Hello, At a regular FOREX broker like Oanda or FXCM the only cost you have to pay is the spread. You have to pay the spread only once in a round turn. How does this work with Interactivebrokers? Do you have to pay the spread twice in a round turn just like when trading index futures? Thanks, Herringtrader
The spread is much narrower for IB's retail FX. I believe EURUSD is as narrow as 1 or 0.5 pips. You never pay the spread twice per roundtrip; only buy at the bid and sell at the ask. However, because IB has chosen spreads considerably smaller than other bucket shops, it has chosen to charge a commision as well. RoughTrader
roughrider, IB is not doing anything different here, they are charging commission which is equivalent to a 2 pip spread, they are not going to give anything for free, I could be wrong that is just my assessment, I used to use efxgroup.com for lower pip spreads but they charged for $5 for each side, now I switched to fxproforex.com because of the reliability, tight spreads and no commissions.
That isn't true. For a 100K trade, the commission would be = 0.2 pips of a spread. Which would make a 1 pip spread = 1.2 pips. I suspect that is a better deal than your "no commission" deal above.
I see there is a little applet on their home page showing the bid and ask on 5 main currency pairs. Looks to be fairly up to date. So anyone can look at this and see it they consider them to be good or not.
Def, What are your spreads on EUR/USD and USD/JPY? What is your account minimum?.....How would I get the 1 pip spread?...Thank You
The spread is not fixed and sometimes EURUSD is one pip and in 5 seconds it can go to 3 pips. Using a market order you take your chances, use a limit order and fair much better. I would say the average for the majors is 2 pips. I am looking at USDCHF at this very second and its showing 4 pip spread. I like IB but Oanda IMO is the best FX outfit.
Thanks everyone for the help! Below I compare the estimated cost of IB and Oanda. Cost of a $200,000 (2 big lots) EUR/USD round trip during normal market conditions: Oanda: 1.5 spread X 20 = $30 IB: the spread changes between 1-2 so I calculate with a 1.5 pip spread. Brokerage fee: (200,000 X 0.00002) X 2 = $8 spread cost: 1.5 X 20 = $30 total cost $38 So as you can see Oanda is cheaper during normal market conditions. Does anyone know if the spreads are better at IB during news releases?