Basic Questions about IB

D

DaytraderDave

Question about IB, I'm sure they've been answered before but can't seem to find it at this time:

1. Can you offer out on an ECN through IB's trading platform, or is limited to hitting the bid or ask, or waiting for a limit order that isn't displayed?

2. Is it a flat .01/cents a share rate, no ECN fees, no SOES, no NASDAQ, or NYSE fees on the execution?

3. I've recently downloaded the trading platform, but haven't had a chance to really take a look at it. In peoples experience, are orders (market) for the most part executed in a second, or does it sometimes get delayed?

4. Is the platform condusive to instant execution style trading or is more like routing your order through a marketmaker, who depending on order flow can take a second to almost a minute.

Thanks
 
Originally posted by DaytraderDave
Question about IB, I'm sure they've been answered before but can't seem to find it at this time:

1. Can you offer out on an ECN through IB's trading platform, or is limited to hitting the bid or ask, or waiting for a limit order that isn't displayed?

2. Is it a flat .01/cents a share rate, no ECN fees, no SOES, no NASDAQ, or NYSE fees on the execution?

3. I've recently downloaded the trading platform, but haven't had a chance to really take a look at it. In peoples experience, are orders (market) for the most part executed in a second, or does it sometimes get delayed?

4. Is the platform condusive to instant execution style trading or is more like routing your order through a marketmaker, who depending on order flow can take a second to almost a minute.

Thanks
More...

You have full access to all major ecns, you can both post and hit orders.

The $0.01 per share is a flat rate, nothing extra. Actually the rate is $0.005 for any shares over 500.

The demo limits your order execution routes, you can't get the major ecns, but they are all available in the full version. The execution speed in the demo is not indicative of the real version.
Fills usually take less than 1 second if the size is there.

Nothing gets routed to a market marker unless you choose so. Plus with the advent of supersoes the MMs can't really hold your order anyways.
 
The per share rate (.005 to .01 depending on size) they charge is actually around what the listed fees for ECN executions are. This may sound like a dumb question when your getting such a good price, but how are they making money? Seems like you add in the ECN execution, along with NASDAQ charge, seems to be that little room for profit, if at all.
 
ways to make money:

self-clear

route as many "best" orders to island, which is both cheap and pays the broker when it's customers "add liquidity"

only take accounts from traders who do volume

do all customer interaction over e mail and the web whenever possible, thus saving unnecessary costs

just because they don't suck doesn't mean they can't be cheap

i'd rather pay .01/share for a quick execution than $9.99 for one that sucks

everyone wins with this model
 
In regards to how they make money, I believe Def stated they made over $500 million with their proprietary in-house trading system last year. I don't think retail is a big money maker for them (except for Island order flow and self-clearing), but they already have the infrastructure to provide it so they are capitalizing on it.
 
IB also keeps the interest on the first $10,000 in the account and they charge for data. Still the best deal available.
 
All brokers pay the data fees to the exchanges, most absorb the cost with higher commissions. I was just pointing out that this is one way IB lowers cost and is able to offer the best commissions available. If a customer does not plan to trade at least once every month, though, a broker with higher commission but no data fee might be a better fit.
 
True indeed, drbtk. Further, customers who typically have more than a nominal amount of cash sitting around in the account (and trade infrequently) should probably look elsewhere. Doesn't matter much at the current rates but, under more typical circumstances, funds waiting to be invested (or traded) should be earning at least some interest; $10k is not a nominal amount.
 
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