I have not traded stocks before with IB. Need some help on IB's commmssion rates. For bundled rates, IB's rate is $0.005 per share. Example, purchase of 1,000 share @ $50 share price will cost $5. Does this include ALL exchange or whatever fees? Another question is: can i short the stocks that I do not have? can I sell it to the nearest bidder, or do I have to sell 1 tick higher(I have heard of the uptick rule) and finally.....does this uptick rule and short selling rule apply when selling ETFs(exchange traded funds)?? Thanks a lot
The bundled rate include exchange fees, so it matters not whether you add or remove liquidity. There is a $1 minimum per trade, and if you modify an order (price or quantity) after a partial fill, it is treated as a new order for the $1 minimum. The uptick rule is gone. But the broker must be able to find borrowable shares, otherwise it is a naked short which is "supposed" to be illegal. This means that some of your short orders will be rejected because no inventory is available or held until shares can be found. This applies to ETFs as well as stocks. NB: My experience is with U.S. stocks only, so these answers could be different for foreign exchanges.
For the ETFs, how would I know if IB has stocks available for traders to short? Is it OK to initiate shorts on ETFs on the assumption that stocks are available? What about margin? If I were to short say $10,000 worth of ETF, how much margin is required? Thanks
There's a data column you can add to the TWS screen that shows if a stock is shortable or not. Green if shortable, red if not.
Margin requirement is the same for ETFs as for stocks, long or short (25% intraday, 50% overnight). The software gives you an indication whether an issue can be shorted, but I have found that to be unreliable. You should expect to have some short orders held or rejected. Availability for shorting also changes continuously during market hours.