Hi stevet... ...Just curious, IBs round turn is $4.80 for an emini S&P. What's the "professional rate" ?
"The fact is that they are not cheap - they are expensive in relation to professional rates" But these professional rates are dictated by volume correct? So in other words it is only cheaper for people doing 5k+ contracts per month correct?
independent professionals are charged whatever they are able to negotiate based a) their negotiating skills b) the volume they do and c) contacts they have
i guess the attitude hear shows why payment for order flow prevails in the US stock and options markets. People want to squeeze their commissions so low..that firms have to look for other sources of income. take $4 side which seems to be avg---exchange fees take a chunk and then take costs for clearing, exchange membership, servers, routers, lines to the exchange, back-up servers, back-up lines back up routers, T3 lines, programming staff, customer service staff, management, advertising, office space I wonder jsut how many of these brokers will be able to survive. In most countries just the trading tax/stamp duty is higher than the US markets!! Lets rejoice.....once we had to count commission as number of ticks....now we are down to a fraction of a tick - It seems some people are adding up their commissions and saying...wow...if I only paid a dime a trade then I'd be earning so much money every month. Get real people, if you can't make money with these commissions then you never will - so pack it in and take up window cleaning.
The only people who should be whining about lower commissions is brokers. Otherwise who would argue about lower transaction costs? Are you a broker?
Yes I can relate to some of the sentiments you present, particularly about counting commission as # of ticks, and now down to a fraction of a tick. I'm all for lower commissions. We have the best commission structure we have ever seen in trading and it appears it will only continue to get better as more firms compete with their rates. Some firms may drop out but overall the competition will hopefully continue to drive prices down bit by bit. Low commish opens up new trading styles that weren't viable before and helps make old trading styles more profitable. Brokerages are forced to become more electronic with the rise of the electronic markets, which leads to lower costs to transact trades.
voltrader so, do you know the business models and bottom lines of clearers/brokers just because other countries have stupid systems - does not mean a broker in a country with a good system should not be hit on to get them to charge less if professional traders had to pay retail rates - they would be cleaning windows real quick
i don't use IB but i have a lot of happy friends that do. i would be very surprised if they would be so stupid as to try and frontrun and kill the goose that laid the golden commissions. my view as an observer is that they are just making money off of much tighter profit margins because a) they have most of their functions internalized and thus have much lower operational costs and b) they are cleaning everyone else's clock in terms of volume because for 99% of traders IB's price just can't be beat. Sound familiar? (Hint: ever shop at WalMart?) You see the big, well run retailers sweep out their competition all the time by maintaining razor thin margins and making it up on volume. Why should the brokerage biz be any different?
I remember my first Accutrade account charged 3 cents a share or $50 minimum per side, and I thought that was great at the time. We are spoiled these days with low rates and fast electronic networks.
IB does not scalp or frontrun anything off of my orders and I do not need to look at any IB records to confirm this (I can tell by the order fills). buzzy2, I am glad you backed off your statement in a later post. Catoosa