First off I'm kinda new at this and dont know alot so im sorry if this is stupid.. I currently use Etrade with $9.99 commission.. I intra-day.. so i am doing anywhere from 30-65+ trades a day with 2500-5000+ shares.. now i keep hearing how IB has great commissions.. but even with Etrades high 9.99 flat rate it would be cheaper than IB with 3-5,000 shares? ex. i made 40 trades 3,000 shares each.. so each trade (buy/sell) is $20 on Etrade.. on IB with their flatrate (.005 per share) that would be $30 ?? am i missing something here? or is IB not right for me? I know they have "unbundled" but after reading that i am still slightly confused on what it is and it doesnt seem right for me?? EDIT: i also forgot to say i only trade Stocks/ETF's
UNLESS things have changed in the last few years I am almost certain you are giving away lots of $$$$$ potential profit in unfilled orders, slow fills and all the other nonsense that etrade tortures their customers with
if you are trading this much you really should consider opening up a account with a direct access trading firm. You need a real platform.
Who: In general a direct access broker gets you better execution. If you improve your buy or sell by a penny per trade your are already ahead even at a $20 bundled commission cost. However, your question can't really be answered without a bit more information. IB's unbundled rates may or may not be cheaper. It depends on your trading style - Do you always use limit orders? Market orders? Limits to enter and Markets to exit or vice versa? Market orders remove liquidity and limit orders add liquidity. - What type of stocks do you trade. Where do they trade? This may or may not drive you (or IB's SMART system) to a particular exchange or ECN. As you can see there are many different rates at the various exchanges and ECNs and not all equities are traded on all ECNs\exchanges. You'll need to add $75 a month to the total to pay for Level II info if you wish to direct your order to a specific exchange/ECN. You need to set up a spreadsheet with your typical trades for the past few months and work out the costs. You need to look at your average trade. In particular, Market versus limit orders. You appear to be trading between 3 million and 7 million shares per month. Calculate IB's average cost at the 3 million share level and the 7 million share level. Figure out the exchange fees and regulatory fees and apply them to IB's rates. Then consider the direct access advantage for probable price improvement and you can make decision. I'm assuming you trade by hand and not through an automated trading system so you don't need to worry about cancellation/change fees on stock and ETF orders. Jack
If you are doing the kind of trading you describe through Etrade you are probably losing 5-10 cents on every execution. That adds up to a lot of money very quickly. For that type of trading you definitely need to be using direct access. I don't use IB anymore, I now use Efficient Executions because their rates are alot cheaper and better customer sevice. For the volume you are doing you should check them out. Their rates: For 3million shares a month = $0.001367 per share For 7million shares a month = $0.001157 per share But you will have to pay exchange and ECN fees if you use direct access brokers, but those are alot cheaper than the slippage of 5-10 cents a share that you are losing on Etrade executions. However you also get rebates for adding liquidity from ECN's of $0.002 or more. So if you add liquidity and get a rebate the rebate will cover the cost of commission and leave a little money left over for you. So you actually get paid and make money for executing the trade instead of you paying someone to make the trade. You should take some time to learn about direct access trading and exchange and ECN fees. You should really take a spreadsheet and your last few months statements and see how much you paid in commissions to Etrade each month and how many shares you traded for those months. And compare what you paid to Etrade against what you would have paid if you had per share pricing.
Thanks for all the help.. i will keep reading and learning about this.. i know im losing alot of money with Etrade.. they suck A**.. and i hear IB is the way to go.. but i always hear IB has cheap commissions and they just didnt seem that cheap.. btu no doubt with a slightly faster execution it would make up for the commissions.. but let me get this straight.. the "unbunbled" means if i trade 300,000-3 million.. its $.002 per share.. and then monthly exchange fees and wat not? because i was confused about the unbundled..
IB's commissions are too damn high! For a firm that just reported huge profits, they're doing their customers no favors by keeping fees high at the risk of many walking away to startups. My #1 complaint? Why charge a min $1.00/100 shares? That's 1 cent/share! Why not charge .005/share across the board? European trading? Another ripoff! IB used to be competitive but no more. Their 'forte' is TWS and their order routing. But not fees.
IB's commissions when looking at the entire picture are very competitive. You need to look at execution first and foremost plus additional fees many firms tack on to their "advertised rate". IB recently receive the results from the TAG audit group showing large price improvement over the industry average. http://individuals.interactivebrokers.com/en/p.php?f=smartRouting&ib_entity=llc On stocks IB was 42 cents better than the industry average and 60 cents better on options.
No it means if you trade 3 million share in the month this is how your commission is broken down: 300,000 shares @.0035 = $1,050 2,700,000 shares @ .002 = $5,400 ------------- --------------------- 3,000,000 shares @@@ = $6,450 $6,450/3,000,000= .00215 per share (but remember there is a $0.70 minimum charge per trade, this can add up to another .001 or more for your average per share rate for the month) Also, 3 million shares: Interactive Brokers @ .002150 = $6,450 Efficient Executions @ .001367 = $4,101 ------------------------------ ----------- your total savings per month = $2,349