First, Your understanding is WRONG. Second, price improvement has nothing to do with internalization. It has to do with getting a better price for your order. If you place a bid for say 100 shares for $20.52 and get a fill for $19.492, that would be 28 cents or a savings of $2.80 on the trade. Coincidentally, that 28 cents I mention happens to be the latest figures reported from TAG for IB on price improvement for US stocks over the industry. When talking options, that figure moves to 43 cents per options contract over the industry. And to get back to your comment on internalization - as that seems to be a common theme that many of our competitors stoop to in a vain attempt at discrediting our routing technology and logic - YOUR UNDERSTANDING IS WRONG !!!
It sounds like you are a bit of a gambler. You say you started with around 100k - have you had a serious drawdown before? Do you have much experience with risk control and managing drawdowns? Are you good at handling the transition from rampaging multi-year bull market to major blowoff top and then devastating bear market crash? If not, then no matter how much you make during the runup, you have a very good chance of blowing most if not all of it on the way back down. I am not saying stop trading, or stay flat, but I would advise you to put in some serious hours in the next few weeks on developing industrial-strength risk control. If you don't have a robust plan for how to avoid getting hosed when a bear market eventually comes, then you will get hosed when a bear market eventually comes. For example, if gold and silver fall 50% in the next 12 months, will you get out with a 10 or 20% loss, or will you lose 50%, or will you go bust with a huge account debit, screaming "but it's just a pullback!"? Other than that, I don't see the issue - there are many established brokers of stocks and futures. Just pick the biggest, best-managed ones, so your funds are safer from broker blowup, and have 2 or 3 separate account, just in case.
Greetings. My name is Wayne Carr, customer relationship manager for J.T. Marlen, a leading New York brokerage house. May I advise the purchase of Santrade and two dozen pink sheet stocks on full margin sir? Our investment strategist is recommending this as an appropriate portfolio rebalancing for out high net worth clients this month. Hurry, this opportunity won't last long, I have a dentist on the other line and SEC regulations prevent me from holding two phones to my ears at once.
Cheers buddy - at least now I know I will be dealing with a recommended and registered broker who won't cheat by front running my orders or taking the other side of my orders. My millions are safe - geez why didn't I think about that after 60 years trading and making millions in the market.
ok i deserve it for thinking one thing in my head and typing something else on top of what I started w/o proofing - definitely a senior moment on my part. Should have simply said the price improvement stats for IB on US equities over the industry for the first half of 2010 was 28 cents per 100 shares.
Brandon, at first glance: -open a prop account at echo and/ or bright for your intraday stock trading. -open a prop account at vtrader for your option trading. - open a retail account at velocity to trade futures. (or if your volume is large enough lease a seat or go to fortis clearing) - open accounts at MB trading and interactive brokers for your swin/ longer term trading. Voila Step 5: Profit
How is my understanding wrong? Your post seems to confirm that IB's behavior is precisely internalization; if not, then what is it? My definition (and the only one I've seen) is that B/D internalization is when a broker takes the other side of a customer order. Are you trying to sidestep this by saying it's "some other entity" (i.e. IB's Timber Hill unit) rather than IB itself? And I can't see how the practice you outline ("price improvement", as you call it), regardless of how you choose to classify it, wouldn't impair fair and transparent pricing in capital markets. http://www.tradersmagazine.com/issues/20_304/nasdaq-internalization-dark-pools-105375-1.html
And by the way, I've never seen your competitors discuss IB's internalization of orders. I looked into this myself when I noticed a number of "fine print", IB-specific fees/rules which seemed to me subtly designed to discourage IB customers from competing with IB's own Timber Hill unit, after which I chose to do my trading elsewhere. I don't mean to sound too negative on IB or its founder, both of whom I genuinely respect. I just wish that IB would cut the "price improvement" charade and simply post better prices to the NBBO rather than participate (albeit to a lesser degree than the "mass market retail firms") in what by common definition would seem to be internalization, which IB's founder so famously and publicly criticized a couple of months ago.