Interactive Brokers Fees question

RC. · Feb 20, 2015

I've been using IB's fixed commissions but don't know if I should switch to tiered.

https://www.interactivebrokers.com/en/?f=commission

Tiered offers $0.035 while fixed is $0.05. I mainly trade options 3 times a week in an account worth 3 grand. Can anyone bright explain the nuances of tiered vs. fixed in this context, and which is better for me?

xandman · Feb 20, 2015

Go with Fixed. Don't waste brain cells on this decision unless you start getting day trading priviledges ($25K min) to trade hundreds of options contracts per day or 15,000 shares of stock per day. Tiered is for high volume trading.

Welcome to ET.

fika · Feb 21, 2015

I make about 2-5 trades a week on an account of about 60k should I be doing this?(I have IB)

d08 · Feb 21, 2015

It depends on the order types and shares traded per month.
For example if you do 400k shares monthly with 50% MKT/50% LMT, tiered will make sense.

RC. · Feb 21, 2015

Ok, thanks everyone. I assume the rate of 0.035/share for tiered vs. 0.05 fixed is not entirely accurate, because tiered has hidden exchange fees? That is my assumption, otherwise basic math would say tiered is always better than fixed.

fika · Feb 21, 2015

RC. said:
Ok, thanks everyone. I assume the rate of 0.035/share for tiered vs. 0.05 fixed is not entirely accurate, because tiered has hidden exchange fees? That is my assumption, otherwise basic math would say tiered is always better than fixed.

Ahh that was what I was thinking. Oh well I will keep paying my half penny

d08 · Feb 21, 2015

RC. said:
Ok, thanks everyone. I assume the rate of 0.035/share for tiered vs. 0.05 fixed is not entirely accurate, because tiered has hidden exchange fees? That is my assumption, otherwise basic math would say tiered is always better than fixed.

It's not hidden, it's mentioned there on the commissions page under exchange fees, clearing fees and transaction fees. You can calculate your commissions based on those.
It really starts making a lot of sense once you hit the second tier.

xandman · Feb 21, 2015

d08 said:
It depends on the order types and shares traded per month.
For example if you do 400k shares monthly with 50% MKT/50% LMT, tiered will make sense.

Here is a guy who crunched the numbers already.

RC. · Feb 24, 2015

I just recently got charged over $40 for 20 option contracts roundtrip, and I'm using tiered.

What gives? How does that make sense? Normal brokers charge less...

luisHK · Feb 24, 2015

When you take liquidity with IB, option contracts often cost around 1usd/contract (ie 2usd for round trip)
I often add liquidity but still have a hard time figuring out how much it will cost me beforehand, sometimes it's negative but other times it costs around 0.70, no matter I use direct routing, smart or smart rebate, I get confused ( I don't have huge experience either, trading from a few to 200 contracts at a clip)