eToro , why did you pick them, when there is so many better brokers !
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Broker diversification?
- Thread starter kmiklas
- Start date
eToro , why did you pick them, when there is so many better brokers !
I’ve found that each broker brings with him some additional features. Like, I’ve been trading with fxview and cmc markets and the tight spreads with their liquidity partners. End of the day, I’m the one benefitting from the best bid and ask price.That’s actually a great strategy. I did this mistake initially and blew my sole account with etoro. That’s when my friends suggested me to always trade with at least 2-3 brokers.
Doesn’t different brokers mean more commission fees and an expensive trading?I’ve found that each broker brings with him some additional features. Like, I’ve been trading with fxview and cmc markets and the tight spreads with their liquidity partners. End of the day, I’m the one benefitting from the best bid and ask price.
Why opt for a broker with high commission. Instead trade with the one’s offering commission as low as $1 per 100K. Also, let’s not forget commissions are based on the account and lot size.Doesn’t different brokers mean more commission fees and an expensive trading?
Do you diversify your portfolio? In other words, do you spread your assets across multiple brokers; say, 1M in IB, 1M in Schwab, and 1M in Fidelity?
Do I have reason to be nervous about having all your assets with one broker?
On a side note, are cash accounts with a broker FDIC insured?
Really, you don't have to worry putting all your $3millions in one brokerage as your non-margined assets are fully segregated, away from co-mingling with the brokerages' own assets. Many ultra high networth persons and hedge funds with billion dollars asset use a single brokerage as it is easier to manage assets that way. Moreover for the purpose of margin borrowing anyone should choose the cheapest lender possible. Why pay 7-8% pa interest on a margin loan at Schwab & Fidelity when IBKR offers it for 1.5% interest p.a?
Lehman Brothers customers are all unscathed when the brokerage went bankrupt.
https://www.reuters.com/article/us-lehman-brokerageaccounts-idUSN155295120080915
Do not sign up for stock lending program whereby your shares are being lent to earn extra yield. Brokers want you to sign up for this program as it means more money for them. Besides your payment-in-lieu of dividends, instead of qualified dividends, are taxed higher by the IRS.
IBKR provides daily cash segregation data at their website:
https://investors.interactivebrokers.com/en/index.php?f=7464#collapseTwo
If it makes you sleep better, then put the unused cash in your brokerage beyond SIPC's $250K protection with banks. It can be easily done using ACH transfers.
Here is an explanation what will happen if IBKR were to be liquidated:
https://www.interactivebrokers.com/en/index.php?f=2334&p=invp&conf=am
Fully paid securities are segregated fully
https://ibkr.info/node/1966
If you have margin loan:
The value of shares to be rehypothecated by your broker in the market (i.e. not segregated) is 1.4 x margin loan amount. Brokers need to rehypothecate your shares, since they need to come up with cash so that you can buy more stocks with loan.
https://ibkr.info/node/1967
Average equity for IBKR's customer account is $258k as of Q1-2021. There must be lots of accounts with hundreds of million balance, especially from those introducing brokers such as TradeStation International and other IBKR worldwide entities (IBKR Spore, IBKR UK, etc).
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