Broker for My Scalping Strategy

Q

queensny

Hi -
Please do not flame me on my strategy. I am only looking for advise on how to reduce broker costs.

My general strategy has been scalping (using WMT and XOM) and making some money off small movements.

One of the things you will notice is I switched from flat to tiered in late May which helped reduce the costs somewhat (XOM buy orders).

My current setup is:
- Interactive Brokers - Tiered Model now.
- I always use limit orders to enter and exit positions. All my trades are routed using "SMART" exchange.
- I do not use margin however I like having it available and I like the low margin rate IB offers.


This has been relatively successful however I am not fond of losing 20% of my gains to broker fees (Interactive Brokers).
Can someone who scalps using a decent sized account advise how to minimize the trading costs.

Below is a snippet of two stocks I have traded using this strategy this year.
WMT Gain - 962.66 with 200.23 broker fee
XOM Gain - 3296.33 with 602.81 broker fee
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If you don't use a lot of margin (like PMA with Interactive Brokers), you can find a broker with a flat commission. Since you use limit orders, your shouldn't have a big surprise regarding execution. I think Tradestation has a $5 flat fee for stock trading, like Fidelity and others. Interactive Brokers is great if you buy/sell max 1500 shares per order.
 
Fonz said:
If you don't use a lot of margin (like PMA with Interactive Brokers), you can find a broker with a flat commission. Since you use limit orders, your shouldn't have a big surprise regarding execution. I think Tradestation has a $5 flat fee for stock trading, like Fidelity and others. Interactive Brokers is great if you buy/sell max 1500 shares per order.
More...

We can do $4.50/trade plus maker/taker fees. Max order size of 10,000 shares. That might work for him.
 
If you had used another broker like Fidelity for example - those 5,500 share trades would cost $4. Your paying more than 5 times than what you should or could be paying. They will also pass the ECN rebates on to you and your data including Level2 is free.

I only send small equity orders to IB of under 800 shares ($4). Any orders from 800 -10,000 shares is a $4 commission at Fidelity, not counting the ECN rebates which will trim the costs down even more.
 
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IB's "lowest commissions anywhere" claim is one of the biggest false advertisements anywhere in the brokerage industry.
 
Ok thanks for the advise. I will look to switch to fixed/per trade broker.

IB gave me the impression that with volume and ECN rebates I would have minimal trading costs but I just am not seeing that.
 
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