If you compare with datek or scottrade, IB's commission of 0.005 cents per share for > 500 shares is not cheap by any standard. Let's do simple math 5000 shares of ABC share cost you $9.99 which is equivalent to 0.002 cents/share at datek. For the same number of shares, you have to pay $27.5 0r 0.0055 cents/share with IB. In percentage term, it is 175% more than what one is supposed to pay. IB should reduce its commission by more than half to be called it cheap. 175% more premium is for nothing
This is what has been dubbed the per share vs. ticket debate. It really depends on your trading style. What if you want to partial into those 5000 shares? and then partial out? Hmmm? Do a search (top right of screen) and you'll find many threads discussing this at great length.
I wouldn't be surprised if IB gave us a commission cap in the near future. Their track record speaks for themselves, reduced commissions, increased margins (4:1)......how about it def?
I doubt any serious trader with that size will trade with datek. If i can trade size of 5000 and up it would be stupid to trade with datek. For Swingtrading it may be ok, but not for intraday-trading or scalping. And for anything till 2000 shares ib is alright. And for speed i doubt datek is faster. I traded earlier with datek and fills were very poor (don't know how fast fills are today). So, add the poor fills as extra cost .
I'm currently still at Datek, as an Elite customer. While Datek is way better than the discount brokers we have in Germany (where "discount" is a misnomer), I feel quite unhappy meanwhile about Datek's ticket charge of $10 for each trade. IB's per-share commission is much better and encourages active trading. The reason I'm not yet an IB customer is primarily that I'd like to see much better customer support at IB. Just for the THEORETICAL case that I have a problem or some contentious issue someday, I'm not the type of customer who wants to contact the customer service everyday (on the contrary!, have never really used the Datek customer service so far, but it's good that they have at least a customer service if one needs it)
forget about a cap on fees (at least that's my perspective). the one's offering a cap are subsidizing the size trades with the higher fee on the smaller trades. what do you think the average trade size is with the firms charging caps? they also know that taking a loss on then entry can lead to huge gains for them on the backend as many people scale out. it is a tradeoff. if you are able to get 5K on one fill, when closing the order are you doing 5K at a time or 5 1K orders. If you do 5K at a time and don't scale out, perhaps you're better off with a fixed fee broker. you can't be all things to all people. one last thing I'd like to add, all insitutional trading desks that I know, pay per share without a cap.
Comparing Datek to IB is like comparing Bill Clinton to Ronald Reagan. .......And, if you have to ask.....No, I can't explain. IB commissions not cheap? Give me a break!! BSAM
To the small investor, IB can not be beat. The commisions can eat most small investors right up and make it difficult to get in and out of trades quickly and to do partial sells. I work with an account under $10K and Datek, Etrade, and all those places would kill me. Say I buy 20 shares of a $30 stock, thats a $6,000 investment. At Datek or anywhere else, thats at least a $20 -$25 roundtrip. At IB its about $4-$5. Say I do 20 trades per month about this size, thats at least $300 bucks I save on commissions alone. Yes, I wish they offered a bit 'sexier' service, but bottom line is that it adds to my 'bottom line'. I would love trailing stops and a way to transfer money from my bank account without having to pay a wire fee, but its minimal bitches from me. Unless you can show me a cost savings equivalent elsewhere, IB is the place for me.