Why IB sucks for futures traders: stops!

Discussion in 'Interactive Brokers' started by Simtrader, Feb 11, 2003.

  1. Seeing if I can collect any flames from all you ill-informed IB lovers out there! Re-posted from another forum where people had complained about their IB stop orders not getting executed; my opinion on IBs handling of futures stop orders:

    Why any futures trader uses IB is beyond me given the way they handle stop orders. Unless they've finally made the long-awaited change of sending stops native to Globex (judging by the comments it seems not) then in my opinion, it's a mess because your stop is only held on IB servers which means:

    - your order will only get sent to Globex as a market order when the stop price is triggered. In the best of cirucmstances (when it works) this means that your fill takes the lowest priority. All stops at the same price held directly on Globex will be filled before your order is. Orders held native on globex are timestamped and queued. Even if you sent your IB stop order four hours earlier, Globex doesn't even know about it until after the price is hit ...because only then does IB actually send it off. Bottom line? time lag in getting the order off (even if <1 second) and bottom of the pile priority, all mean increased risk of a tick slippage. At $12.50 ES, what good is your extra $1 commission saving?

    - Your stop relies on IBs own datafeed to trigger it and send it to
    Globex. A problem with their datafeed means your order can go
    unexecuted. My understanding is that it's not a true streaming
    datafeed but rather a snapshot every second or so. What if the
    snapshot misses your stop price? Or what if the feed goes down for 10 seconds around the time your stop would be triggered? Your stop goes unfilled that's what!

    Contrast this to the situation where your stop is held directly on
    Globex. It's been timestamped and received by the entity actually
    doing the execution. It will receive preferred filling. Your PC
    could blow up, your brokers servers could explode ...and nonetheless you are guaranteed to get executed. The worst that happens is that your brokers order software goes iffy (it happens to them all) and it says your order is still working. But if you KNOW your order was sent to Globex you have total peace of mind that the truth is you were executed and they just aren't showing it yet. You can relax that any software glitch has no material impact on you. Contrast that to IB where you are sitting there with a "working" order and wondering:
    "was I filled?", "is the system just slow?", "am I still in the
    market?". Who needs that hassle in their life?

    To me, it's such a basic fundamental to have your stop orders only
    rest on Globex servers ...trading with them on a brokers' servers or keeping them on your PC is just insanity. Pay an extra buck or two and use a J-Trader platform* that holds stops directly on Globex. IMHO the commission savings of IB just aren't worth the extra risk of $12.50 slippage, the extra risk of unexecuted orders, and the mental stress it puts on your ability to successfully trade, when problems do occur. There's enough stress in trading without worrying whether your orders are filled or not.

    *Not all versions of J-Trader can send stops directly to Globex (some versions only hold them on your PC), but stand alone version does offer this capability. For the record, I have no affiliation with any J-Trader broker.

    Flame away, but if anyone can explain why keeping stops on IB servers is not inferior and inherently riskier than the certainty of having them on Globex I'd love to hear it!
  2. Quah


    Globex only accepts STOP-LIMIT orders no matter what platform you are using.

    You are going on and on about stop orders being held on GLOBEX servers. GLOBEX doesn't accept STOP orders, thus they don't hold them on their servers. Maybe you should check your facts...
  3. One guy replied "use stop-limits instead because IB does send them direct to Globex" to which I wrote:

    Except you have the hassle/delay of having to always enter two
    separate prices, one for the stop and one for the limit at a far
    enough away price to guarantee a fill (to simulate a stop order). And you always have to remember to do it this way. Maybe this isn't a big deal to some folk but it's an inconvenience I can do without.

    But the other issue is: Can you QUICKLY "modify" a stop-limit order with two different prices (i.e. change the stop price frequently while keeping the same limit price ....for use as a trailing stop)? With stop-limit orders, you normally have to straight cancel them and place a new one. Is that not true also of IB? This causes delays compared to modifying a plain stop order. When you're trailing your stop-loss tight behind the market to lock in profits you may need to quickly modify the stop price. Having to cancel the order and place a new one every time is a delay which can cost you money (e.g. the market stops you out before you've had time to do this). Therefore, if you use stop-limits instead of stops with IB, maybe you are solving one problem (not relying on IB servers) only to create another (inability to use a fast trailing stop)?

    For an extra buck commish you can have plain stops rest on Globex (which can be modified very quickly) and have decent phone support when you need it. You pays your money you takes your choice.
  4. Quah


    LOL - You aren't listening. GLOBEX DOES NOT ACCEPT STOP ORDERS.
  5. The bottom line IMHO is that until IB lets you send stops (which can be quickly modified) direct to Globex ...they will stink for futures traders. I have never in my life heard of a futures trader complaining that the price went through their stop and they weren't filled. Except at IB.

    They've been saying for a while things like: "we're working on native Globex stops" and "it's coming soon" (two years ago!) or "our programmers are on top of it" and nothing ever happens. I beleive that the way they handle stops is detrimental to your financial health as a short-term ES trader. All their fans ever say is stuff like "well I love IB anyway and I've never had a problem". In other words refusing to negate this very serious issue and igoring the fact that others have had these problems.
  6. Quah


    If you enter a plain STOP order with J-Trader (PATS), that order is not sent to GLOBEX - it is held on the PATS server - just like IB does. Look at you J-Trader software - see the "*" next to the order type? Don't you know what that means?
  7. I always use stops to exit positions (either at my goal, or stop loss). I have found the fills using IB great. I only trade ES, and overall I have zero slippage. Maybe stock traders have a different experience.

    One thing that is important with IB though is to put in a stop immediately when you have a position as you never know when the platform may crash. I lose my connection to them sometimes, but my orders still get filled (platform crash may not be the correct term here, but its still scary as hell when you have to call em to get out of a position). I haven't had to deal with this since I started placing stops with my original entry order. Overall I think they do a pretty good job. I will move to the X trader platform soon, but at my current volume, IB is pretty good.

  8. Quah,

    Oh dear oh dear. Obviously I am talking about stops that other brokers AUTOMATICALLY send to Globex as stop + 5 or 10pts limit. We all know how Globex works don't we? (only taking stop-limits).

    To the end user such idiosyncracies are invisible. The stop looks and smells like a plain stop order, and it can be manipulated as such i.e. held on Globex and modified quickly.

    IB stops are crap and their stop-limits cannot be modified quickly. PERIOD!
  9. Quah


    LOL. It takes me less than a second to modify a stop-limit order on TWS.
  10. Quah

    Re-read my initial posts. Yes I know what the asterix is for in J-Trader. Not all versions of J-Trader can send to Globex but some versions can. You're looking at one that can't.

    #10     Feb 11, 2003