If I understand correctly, you are saying that the trades only take place twice a day during windows. For an active trader (and that is presumably EXACTLY who they are trying to appeal to), I would think that would be a big negative. Being able to buy at specific times when a stock looks appealing is important - especially on small or micro caps that have spreads of 10% and wild variations. And, how do they handle the spread issue?
Good questions. Foliofn offers two classes of trades, both window and market. Market trades are executed in real time (during market hours) and at cost if you don't get x amount free. The spread issue is whatever's going on in the market at the time the order's placed. This is similar to what happens at any other brokerage.
Window trades, on the other hand are their strength. What they do with these is combine orders internally between users of their service, only going to market if there is excess beyond what won't be filled internally. In other words if I'm selling 100 shares IBM, for example, and someone else wants to buy 100 shares, this order would never see the market and would get a better spread than the market spread as the whole process is internally resolved. On the other hand, if I'm selling 1,000 shares IBM and someone only wants 100 in that same window, the other 900 will be sold on the market and I'd get effectively the two spreads (100 internal, 900 market) combined.
The downside of the window trade is that you don't know the exact fill price you're going to get. Further, quotes on Foliofn's pages are under a 20 minute delay. I've gotten around that using the Medved Quote Tracker, giving me, in essence a window "20 minutes into the future." So I see if a trend is continuing as the window closes - I'll let the trade continue - sometimes I've yanked a trade out of the way beforehand. In balance I'd say overall the trades balance out and that I get a trade most of the time that's favorable.
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