The IB system did not bogg down, probably because not many individual investors use it. However, it does have annonying connecting time when you start, which is fairly long. But you only have to do it once to open it. No checks were lost! (I only sent one so far) Confirmation is usually in seconds, but sometimes it takes longer especially when the stock is very volatile. I could not get a limit order filled when a stock spiked down and quickly recovered. I tried to buy at the ask price when it was going back up. But the ask price went up and my order never got filled. I don't have any marketable order that took more than 3 minutes or any hung up cancel. But a lot of times, 3 minutes or even 1 minute is TOO LONG. I have some "botched" trades, but that depends on what you called "botched". If I send an order for a buy at a particular price and the price goes up in 10 seconds and my order could not get filled, then I would call that a "botched" trade. There are many botched trades with IB by that definition. This perhaps happens more often than other brokers I use, such as Scottrade and E*trade. I still like IB for some trades. It's excellent for options execution. The bid and ask spread on options is much better than what I can get at other brokers. I usually use it for option trades. I also use it for stocks that have narrow spreads (1/16 to 1/8) so that cutting spread is not really an big issue. If IB can improve the routing of limit orders so that they appear on the Level II screen, then I would use it more for stock trading. Perhaps someone from IB (def) can comment on any possible plan to improve this?
I'll have to get back to you on why quotes are not making it to the level II screeens. I'm based overseas and need to talk to someone in the states during NY hours. Important to note, is that we do not sell order flow and if you are not filled on a NASDAQ stock, my guess is that it is a market maker not honoring their quote. However, I will attempt to provide you with a satisfactory answer. BTW, you are underestimating the number of clients that use the Interactive Brokers system. Putting us in the same sentence as browser based systems is like comparing a ferrari to a school bus. If you want fast order entry and fills, a java based brower is not your best bet. It's unfortunate that you only trade stocks on markets with tight spreads. The IB system allows you to place and work an order inside the bid/ask spread. Even if the quote does not show up on level II, I'm ceratin that order is still being worked. Finally, kobuk is correct that Timber Hill trades all over the world. Outside of the US where where open outcry prevails, most markets we trade are electronic. We build what we believe are the best and most efficient order routing systems for our proprietary trading and then adapt these systems for client orders. (the prop side never sees a client order until it is on the trading floor or exchange order book). These systems are constantly being upgraded. As a result improvements to the software are ever present and I would not be surprised if some of the issues described above have not been resolved. In any case, I'll try to a reply regarding level II soon.
To trader22 and def the above responses were indeed interesting. ...I used the TWS trading demo on stocks and had several trades get "botched", yet the distinction between just simply "missing" an entry point and a "true" botched trade is of course enormous as everyone knows. A "real" botched trade, is the kind you get when you combine customer service that stinks, with system a failure or net conjestion that jams a browser page, not to mention alot of other weird shit, ...and a wait on the phone over an hour to be told that everything is YOUR faUlt, ... ... with absolutely none of the fault being theirs (etrade, datek, ...etc, etc.) Comparing browser trades to trades done on the TWS system, ...to buses and ferrari's just about says it all. I see from using IB's TWS demo that it is possible to complete vastly more trades than with a browser, simply because it is "interactive", with no waste of precious time. No need to run over all the details again. Browser-trading is like duck hunting, with the rules being that you must keep your gun unloaded and zipped in it's case until a duck is withen range. Well shit', ...you can't hit a damn thing unless the thing squats down in the decoys, which aint' usually what happens!!! ...now you understand my frustration with day or swing trading with browsers. It looks to me like the future of trading is probably headed towards what IB is doing. At least for day and swing. The longs can probably do just fine with 90 second page-flipping trades. But other than going long, browsers just are no fun to use anymore. To all, ...have a great 2000. ...kobuk.
