Interactive Brokers and low float stocks.
- Thread starter saico
- Start date
Agreed. IB is prohibitively expensive when it comes to trading large numbers of shares. It's as if they're trying to discourage it.
I trade them often at IB, both long and short, but don’t have anything else to compare so not sure how to answer your question. Your question also seems too unspecific as low float stocks for regional banks may behave very differently from biotech. Shorting also works differently than going long. Hard to borrow stock also work differently than those available for shorting. Volume on low floats can be a few hundred shares per day and you can wait for fill several days depending on your limit price, while the volume can shoot up when pumped on news, etc. Every day and every stock can trade differently, while all this doesn’t depend on the broker.
But generally IB routes orders to exchanges, so fill quality and speed will be as good as availability of the stock itself. While you can have some control by trying different order types and directing orders to specific exchanges, which again, may work differently for different stocks.
Sometimes when I set the limit price to be immediately marketable and use their SMART routing, I feel like I get screwed by overpaying and my order shown as being filled at “DARK” exchange, meaning some dark pool. But I don’t know whether I would get a better fill elsewhere, so it’s still hard to compare to “nothing else”.
At least there are lots of parameters you can control: order type, limit price, routing to specific exchanges, algos, hidden orders, etc. As long as you have such control then the broker shouldn’t matter except for commissions.
Availability of hard to borrow stocks seems better than at other brokers, at least based on some people telling me they cannot short the same stocks or fill similar short orders at TDA (not even sure if this applies only to hard to borrows, as various shortable stocks may not be available for shorting at some brokers anyway).
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Hi guru,
thanks for your response. I was refering to the typical stocks with a float between 1 and 5 Million and price between 1$ and 5$. Especially those, that are the typical premarket top gainers with an unusual high volume. Better said, those that are in play. I'm only interested in going long not shorting. How would you compare the speed getting filled on marketable limit orders comparing liquid mid and hi floaters?
Saico
I almost can't imagine that you get the same fills quality wise with a free broker. I think they somewhere have to use other ''routes'' to make it up for them, or they even can come up with excuses to not get you filled at all. No problem when you swing trade, but when you daytrade, well thats an other story imo.
They move so fast that there is not much to compare. If you can get them before the price moves then that’s all that matters. But any answer here would be very theoretical because each situation is different, and each trader trades differently and different qty. Someone buying $100k worth of micro-cap stock will have different opinion than someone buying $1k worth. Each trader may also develop favorite techniques in terms of using specific exchanges, hidden orders, etc. As long as your orders get send to exchanges (vs market makers) then you may not be able to get better fills at other brokers, while how this compares to larger and liquid stocks doesn’t matter.
You just can’t get opinions about how your fills will work, from the internet. Especially as your own trading style will evolve and you’ll have different opinion each week. Some people here on ET even get paranoid and suspect that their broker steals their strategy or front-runs their orders. So if I was paranoid then I could also provide some skewed opinion. All this stuff is subjective and there is no way to prove that orders get filled one way or another, except for being guaranteed best price when sending order to lit exchanges during rth. If you’re serious about trading then you’ll have no problem testing different order types and routes/exchanges. And then your own opinion will still be different from everyone else’s, and may change each week.
Btw, I witnessed some traders getting better fills on Robinhood than I could get at IB. This could be due to Robinhood’s internal liquidity, or their market makers trading within their own dark pool, or it could be purely subjective and I may be wrong, could be due to different timing in milliseconds. This is just an example of how subjective is this whole topic.
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And allow plenty of slippage for exits; eVen more so on stocks under $5. I've averaged notably worse slippage on small caps or stocks under 1 million average vol. But i'm not sure that is the brokers fault@ all.............................................................................................