NEW YORK Jan 8 TD Ameritrade Holding Corp
introduced a trading tool on Tuesday that it says will
shed light on small investors' engagement with the stock market,
a sentiment indicator that can guide other traders.
Dubbed the Investor Movement Index, or IMX, it measures the
ongoing risk appetite of the online broker's approximately 6
million customer accounts and will be published monthly. It is
based on positions of TD Ameritrade clients with $2,000 or more
who make at least one trade during the month and is calculated
according to a proprietary formula that scores each account on
the riskiness of new positions taken during the month.
The index responds to perpetual questions from journalists,
analysts and traders about the mood and behavior of retail
investors, TD Ameritrade Chief Executive Fred Tomczyk said.
The company will offer the results on a public website with
specific comments about its clients' most and least popular
stocks. But it will give more "granular" detail about industry
sectors and particular investor demographic preferences to its
No competitor offers a similar index and it will take them a
while to develop the methodologies behind it, said Steve Quirk,
a senior vice president of TD Ameritrade's trader group who
specializes in options trading.
Spokespeople at Charles Schwab Corp. and E*Trade
Financial Corp. did not respond to requests for
In a somewhat surprising finding, the index rose in December
amid the "fiscal cliff" debate on the U.S. budget after staying
flat in October and November. That shows it can at times correct
the damaging sentiment within the securities industry that
retail investors pile in or out of stocks long after the "smart
money" has moved, Quirk said.
Because the index is based on actual trades, it is likely to
be more behaviorally accurate than surveys of consumer sentiment
by various groups and more reflective of retail trading than the
CBOE Volatility Index (VIX) that is heavily influenced by
institutional investors and professional traders, company
Steve Schnipper, an active trader from New Jersey who spoke
on a panel at the index's introduction, said he might benefit
from the index if TD Ameritrade shares index data with him from
more sophisticated customers in options and other areas.
"As a standalone number it doesn't mean much," he said,
adding that "the monthly schedule doesn't do a lot to show you
Richard Repetto, an analyst who follows brokerage firms at
Sandler O'Neill & Partners, said the index may be moderately
beneficial in revealing the hidden behavior of small investors.