Did you know IB commish is lower than Global Futures?!

Discussion in 'Interactive Brokers' started by ML_QUANT, Jul 18, 2008.

  1. JackR


    Whre are you getting you figures? IB's commissions are "all in." This means there are no additional fees from exchanges, data feeds, platform fees etc.

    Assuming you want to trade the ES on the CME:

    300 @ $2.35 = $ 705
    700 @ $2.15 = $ 1505
    4000 @ $1.80 = $ 7200

    Total all in for 5000 = $9410
    $9410/5000 = $1.882 per side, $3.764 RT @ 2500 RT's. If you go to 5000 RT's then the average rate would be $1.661/side.

    I'd suggest you look at the sites that seem to be offering very low commissions and ensure you are not just seeing commissions without any of the exchange fees added.

    #11     Jul 19, 2008
  2. This is what is upsetting about IB, they make their comm. Structure so that between the 4 of us not 2 end p with the same results!
    Here’s how I reached my calc.:

    Cum. Tot. Comm. Cum Qty. Side Cum Tot. RT Qty. per Tier per side per RT Cum Comm. Side IB AVG. COM All In
    $ 360.00 300 150 150 $ 1.20 $ 2.40 $ 360.00 $ 2.40 $ 4.70
    $ 1,060.00 1000 500 350 $ 1.00 $ 2.00 $ 700.00 $ 2.12 $ 4.42
    $ 1,710.00 2000 1000 500 $ 0.65 $ 1.30 $ 650.00 $ 1.71 $ 4.01
    $ 2,360.00 3000 1500 500 $ 0.65 $ 1.30 $ 650.00 $ 1.57 $ 3.87
    $ 3,010.00 4000 2000 500 $ 0.65 $ 1.30 $ 650.00 $ 1.51 $ 3.81
    $ 3,660.00 5000 2500 500 $ 0.65 $ 1.30 $ 650.00 $ 1.46 $ 3.76
    $ 4,310.00 6000 3000 500 $ 0.65 $ 1.30 $ 650.00 $ 1.44 $ 3.74
    $ 4,960.00 7000 3500 500 $ 0.65 $ 1.30 $ 650.00 $ 1.42 $ 3.72
    $ 5,610.00 8000 4000 500 $ 0.65 $ 1.30 $ 650.00 $ 1.40 $ 3.70
    $ 6,260.00 9000 4500 500 $ 0.65 $ 1.30 $ 650.00 $ 1.39 $ 3.69
    $ 6,910.00 10000 5000 500 $ 0.65 $ 1.30 $ 650.00 $ 1.38 $ 3.68
    #12     Jul 19, 2008
  3. Jack:

    That number you arrived at for 10,000 sides is incorrect:

    First 300 sides are at $2.35
    Next 700 sides are at $2.15
    Next 9000 sides are at $1.80

    You do the math of the above is comes out to $18,410. For 10,000 sides that is $1.841 per side. Per roundturn that is $3.682.

    For what it's worth, I think that $.81 ML Quant is talking about is just for execution and clearing. It does not include exchange and regulatory fees, or any platform charges.

    My guess is that Velocity Futures is somewhat representative of the rest of the market, which I gave a link for above.

    #13     Jul 19, 2008
  4. All you gotta do is make sure you figure it out for execution, clearning, exchange and regulatory for each breakpoint. Not that tough...but either way, it's not IBs fault if some of us get the figures wrong. For what it's worth, your table is very difficult to read, but it looks like your number for 5000 roundturns is correct at $3.68.

    In terms of that $.81 you claim to be the "industry" commission, you need to define what the $.81 is, before it can be compared to anything else. Until then it is meaningless.

    #14     Jul 19, 2008
  5. There is a firm that I do not want to promote here since they clear with RCG which is the most brain dead firm around. Anyhow, they charge .35 per side which is .70 rt + 650 XT / 5000 = .83 / rt add 2.30 for all else and it comes to 3.13 rt Vs. IB at 3.68 the diff is .57 which is a humongous...
    It translates to .57*5000 = $2850 per month. Add it up and it will pay for a fantastic vacation twice a year. I'm not going to gift that to IB! However, IB at 150 rt is cheaper than most and hence, I might change my style of trading, like go with high price stocks like goog and pair with futures and options hence, keep futures vol per month to around 10 a day, and if need scalping go elsewhere specifically for that only. Otherwise, do your scalping elsewhere and take your swings to IB.
    I do agree, IB should lower their's and benefit the huge vol scalpers could give them.

