How does Composer trade?
After you set your portfolio, Composer utilizes an automated trading system.
Composer aggregates all trades and executes them during the set daily trading period. The orders are executed daily between 3:00 and 4:00 PM Eastern on days the market is open. All trading activity for the day will be completed during this time, and your portfolio will update after the orders have been executed.
Editing or liquidating your Composer created symphony
When adjusting your symphony (e.g., adjusting the percentage of current equity holdings or adding/replacing equity holdings):
- Your portfolio won’t automatically buy and sell holdings to return your portfolio to your new targets. These changes will be executed during the next trading period that falls on a trading day as defined by the symphony logic.
When you edit your symphony
- Composer will liquidate the holdings and reinvest the money in that same Symphony.
- As an example, let’s consider someone who has created a symphony that holds 60% SPY and 40% BND. The person then edits the symphony to hold 50% SPY and 50% BND. The next time the symphony is set to trade, dependent on the symphony’s set trading frequency, Composer will sell shares of SPY and buy shares of BND to match the new asset allocation determined by the edited symphony.
Composer allows users to rebalance their portfolio. This includes the ability to swap out equities and ETFs or to edit the frequency that the portfolio rebalances.
If a circuit breaker is triggered in a stock or ETF you own or want to own, we may not be able to fulfill your order in the window you want.
Depending on whether the trigger is a Level 1, 2 or 3, we may not be able to execute your trade on the day you requested it. Regardless of what happens, we will communicate with you and inform you on the conditions that kept us from trading.
Executing trades on trading days
Changes to your portfolio made before 3:00 pm ET will usually, but are not guaranteed to execute before that time.
On non-trading days changes to your portfolio will complete during Composer’s trade window on the next day the NYSE market is open.
Orders not held
The primary method by which customers provide instructions to Composer regarding the securities they want to buy or sell in their account is by constructing Symphonies. When customers subsequently make changes to the allocation of the securities in a Symphony, the corresponding trades will complete during the next available execution time on the next trading day for the symphony.
Buying or selling at the next available execution time
In order to do this, Composer customers should note that all instructions are considered "not held" orders.
- Typically, a “not held” order provides the broker-dealer with price and time discretion in handling the order, whereas a broker-dealer must attempt to execute a “held” order immediately.
Composer exercises time and price discretion with regard to execution. The exercise of time and price discretion has a direct impact on trading and the fill prices the customer can expect to receive.Before placing orders to buy or sell specific securities through the Composer platform, customers are encouraged to consider the extent to which they wish to control price per share and time decisions within their personal trading and investment strategy. Customers who determine such control to be important to their strategy may need to consider alternative investment platforms for those strategies.
What can cause a buy or sell order not to be fulfilled completely?
1. Lack of cash available to complete buys
If you don’t have enough cash available to trade in your brokerage account for all buy orders, Composer will use margin, if available, to fill the orders. If not, the orders will be rejected by the brokerage because of insufficient buying power.
2. Fractional Share Limitations
A fractional share is any equity in a security that is less than one full share.
Example: If Stock A is selling for $900 per share, we can purchase Stock A in $.09 increments because 1/100,000 of a share of Stock A is $.09. If a user has a $100 buy order for Stock A, the closest we can get to $100 using a $.09 increment is $99.99.
Explanation of fractional shares
A fractional share is equity in a security that is less than one full share. The split puts every share into 1/100,000th of a share so you can trade exact amounts of each based on the targets set in your portfolio.
Sell orders not receiving enough to make buy orders
When you submit buy and sell orders during the execution period our system will sell first and then buy using the received funds, all done through your brokerage account.
If the received funds from the sale are less than expected, the buy orders will be prorated to the funds available.
How is my portfolio balanced?
Composer’s algorithm aims to keep your portfolio balanced based on the symphony logic that you select.
Money is first divested from overweight securities and is first invested in underweight securities. That way, your securities grow closer to your ideal target percentage
What price will my trade be executed at?
Composer is not a broker dealer and the price of execution will be dependent on your broker dealer. Composer executes its trades through your broker dealer. Your Broker Dealer has a duty of best execution. The duty of best execution legally requires brokers to seek the best execution reasonably available for all customer orders. To comply with this requirement, brokers evaluate the orders they receive from all customers in the aggregate and periodically assess which competing markets, market makers, or electronic communications networks (ECNs) offer the most favorable terms of execution.
Some of the factors a broker must consider when seeking best execution of customers' orders include:
- The opportunity to get a better price than what is currently quoted
- The speed of execution
- The likelihood that the trade will be executed