Interactive Broker, High commission

R

Ref

Hello, I am really wanting to move from Scottrade to IB. I like everything about IB so far. However, there is one thing in IB that is bothering the heck out of me. Their commission. On the website, yes, it says it's the lowest.

if I buy 1,000 shares of $50 stock, it's about $5 right? Great.

However, I buy a lot of stock that's $5 - $10. If I buy 20,000 shares of a stock that cost $5 (total market value: $100,000), I'll be paying $100 commission fee? Scottrade would charge me $7 for this. Even if I just buy 2,000 shares, that's already $10 ($3 more than ST).

So in my case, IB would be a bad choice when it comes to commission correct? Or is there something I am not understanding.
 
If you only buy large blocks of stock, ticket charges will be a lower commission. You have to assume that you will get the same execution price with the ticket charges as with DMA. (To get the ticket charges, you are likely entering a dark pool)

That may or may not be true. I prefer DMA and I like to "work" an order rather than execute at one price. If I can get a better price that way and receive a rebate, my net price might be better. "might"
 
I like to enter at one price. I'm looking at Lightspeed trading. Maybe I'll go with them instead. $4.5 flat rate.
 
Ref said:
Hello, I am really wanting to move from Scottrade to IB. I like everything about IB so far. However, there is one thing in IB that is bothering the heck out of me. Their commission. On the website, yes, it says it's the lowest.

if I buy 1,000 shares of $50 stock, it's about $5 right? Great.

However, I buy a lot of stock that's $5 - $10. If I buy 20,000 shares of a stock that cost $5 (total market value: $100,000), I'll be paying $100 commission fee? Scottrade would charge me $7 for this. Even if I just buy 2,000 shares, that's already $10 ($3 more than ST).

So in my case, IB would be a bad choice when it comes to commission correct? Or is there something I am not understanding.
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You are missing a number of things.
1. IB offers tiered pricing which starts at .0035 per share and slides down to .002 and more after 300K shares per month.
2. Order flow/routing. You can place a limit order and may not get filled by all brokers equally due to payment for order and/or how your order is routed. For example, IB is probably one of the few firms that will continue to scan and work your order to other exchanges after the initial order is filled.
3. REBATES: If you are providing liquidity as you suggest, you would be eligible to receive exchange rebates directly which further reduces your costs.

IB isn't all things to all people. if you are content sending in an order and sitting on it until filled w/ no rush to scalp out quickly, and no requirement for margin, perhaps the fixed fee brokers may work best for you. However, I'd suggest you give IB a test and go side by side and make an informed decision as you might be pleasantly surprised.
 
How are Market Makers making any money when people use limit-orders sucking up all the size on the offer? 50,000 shares of taking liquidity is rough on Wedbush or another firm trying to make markets in these stocks. How do firms buy stock and charge such low fees if we are busting the offer, these Market Makers don't hold much inventory for retail clients unless your trading one of the popular stocks.


I can see why IB limits orders at 5000 because charging $3 or $5.00 for spray-orders on the bid or offer costs bank! I am not talking about "commission schedules" including all "pass-through" fees, your paying your $.003 plus extra depending on how far they went to fill that order.


Has your luck with bigger Online Brokers been horrible, I have no problem getting size filled at most levels, what's your story?
 
You guys are all missing out. My korean stock broker charges 1.35$ for every trade you make. No matter the quantity or amount of that trade. Its called ebest trader but the entire thing is in korean. I hate how american companies are all in the business just to make exorbitant amounts of profits. In korea customer satisfaction is highly sought after and regarded. Almost everything is done to make the customer as happy as possible then comes the idea of maing profits. America is seriously a broken down country with a broken system. terrible.
 
cashclay said:
You guys are all missing out. My korean stock broker charges 1.35$ for every trade you make. No matter the quantity or amount of that trade. Its called ebest trader but the entire thing is in korean. I hate how american companies are all in the business just to make exorbitant amounts of profits. In korea customer satisfaction is highly sought after and regarded. Almost everything is done to make the customer as happy as possible then comes the idea of maing profits. America is seriously a broken down country with a broken system. terrible.
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Not just America, Europe as well. It's pretty much a cartel nowadays since the fees only slowly drift upwards by separating other fees from the commissions. Electronic trading hasn't been a new thing for a long time now, yet fees are not coming down and there is really no competition between brokers, all the startups that promise lower fees fail to take off.
 
i960 said:
I find it funny that you actually believe this. All brokers are there to make money - not be your friend.
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YOu would assume living your life in america or europe. but in asia esp japan and korea things are very different. Theres a huge responsibility to the public first. Its an asian thing. Things like filial piety, respect, and etc... are high.y regarded in these neck of the woods. This is obviously not saying that these people are not trying to make a profit. of course they are but they do so in a much more dignified and thoughtful manner. For instance its not uncommon in korea to visit a auto repair and have repairs done to your ca without a fee. If its something small the repairman feels an obligation to say,its okay. Or its also not uncommon to get into a taxi cab in korea with the driver telling you that the location is literally 5 mins walk from here and take you there free of charge. This kind of behavior is embedded into the korean culture.
 
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