    It seems, IB in the stocks contrary to the futures is amongst the lowest in the industry, their unbundled comms. is that true?
    #15     Jul 19, 2008
  6. First, I have no doubt at all that IB is not the low cost provider in futures. Nor are they in stocks. If cost is that important to you, you should not deal with IB...it's really that simple. Makes no difference to me.

    But let me give you a different perspective. Evidently cost is quite important to you. That $2800 is a very big deal to you....it represents vacations. LOL. To me, that $2800 savings doesn't mean shit. To me, that looks like stumbling over dollars to pick up pennies.

    I've dealt with alot of different brokers over my trading career. The first thing I think about when choosing a broker is whether my money is safe. Evidently you don't give that a thought. I guess your account is $100K. So if one day your $100K is in jeopardy because the firm you picked has suddenly been shut down, how will you feel about it?

    I've taken all kinds of risks every day in this business, for around 40 years. I've taken countless losses (and countless gains). But one way I never want to lose my money is because the firm I picked when out of business. I'm willing to lose because I analyzed something wrong. But I'm not willing to lose a dime because I picked the wrong broker.

    For that reason I stay happily with IB. Yeah, I spend more than I have to for commissions. But the firm is financially sound. And, the account is insured.

    Next though....I don't just trade futures. Sometimes I'll trade some stocks. I don't want to have to do that through multiple accounts. I want to be able to do it with minimum of effort, and then get back to my main thing which is trading futures. You want to putz around with multiple accounts, one for futures, one for stocks....more power to you. My time and convenience are important to me.

    I don't do it right now, but if I ever want to trade a stock in the far east, or somewhere else, I can do it where I'm at. I don't have to wonder how the hell to buy a stock in Tokyo. If I want to change some of my funds into a different currency, I can do it.

    But then again, I'm not scalping like that either. I'm not going to churn my account for $18K commissions a month on a $100K balance. LOL. I figured out a better way to trade in the last 40 years.

    Finally, I'm always surprised when a guy know a broker who has a very low rate, yet is unwilling to name them. That alone speaks volumes.

    Let's put it this way. I don't buy my shirts at the cheapest place in town. I don't drive the cheapest car I can find. There's a reason for that. I found out along the line that there's an interplay between cost and quality. You alone can determine where you fit on that scale. But when you're all the way down to the end on cost, you're usually in the wrong place.

    #16     Jul 19, 2008
  7. JackR


    OldTrader - You are correct, I did not save the spreadsheet I ran the numbers up in, must have screwed up a cell formula.

    ML_Q - OldTrader's calculated numbers are correct.

    My individual tier commissions are correct. I trade the ES and those are the commissions I actually pay.

    #17     Jul 19, 2008
  8. Jack,
    So are mine, in fact, 100% correct.
    If the posted table is not clear, the pic attached is crystal clear and ver informative.
    #18     Jul 19, 2008
  9. OT,
    Obviously you're not churning hundreds of contracts per day as I do, because, I find your way of trading very risky and I’m not in this business to try and justify where the market should be heading according to my analysis. The way I trade, the market can do what it likes and frankly I don’t give a shit because I’m perfectly paired which, is why the volume is high. To do that, I’ve spent 22 years using the power of computational numeric analysis to it’s maximum within my capabilities to reduce risk.
    Frankly, I don’t care if 3k a month is peanuts to you nor that there are families living on smaller budgets than that within same US nor about I’ll never give a cent more to IB than they deserve. However, what is important to me is risk & money management! The 36k annual excess comm. Expense you are trying to undermine, translates to 36% of the risk capital involved here. Meaning if I were to breakeven with IB at ZERO gains or loss Vs. had I traded with other lower cost brokers, itself translates to my having gained 36% with other firms Vs. ZERO with IB. So it would be nice to after 40 years of experience in this field to enlighten us with little more insight. Do you yourself make 36% a year?

    On the issue of not mentioning who the low cost broker is, like I said I don’t give a shit neither for them nor for their lousy RCG clearing so I’m not going to promote them here but, any informed trader should always be updated on everything happening in this industry and keeping up with the trader’s cost trend is a MUST since you need to compete with your other fellow traders and BTW, how would you do that if he has a 36% edge over you while you nag about not wanting to have to deal with 2 different brokers? BTW, I don’t even do that manually, only work with brokers who do have an API. Although I watch every tick personally.

    On the issue of funds at risk with other Brokers? Trust me if the other Broker and or RCG go belly up, your money will be worthless any ways.
    I am also surprised why you lead the audience to believe as to why only funds at IB is safe?! Don’t they all have the same insurance?

    Conclusion, IB is the choice broker for anyone trading LESS than 151 RT a month.
    #19     Jul 19, 2008
    #20     Jul 20, 2008