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I Am A Self-Directed Trader About To Broker With JP Morgan's Institutional Side
- Thread starter MollieJp
- Start date
The philosophy of logic is complex. Only money matters to me and mental masturbation is less important.No,it was not me.
My previous post was to point out those words were illogic.
it always depends on what you want to do and how sensitive your strategy is to execution risk.I am in a similar position with a fairly large account from a liquidity event, but I trade single name equities and options.
TBH I spent a lot of time looking for a semi-pro offering (sometimes confused with mini-prime) and have met/spoken with many. Nothing beats IBKR for an armchair individual trader I found, regardless of account size.
It takes time to get filled and a lot of order manipulation in my case but that is not a bad thing I found. Speed of execution does not always correlate with returns.
If you trade delta one instruments such as futures and stocks and hold them for multiple days, 5 ticks more or less really do not matter when your P/L is measured in points. Plus you can enjoy the commission structure as well as the account safety and ease of use of IBKR.
However, if you do a lot of options and trade delta neutral for example, execution matters a LOT. It is a huge difference if you buy that 25 delta call option for 50cts ot 55cts, basically your trade just was 10% more expensive in the later case. That is like buying SPY for 419 instead of 381, think about that.
it always depends on what you want to do and how sensitive your strategy is to execution risk.
If you trade delta one instruments such as futures and stocks and hold them for multiple days, 5 ticks more or less really do not matter when your P/L is measured in points. Plus you can enjoy the commission structure as well as the account safety and ease of use of IBKR.
However, if you do a lot of options and trade delta neutral for example, execution matters a LOT. It is a huge difference if you buy that 25 delta call option for 50cts ot 55cts, basically your trade just was 10% more expensive in the later case. That is like buying SPY for 419 instead of 381, think about that.
Agreed. That's why delta neutrality for retail or small HFs is a quasi myth. It may work at times but only seldom. Not wanting to sound like a know it all prick but I have not seen evidence to the contrary.
Perhaps I should rephrase my statement as: build a strategy that works with your broker AND nothing beats online DMA turn key discount brokers for retail investors.
retail delta neutrality DOES work, you need to consider a few things though:Agreed. That's why delta neutrality for retail or small HFs is a quasi myth. It may work at times but only seldom. Not wanting to sound like a know it all prick but I have not seen evidence to the contrary.
Perhaps I should rephrase my statement as: build a strategy that works with your broker AND nothing beats online DMA turn key discount brokers for retail investors.
- You need to trade high priced options that have high vega per lot
- vol of vol has to be many multiples higher than the execution costs in vega terms
- You need to use passive volatility orders instead of fixed price orders or (god forbid) cross the spread
As an example, you're much better off trading TSLA or GOOG than the SPY. I see too many people trying to squeeze a couple of bucks out of low priced names that have like 20% implied vol and ATM is 1$ or 1,5$ and a bid/offer of 5-10 cts. When the option has an absolute dollar vega of 2 bucks and vol moves from 20 to 23...congrats you just made 6$ per lot which barely covers your round turn commissions. When you're stupid enough to high the bid or take the offer...the 10cts you paid convert into 10$ for the lot for which a 5pt vol move is required to cover that. When you trade that option delta neutral and make every mistake in the book, you'll need an 8pt vol move just to break even...and which stock do you know that has 20% IV average and a 50% vol of vol?
If you trade a single GOOG option that is 160$ ATM, it may have a bid/offer of 5$ but its $vega is almost 230 bucks when you factor in a 70% IV. Add a vol move from 70 to 65 and you're looking at a P/L 1150$ which completely dwarfs your commission.
However, execution has to be on point. If you just smash the bid/offer, you're fked. That's why you need to use vol orders, even better vol orders for delta neutral combos.
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