small lots with ib

G

Gordon Gekko

Originally posted in another thread by Tech Analysis
Trade small lots at first (IB is great for this).
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say you want to test a new trading system. you don't want to paper trade, but you also don't want to trade with normal size either.

could you trade with ib and trade 1 to 5 shares instead of 100 to 500?

am i correct that the commissions would be 1 to 5 cents instead of 1 to 5 dollars?

thank you
 
Originally posted by Gordon Gekko

say you want to test a new trading system. you don't want to paper trade, but you also don't want to trade with normal size either.

could you trade with ib and trade 1 to 5 shares instead of 100 to 500?

am i correct that the commissions would be 1 to 5 cents instead of 1 to 5 dollars?

thank you
More...

No; $1.00 minimum.
 
Originally posted by Gordon Gekko

say you want to test a new trading system. you don't want to paper trade, but you also don't want to trade with normal size either.

could you trade with ib and trade 1 to 5 shares instead of 100 to 500?

thank you
More...

you'll never have an accurate test trading 1 & 5 lots. Many of the exchanges won't accept orders of that size. They will also be harder to fill and executions/slippage would probably be poor.
 
I trade odd lots very often w/ IB, because I have a smallish IRA account with them. It generally works very well for me but there are times when when it takes quite a while to get a fill but this is almost always on low volume stocks. With an odd lot you're definitely not high priority.

But it works fine for this account as I swing trade from it. I can't imagine it working in an intraday world. Also, you can trade some of the ETF's with odd lots such as MDY, etc.
 
I do have to say though that I've never tried anything as low as 5 shares or 1 share. (Maybe that Berkshire Hathaway I bought - just kidding). But, again, I've done scores of trades between 40 and 70 shares in order to achieve diversification.

Note: I don't believe this will work for any option/margin type orders - only if you want to buy straight up cash.
 
It's still $1. Anything below 100 shares is $1. However, why would you trade 5 shares? Would you be excited if the price goes 0.50 point and you would make $2.50? It would only be $0.49 after commisions and SEC fee. Trade round lots or do paper trades. There is nothing embarassing about testing your strategy before using real money.
 
I read somewhere on ET about a trader that started out trading
1K lots back in 1999 or so and didn't do too well. So when he
returned to trading last year he traded 10 shares untill he became
profitable. This is with IB trading Nasdaq stocks.
 
Originally posted by version77
I read somewhere on ET about a trader that started out trading
1K lots back in 1999 or so and didn't do too well. So when he
returned to trading last year he traded 10 shares until he became
profitable. This is with IB trading Nasdaq stocks.
More...

I think you might be referring to me. It was actually 1997 when I traded 1000 share lots, but I did in fact trade 10 share lots last summer with IB until I was profitable doing that. This only works with NAS stocks, IB requires you to open NYSE positions with at least 100 shares. I trade liquid stocks, and found my experience with 10sh lots to be the same as with larger positions (this might not be the case with low volume stocks). I now pare into my positions about 200 to 400 shares at a time and sometimes put on a position of three or four thousand shares. As my account grows, I gradually increase my entry size. I now trade some NYSE stocks too, but I am still partial to Nasdaq.

Anyway, this worked great for me. I was able to concentrate on my techniques without being scared to death. If you want to trade liquid Nasdaq stocks, I would start this way. Good luck.
 
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