How is Interactive Brokers Cheaper?

Quote from SideShowBob:

What about futures commissions?
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Futures are pretty good under the unbundled if you do 1000-10,000 EMini ES contracts per month, its $0.35/contract, then add another $1.14 Tier 1 - Total $1.49/contract


Bundled is $2.40/contract.

Although commissions are lower than my present futures broker, I don't care too much for TWS platform.
 
Quote from FutsTrader111:

IB is great if you trade small size as the commissions are way less than a regular online broker. But when trading size, I don't see why anyone would want to pay 400% more on commissions.
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why? api and passthroughs. i know a couple guys running fix with them that make some serious markets (ie, they trade size). one of the few retail venues who support that. go try that on ameritrade.
 
Hey guys, whats your views on brokers who have retail trading divisions. I can't see how this benefits retail traders if a broker is using his own money to trade against its clients. Especially if it is possible for a broker to find all its clients open positions.

I tend to stay away from firms like that. What about you?
 
Quote from propseeker:

why? api and passthroughs. i know a couple guys running fix with them that make some serious markets (ie, they trade size). one of the few retail venues who support that. go try that on ameritrade.
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True, but I was only considering manual orders in my question.
 
Again, the question is:

Given Ameritrade allows you to trade unlimited size for $9.95, why would anyone want to trade size with IB for highly liquid issues? More so when the commissions climb as the number of shares go up.
 
Quote from FutsTrader111:

So lets say I have 30,000 shares of FAZ to buy and sell. Base pricing is 0.0035 (assumes I generate less than 300K volume/month)

Then when it comes time to buy I add in 0.0018/share for NYSE exchange fees :

30,000 * 0.0053 = $159

Now when I remove liquidity commissions are (after NYSE ECN fee/rebate):

30,000 * 0.0025 = $75


Thats $234 in commissions round trip.

How is that less than $20 round trip under Ameritrade?

So what is the advantage of trading a liquid instrument under IB? I just don't see it other than if Ameritrade gives me crappy fills (which it hasn't). I get no slippage because I'm limit ordering. Even if I break up the order in 3 chunks of 10,000 thats still only $60 round trip.
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You're calculating it incorrectly.

30,000 Shares, IB charge you $105. Now if you are adding liquidity to say INET, then you get a rebate of 0.0025 per share = $75. Total $105-$75 = $30. So that takes you to $60 a round trip. This is what it'll cost for the first 5 round trips.

After that the IB commission drops to 0.002 per share, so your IB charge is $60. So, now you actually get paid $75-$60 = $15. So you now get paid $30 per round trip.

Do 10 round trips total in a month, and your total cost for 15 round-trips is now 0. And every subsequent trade you make you will get paid....

So if you are an active trader (or more than two trades per week) you will be better off with IB.

If you are using overnight margin you will also be much better off with IB with our low margin rates.

If you decide to do market orders, then the extra commission that you will pay, will likely to be offset by the better execution that you receive (a recent independent audit showed this to be an average $0.0053 per share).
 
Quote from SomeYoungGuy:

What is your definition of "adding liquidity" as it relates to commission rebates?
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My answer is as follows:

First of all, ask a simple question: Why does a broker pay you for "adding liquidity"?

Theoretically, a broker cannot care less if you "add" or "remove" liquidity, liquidity has nothing to do with a broker, a broker will be happy if it gets the commission. Then, why, why, why, does a broker so eagerly want you to "add liquidity"?

OK, the broker will say: Not me, I didn't pay a trader to "add liquidity." Then you must ask this question: who the hell cares so much that he is willing to pay me?

If someone is willing to pay you to "add liquidity," it must be good for that person, not for you. In trading, "good" means making money, this money has to come from someone.

Have you ever done target shooting? In target shooting, there are two things: a shooter and a target. When someone pays you to "add liquidity," he is making you a target. That is my definition.

Back to a broker telling you: it's good for you to "add liquidity," you will get rebate, you will make money, you will make a lot of money by "adding liquidity."

Well, I am telling you: the broker is lying to you, you have been deceived.
 
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