passing day, the company’s fortunes depend less on selling software and more on online subscriptions and commissions. “We had to shift our strategy,” admits Rafael. “That’s really what we have been doing the last two years – redefining our company. We were selling specialized trading software in a time when software meant high-tech. Now software is ancient. It’s an Internet world.”
TradeStation Group calls its new service the “next-generation trading platform for the active trader.”
WindowOnWallStreet.com provides complex market quotes, securities charting, portfolio management, discussion forums, and analysis. So far, the site has more than 12,000 subscribers who pay $79.95 per month. Customers spend an average of six hours per day using the service.
OnlineTrading.com is a direct-access online brokerage serving upper-income individual and institutional investors. The site, which had not launched at press time, will incorporate the latest version of TradeStation Group’s analytical trading software, TradeStation Pro.
Many competitors market analytical trading programs on the Internet. TradeStation’s edge, however, is its reputation and longevity in the marketplace. For eight consecutive years, its software has won the Readers’ Choice award given by Technical Analysis of Stocks and Commodities magazine. TradeStation Pro is written in its own programming language and has an exhaustive list of prepackaged trading strategies. Many people who buy the software sell or exchange trading strategies they create.
Here’s how TradeStation works. Suppose you want to purchase only stocks of semiconductor component manufacturers with more than 30 percent annual earnings growth that trade under their 50-day moving averages. The software can produce a list of currently traded companies that meet such criteria and predict their performance. You can choose stocks that match the criteria over a five-year period, for example, and chart their performance. The software also allows you to “paper trade” to test your selections. Investors can apply a similar approach with futures, options, and currencies.
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