kobuk, thank you for pointing out the disctintion between a botched trade and not getting hit on a limit order. Nevertheless, I have spoken with some of my colleagues who are more familiar with our NASDAQ execution and received responses along the lines: IB is constantly improving its system and tweaking our order routing system to maximize speed of executions. We are constrained by the nature of the NASDAQ trading system where there is no central order book and the responsiveness of market makers vary. To say that an order went unexecuted because the market moved and no one hit the order therefore we botched the trade is unfair. Nonetheless we take all complaints seriously and address each problem systematically. One thing that you can bank on with this company is we are constantly seeking ways to improve our order routing and speed of execution. With this in mind, I hope you do not mind if I post a letter that we have sent to all of our clients regarding best execution. Exchanges and some of their members are fighting to maintain their franchise at the expense of the retail investor. What is going on at the CBOE pales in comparison to the rules that the ISE is trying to implement on there so called electronic option trading system. Hope you have a great and profitable new year and here's the letter, if you agree, I not only encourage you to write to the SEC but your congressman as well. December 29, 1999 Dear IB Customer, For years investors have been searching for a competitive environment in which to trade equity options. Interactive Brokers' best execution system provides investors this opportunity. The system offers fast, automatic execution of equity options at the best possible price. The problem, however, is that recently exchanges have proposed rules that drastically undermine the capabilities of this long awaited solution. For example, rule changes by the Chicago Board Options Exchange (CBOE), which have been "pre-approved" before public comment by the Securities and Exchange Commission (SEC), currently deny the automatic execution of customer orders if any other exchange price locks or crosses the CBOE market. This rule change compromises the advantages offered by CBOE's automatic execution system because orders may be kicked out for manual handling without notice. Furthermore, once an order is removed from the automatic execution system, the customer loses control of the order given that it cannot be cancelled or rerouted to a subsequently better bid or offer. We expect other exchanges to adopt similar rules. These rules have a serious debilitating effect on the quality of service offered to Interactive Brokers customers. They deny the customer the full benefits afforded by technology as well as the ability to truly compete. Interactive Brokers has submitted comment letters to the Securities and Exchange Commission opposing these proposed rule changes. We state that the "Commission should resist any rule or plan that reduces competition, places the interests of exchanges or their constituents above the interest of customers, or seeks to deny customers the dramatic benefits of rapidly advancing technology." We urge you to read our comment letter posted on our website as a pdf file at http://www.interactivebrokers.com/download/comment5.pdf. This is a very important issue, and your opinion can make a difference. If you agree with our view, we encourage you to comment on these rule changes and the effect they will have on you as our customer. Please route your comments in care of: Jonathan G. Katz, Secretary Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Thank you for your attention to this letter. It's time we put an end to rules and regulations that stifle competition. Sincerely, David Downey Executive Vice President Interactive Brokers LLC
There ya have it. .... Just when the individual investor at home starts to do well using an automatic best execution system, the bs from rules regulators starts. No doubt the fox rules the chicken house wherever big bucks change hands. ...SEC, CBOE, ...whoever the hell they are. What exchanges are probably really whining about is the fact they don't have themselves standing as the middle-man between my sell and your buy and visa-versa. That's when they probably screw around and make billions we don't know about. They don't just want the automatic spread they make, they want to f#ck around too. I just hope the growing power of the huge mass of individual investors can keep snowballing the current online trading revolution that is making competition and fairness the major factors. There is absolutely no excuse in a free country, preserved by the millions who died in two world wars, for my trade NOT being executed in the best possible way. Anything less is just corruption. Kicking orders out and manually messing around with trades sounds to me like mafia style bs. ...It flies in the face of technologies growing ability to handle the astronomical complexities of trading far more efficiently than if attempted manually. I don't really know what is going on, but I smell something that stinks. ...enough to gag a maggot
DEF; thank you for the heads up on the rule changes at CBOE. This explains, I believe, some odd executions I experienced in the past ten days. The most peculiar to was an order to sell-to-close 10 contracts at the bid on CBOE. It took twelve minutes and three separate transactions to complete!! Meanwhile, the bid never changed. Go figure. After reading IB's letter to the SEC I would like permission to re-print it and send it to my senators under a cover letter from me. If this is o.k please let me know. Anyone out there who now trades options or thinks they might should read the above mentioned letter and pass your comments on to the appropriate individuals. Thank you, white17
white17 - send it to the head of the SEC too, your senator probably won't really be doing much about a rule change that's within the SEC's purview.
I'd be all for any contacts with your congressman and the members of the finance committees regarding the letter. In the end though, I believe the SEC approve or rejects the rule changes. Pressure from congress of course couldn't hurt. If you get the time, read the comment letters on our website (www.interactivebrokers.com) under news and research. The comment letters have been cc'd to the Chairman of the SEC. They are quite detailed and as I think I posted above an interesting read. If you forward our letter or create your own, please add a link or mention the comment letters which provide "meat" to the arguments. whitel7, I hope you are patient with us as we fight this battle. The wait for those fills is unacceptable and we will be constantly modifying our routing to optimise your fills. Timber Hill has been up against this type of opposition many times during it's history. It seems a mjority of firms and traders enjoy the status quo and fight innovation. If you work at Timber Hill and/or Interactive Brokers - that is just unacceptable.
bro59 could you or someone else clarify a little bit? Here is the question:if I go HIGH BID on the IB system do I show up as high bid on the general level 2 screen? And if I do what am I called? For example on the Watcher system I use I am the ISLD (island ecn). I can see myself go high bid, low offer etc..I am an active participant. Also can I preference almost anybody like I can the Watcher? ------------------ mikev