ahhhh- don't take it personally man- my point was that most (not all) people who are retail are clueless and not professionals when it comes to trading- yet they still pay less then the professionals at prop firms.
ok, ok- it seems i have pissed some people off that trade at IB by calling them scrubs. i understand that many of you are professional traders and choose to use IB for the lower rates (probably the only reason) now, there is nothing wrong with that and i am not trying to discredit anyone who trades at IB. my contention was that the majority of retail traders are in fact "scrubs" as i see it- they trade maybe 500K shares/ month, are not very active and are not exactly the "smart" money in the market. for the professionals that are active traders, trading for a living at IB or a similar "retail" firm , that is a different story. also, lets keep this thread on topic and not get into a pissing contest here- we are all adults and many of us ARE professionals here- where you trade is not the issue- it is what you pay for the privelege to trade. cheers!!
The rates that you are paying for the volume you do is definately ridiculous. You should probably be in the range of 3/4 cents per share with no desk fee's (these are ridiculious by the way). The advantage you get at a prop is the office enviroment, but more importantly THE LEVERAGE!! Most retail firms give you 2 to 1, whereas at a prop firm, it can greater then 20 to 1.
hahaha! i think you're even more obnoxious than me! but you are definitely wrong in thinking that share volume is any measure of how good a trader someone is. definitely wrong. and i'd have to agree with aphie on this one, it does seem that you've just woken up and realised your "professional" (what a misleading term, as there are no end of deadbeats there, if u trade where i think you do) firm is raping you on commissions... question for you. are you actually using all that leverage they give you? if not, screw the "pro" firm crap, find a truly "professional" deal (they're out there, and not even that hard to find, and much better than .075), or just go IB..
Smoke, I'd be willing to bet that the top pikers at IB do as well, if not better, than the top performers at many of the so called professional shops. They may even do more volume. But you'd be comparing apples and oranges as many of IB's clients are a who's who's list of professional fund managers, FA's, CTA's, investment banks, hedge fund managers, ex-floor traders and some fantastic traders sitting at home and trading on their own. IMO, The larger the account, the less likely one would want to go pro. IB's speed of routing, if not the best, is amongst the best industry. Basket utilities, API"s and guranteed VWAP's are not the tools of scrubs. Even if these higher net worth accounts don't choose IB, they would seek other alternatives besides a prop house. Anyway, no offense taken by me. To get back to your question. IB self clears, has a prop side that is consistantly amongst the most active traders world wide, is almost completely automated and even provides access to some other brokers/houses on a give-up basis. Most prop/prof firms and other brokers are not self-clearing, don't own the exchange seats, and do not have the economies or efficiencies of scale to offer the same rates as IB. Simply put, IB can do it at a lower cost.
Smokey, When I trying to get started, this is also the firm I was going to, so I know a little bit more than just .01/share. I noticed they are really smart and shrewd running a business from a few little things: - You have no choice but to take the class before even you start. (My guess is that this pie goes to Don. It is justa guess. Don, if you read, why don't you tell us) - desk fee $600/400 depending on if or not sharing FA, even though Redi+ cost them nothing. - Volume rebate is calculated based on 100K increments, my understanding is that the residuals you don't get rebate, this might not much for each trader each month, but a lot to firm's bottom line. - short stock interest has to be start with more than $100K short stock value. Also not much for a trader per day, it adds a lot to firm's bottom line. - What was told at sales seminar 25% "reserve" actually is worded differently in the traders agreement. It is worded something like, when trader withdraw profit, firm takes 25% profit. At the year end firm will distribute those 25% profit back to trader. While I don't have any accounting background, my understanding is that firm is using traders' profit to protect owner's capital, very smart risk management. My conclusion is that they want every fraction of peny possible from their every kind of traders. Do I want to be their "customers"? ONLY if I have no other choice. Those were just what I observed and thought then.
wan2be, think about it man. how in the world are those "professionals" gonna be able to pay their taxes unless 25% is withheld till year's end? hey, how'd we all know which firm smokey's at?
Forget the "professional" atmosphere at prop firms, the "better software" or even the "learning from others" relationship that many prop firms advertise about. Whether to go with IB or Prop is simple. Access to leverage & bullets. (And if you are not a winning trader, then also add the ability to risk firm capital.) If you have enough equity where 4:1 margin is enough for your day trading needs, then all you'll need is IB. I suspect that eventually IB will offer bullets which will make prop firms even less attractive for the well-funded trader. I see no problems with a prop firm charging more on commissions when they are taking a risk by providing you with leverage. What if IB was allowed to offer customers a slightly higher rate if the customer wanted 40:1 leverage? I think a lot of people would jump all over that.