Could someone please clarify this: From what I understand, with a non-direct-access broker, a "trade" is an order to sell or buy a certain amount of stocks, regardless of whether it takes more than one transaction to fill the order. For example, buy 500 shares with limit 24.50 may get you 300 shares at 24.48 and 200 shares at 24.50. This is one trade, and therefore merits one commission. But these commissions are terribly high, and I've been looking into alternatives. Interactive Brokers looks attractive, with much lower commissions, but one question I have is regarding when one must pay this fee. Using the example above, except with a direct-access broker, with the customer making these 200+300 decisions instead of a black box, would there be a double commission charge? Forgive me if I'm making an obvious mistake here, but I'm just trying to get into trading a bit more, figuring things out as I go
Lino. Ive been with IB for three mo. and made 'bout 250 stock trades. I always use their Smart routing. Im a new trader and so i almost always open a position with just 100sh lots...or even less. Sometimes Smart will get some of the shs from more than one exchg, even with my tiny orders. Still the comm is just 1cnt/sh. If you begin adding conditions to the order, then im not sure what could happen re comm. Also,if you havent already, go here: http://www.interactivebrokers.com/en/trading/orderRoutingLogics.php?ib_entity=llc and clk on some of the links to see routing diagrams. ............ rj
Your question is a little confusing. At Interactive Brokers if you entered a limit order for 300 shares @24.50 and enter another limit order for 200 @24.50 that would be two orders. At IB that would cost you $.01 per share, $3.00 and $2.00 respectively. If you enter a single limit order for 500@24.50 that would also cost you a total of $5.00. If the fills were all at $24.50 but you got filled in ten 50 lot pieces you would still pay $5.00. If you only got a partial fill on 300 and cancelled the rest you would pay $3.00. However, if you manually entered ten separate 50 lot limit orders @24.50 and got filled you would pay $10.00 as IB's minimum equity commission per order is $1.00. This is the way IB works. Other firms may or may not be similar. Jack
Per Share pricing plans are neccessary for scaling for most retail traders. You shouldn't have to worry about commish when structuring your orders, the focus should be on the trade. Michael B.
Thanks for all your replies, and I can now better understand how the commission stays low even with multiple trades. I was under the impression though that with IB, one had direct access to the list of (for lack of better terms) bid and ask items, with which one could piecemeal their order together if only one would not suffice. But maybe I'm completely off track here and something more automatic is going on that I'm not quite comprehending.
Your question is really very simple and basic - don't worry we were all there at one time (were'nt we?). Please contact IB directly and they'll set you straight. help@interactivebrokers.com Wait, I think I get your Q. Are you asking what happens if you enter, lets say a buy for 500 shares and you get filled 200 and then 300 at different times? If this is your question, it depends when you get filled. If it is during the same day, then your order is considered one order and you will be charged as one order. Or in IB's case $5. If the order is good till cancelled (or good till some specific time in the future) and you get filled 200 shares today and 300 shares tomorrow, then you will be charged two times. But with IB this would be the same $5 as they have one cent/share pricing. Another broker that charges you per ticket (let say $20/order) would ding you twice. Once for the buy today and once for tomorrow. So you would have to pay $40 for the 500 shares. Hope that helps. If you still don't get it, please contact IB (above email).
I suppose if you have one of those brokers that charge you the minumum twice, you could use fill or kill instructions. But I read somewhere that MM's don't like those. Michael B.
Babak, I understand now I think. I was under the impression that the user decided with whom he or she would trade with. But now I see that this is not true, and that one basically submits an order and someone/something else fills it however possible. Apologies again if the above made no inkling of sense.
Technically you can decide 'who' you want to trade with. I mean, if there is a bid you can hit it. One could argue that you decided to sell to the person who was buying X shares at Y ask. But you could sit at the bid/ask or enter your own bid/ask splitting the spread. This would then be putting yourself in the market and waiting to be taken.