What cheap markets are there in IB?

Discussion in 'Retail Brokers' started by Twinsen, Dec 12, 2012.

  1. Twinsen


    Hi Folks,

    As you know Interactivebrokers has many markets to trade, national, international. Though I do not have account there yet.

    So for small accounts, let's say $4000 (I know their min is $10k, but for people less that 26 yo it is $3k).

    Recommend me please an instrument which is cheap to buy and is good to trade intraday? I mean enough volume, liquidity.

    Think of penny stocks, I can buy a lot of them cheap and may have a good profit even on a few cents move. The problem is that they do not move every day. I need something which can give a good profit on short moves, but does not cost much to buy and does not require big margin maintaining.

    Maybe foreign futures with low margin requirements or very cheap liquid foreign stocks having good volume and moving intraday which
    I can buy a lot without big money exposure? Is anything there?

    Thank you.
  2. Hi Twinsen, Interesting idea, but day trading stocks with a US broker requires a $25,000 account.


    If you want to day trade with $4,000 at IB, maybe look into CME futures on the Dow (YM), Nasdaq 100 (NQ) or Forex. Best of luck - Lou
  3. Bob111


  4. Not taking pattern day trader rules into account, you could trade any equity you want and trade small lots, 1 share if you want.
  5. Twinsen


    Bob111, at your link: Individuals age 26 or younger - USD 3,000 (or non-USD equivalent)

    Also if you sign up thru their introducing broker you can start with $5000. I know only placetrade.com, but they do not have the whole range of markets IB provides. I do not see futures, forex and other markets.

    But is trading OTCBB stocks under 'pattern day trader' rule too? I thought it applies to normal stock exchanges only.
  6. ktm


    I saw a TV commercial recently for bonds at IB. The screen shots made it look similar to any other liquid market you would see on TWS. Has anyone delved into bonds at IB?
  7. Twinsen,
    even if you traded 1 share for stocks with cost-plus, the commission would be around $1.6 round-trip using limit orders only. To make that $1.6 you would often have to wait out for a whole day or several days on most stocks, and then you would be in for very little profit. If you trade small size, the commissions will kill you and you have to be very skilled.

    Trading futures, the e-minis, you'd pay about $2 in comms, but for example the ES e-mini is ticking in $12.5 per tick. So you'd only need 10 ticks loss to lose $125, and on very small time-frames and without a great market-depth feed (costs about $1000/month) you'd simply be gambling with those 1minute long trades.

    Either way you take it, there's a reason why there's a 10k limit. It will be very difficult to make any profits on such small accounts. If you stay at 0, that means that with a bigger account you would be rich.

    Perhaps you can trade options. Look into iron condors. They don't cost so much and you only need to guess the range where the stock will be trading in 7 or 30 days and you might make something, or lose even more. Selling options is even cheaper but you'll blow up your account with one bad day. This also takes practice and a bit of knowledge, so nothing comes for free.

    Also note, US stocks seem to be the cheapest to trade with IB. Foreign stocks, PINKs and such are more expensive in terms of commissions. When you say "cheap" I think you're referring to commission and margin cost. Volatility of PINKs doesn't make them cheaper, only riskier, but they might appear more lucrative to you if you're not sure what you're doing. All stocks have the PTD rules on them, futures (e-minis) do not.
  8. I believe some foreign futures (eurex) might have cheaper commissions than Chicago.
  9. Bob111


    you mean corporate bonds? yeah,you can trade them. the other day i sold some to someone for -3%YTM :p
    unfortunately for me-my the size on this trade was pretty small(it's some leftovers from old long position)
    for OP is not an option anyway. futures for him is way to go. no PDT,leverage etc. as for trade OTC and PDT- i would contact IB about it. OP-you can find IB guys here,on ET.search for IB-AN, Pete - IB
  10. ktm


    Thanks Bob.

    I'm just thinking for later in life when I make my fortune and want to reduce my risk or just park cash somewhere. I agree with the OP wanting to plow elsewhere.
    #10     Dec 13, 2012