IB commissions for low priced stocks

some simple math:

1000 shares *$1* .002 (.2% is the max commish) = $2

1000*.01 (1 tick) = $10

You state: it is impossible to trade with this structure.

I state: Buy and sell for 1 tick -> earn $10 - cost of $4 = net of $6.

I ask: why is this impossible?

 

never touched stocks priced @1 yet, so u might be right there but on those priced at $3, commish for example on a 1k shares is $10 r/t.

 

Looks like break even on 1 tick. You're shooting for more than a tick, though... right?

 

i shoot for much more otherwise it ain't worth it, but i've been proven wrong over and over and costs are killin' me...u break even on 2ticks--u gotta go past spread and commish.

 

Good question about commish. I look at these trades differently than bitstream, however. To me, the relevant numbers are how much profit. That is what is going to cover the commish. If a low priced stock is in the news or whatever and looks like it has a dollar or so range on it, then what makes the diff whether it is a forty dollar stock or a three dollar stock? You are still looking for a fifteen cent or more pop whether it is a low price stock or a thirty dollar stock. How much of the profit is eaten by commish is the relevant number, not how much of the investment. Low priced is a plus because it allows you to buy more.

Of course, playing around with a low priced stock for a few cents does not work with these commissions, and is best left to the swift boys, who have commish rates designed to benefit from those moves.

 

Have two accounts, one at IB and one where you get a better deal for lower priced stocks.

 

ja, u are right and that proves my point ib has everythin' to lose by keepin' those commish so high.

 

Which firm then?

What's the price?

 

Anyplace that gives you a fixed price for a limit order, unlimited shares. For example, TD Ameritrade:

http://www.tdameritrade.com/pricing.html

The breakeven commission point (not including SEC fees) would be about $5,000 worth of stock traded. At IB:

$5,000 * 0.002 = $10

So supposing you trade a $2 stock, you can trade 2,500 shares of it at IB and be at the $10 commission mark. If you trade 10,000 shares at IB you would be at $40, TD Ameritrade would still be $10.

I just picked TD Ameritrade out of the hat - any firm that gives you fixed pricing would do the trick.

 

when you lose a penny each way because ameritrade directs the order to nite in order to get paid for the order flow
you will lose the entire savings on the commission + more.