Is it worth it to change from an IB to a FCM?

Ruben Haiko

Ruben Haiko

Hi there.
Currently i'm looking to upgrade my trading environment. I'm with Ninjatrader now (platform and brokerage), but looking to switch back to TT again. When i last was using TT i was with AMP. But i wasn't very happy with the service. I'm increasing my trade amount substantially, so i'm looking for a trustworthy party. And commissions are also very important, since i'm a scalper.

I always heard it was best to use a FCM, since IB's are just the middleman.
 
Ruben Haiko said:
Hi there.
Currently i'm looking to upgrade my trading environment. I'm with Ninjatrader now (platform and brokerage), but looking to switch back to TT again. When i last was using TT i was with AMP. But i wasn't very happy with the service. I'm increasing my trade amount substantially, so i'm looking for a trustworthy party. And commissions are also very important, since i'm a scalper.

I always heard it was best to use a FCM, since IB's are just the middleman.
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IB are a member of the exchange so are an FCM. Maybe you mean a GCM full clearing member. I think IB. Self clear so they may be a GCM.
 
Ruben Haiko said:
Hi there.
Currently i'm looking to upgrade my trading environment. I'm with Ninjatrader now (platform and brokerage), but looking to switch back to TT again. When i last was using TT i was with AMP. But i wasn't very happy with the service. I'm increasing my trade amount substantially, so i'm looking for a trustworthy party. And commissions are also very important, since i'm a scalper.

I always heard it was best to use a FCM, since IB's are just the middleman.
More...

IB is FCM, ifyou do not like them, FC Stone is another good one.
 
OP is not referring to IBKR.

An IB provides a pinch of added "security" in the event one (or more) FCM(s) behind the IB defaults. Contrast against a GIB (Guaranteed IB) whereby if the FCM defaults, the GIB offers no additional "security", but does offer security against the IB itself defaulting. In reality all of that remains true.

Opening directly with an FCM may or may not be beneficial. If your funding and volume is significant, you will likely be treated well. Merely meeting account funding minimums or trading volume in the lower tiers, you may be better off with an IB/GIB. For instance, you mention AMP.... as an individual with an account directly with an FCM, you may not be able to match certain policies, for example day-trade margins and time availability. Also, in the unlikely but omnipresent FCM black swan, you may not have any assistance in navigating such an event. IB's are concerned parties, wanting/needing to help.
 
tiddlywinks said:
OP is not referring to IBKR.

An IB provides a pinch of added "security" in the event one (or more) FCM(s) behind the IB defaults. Contrast against a GIB (Guaranteed IB) whereby if the FCM defaults, the GIB offers no additional "security", but does offer security against the IB itself defaulting. In reality all of that remains true.

Opening directly with an FCM may or may not be beneficial. If your funding and volume is significant, you will likely be treated well. Merely meeting account funding minimums or trading volume in the lower tiers, you may be better off with an IB/GIB. For instance, you mention AMP.... as an individual with an account directly with an FCM, you may not be able to match certain policies, for example day-trade margins and time availability. Also, in the unlikely but omnipresent FCM black swan, you may not have any assistance in navigating such an event. IB's are concerned parties, wanting/needing to help.
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Thanks! I'm not so worried about meeting the FCM margin qualifications etc. I just have some bad experience with IB's like AMP and NT. I was told i could negotiate better commissions at a FCM. But maybe this has changed since IB's commissions have allready dropped so much.
 
Ruben Haiko said:
Thanks! I'm not so worried about meeting the FCM margin qualifications etc. I just have some bad experience with IB's like AMP and NT. I was told i could negotiate better commissions at a FCM. But maybe this has changed since IB's commissions have allready dropped so much.
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As other I also thought you were referring to Interactive Brokers with IB. As far as Amp, they used to be FCM, not sure if they still are.
 
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