Thinking about joining IB, question on odd lots.

M

Metamega

So been trading live for about 8 months now. It took some time to get come to an agreement with my wife when I wanted to open a trading account. She has no interest really in investing or trading. We discussed this for awhile and came up with a sum to trade with that A) we had no immediate need for, B)Could easily afford to lose half and feel no pain.

I looked at multiple brokers available in Canada but she wasn't very keen on most discount brokerages. So I gave up and just went to my bank TD and opened a TD Direct Investing account.

So its has its benefits and downsides.

Big reason I'm thinking of changing is over past 8 months, I've had some ups, some downs, mostly downs, but looking at my trades, if I was trading at IB with their commissions I'd actually be break even right now.

My strategy is swing trading and I usually only put on a new position 1-3 times a week. Sometimes less depending on the markets. Now originally I didn't see myself trading so much but I have no problem getting out of a trade quickly if it doesn't work with me the first day so I have a lot of small exits. These commissions add up a lot faster then I had expected.

Right now my commissions for the year are about 800$ at 9.99 per trade. With my share sizes on average, if their commission schedule is true (0.01$ per share or minimum 1.00$). I could probably get that to between 150-200$. Which on my 20k account is a decent percent.

Now heres the issue, IB is confusing to myself, and I thought i might ask here because I'm thinking the sales staff at IB will probably tell me whatever I want to hear.

My current account with TD is pretty simple, I see the level 1 quote (trade Canadian stocks, was waiting for exchange rates to drop past 8 months but hasn't worked for me yet, lol), I see the current best bid/offer price, and always use a limit order, and most the time I use marketable limit orders, I'm terrified to even try a market order and especially on the tsx, nowheres near the liquidity of most you south of the border.

IB has all these smart routing stuff I keep reading and you can choose specifically where to send orders, etc. This is above what I'm use to and not really sure how the orders work. I know with TD, I'd send the order and if it was a marketable limit order, I'd have the shares before I could click the confirmation link. I'm not sure where they send it and never really questioned it.

Then the other issue is I do trade quite a bit of odd lots. TD has never had any issues with this. Never took more then a second if i wasn't chasing pennies on a price. My risk is based off my stop. I allow 1% risk per position and base my size off this number. This system works for myself and my trading plan.

IB section on odd lots is confusing. NYSE and ARCA odd lots are not permitted. I've yet to trade the U.S markets. Ideally the dollar would drop to a more average price and I'd exchange my account but its way to high right now.

I'm sure I'm not the only trader with a smaller account that sometimes can't justify a round lot.

Is their other ways to get stocks listed on the NYSE with odd lots?

Any Canadians here with experience with IB with Odd lots?

Basically my entry signal is based off the price about an 3pm-4pm est. Will I have issues gettings orders filled with odd lots?

Should I expect any hidden fees that aren't listed on their site? From what I'm seeing theirs data fees, which I found, the commission schedule looks like 1 cent a share or 1$ minimum or max 5% of trade, is their some sort of hidden rate behind this?

Seen somewheres too in a note saying "Including account maintenance fees" what are the account maintenance fees.

I just don't want to go through the hassle of opening an account/ transferring if its not going to work for my trading style. Or maybe do some back testing and analyzing to see if I can make my system work.

Sorry for my long winded post, just trying to paint a clear picture of what I'm use so maybe someone can tell me what I would expect with IB.

Thanks in advance for any help


IB rules on odd lots has me kind of confused. It says NYSE doesn't accept
 
I did not read your entire post but have a few comments.
1. All brokers will let you trade odd lots, unless I am missing something here you are not interpreting correctly what you have heard. This should not be a problem, but others here can confirm that.
2. Sounds like you are trading "small" size so the very very low minimum ticket price at IB will as you suspected be a YUUUUGE advantage for you. That said I don't know that you will have the minimum required to open an account with IB, whatever that is.
 
Okay, I did some "Google Search" on Interactive brokers and odd lots and was getting confused. Certain exchanges like Nyse, Amex, Arca, won't take odd lot orders. Now from my understanding their are many venues in the market. I'm assuming that NYSE listed stocks aren't only available to trade through the NYSE itself?

Like a lot of the google search I had about odd lots and IB was referencing MOC or MOO orders and those are probably way different then what I'd ever do.
 
The only restriction on odd lots I am aware of is when trading HOLDRS (a category of ETF's). This is not a broker restriction, it's a rule imposed by the issuer.
 
Here are the account maintenance fees. Double check that IB Canada isn't a little different since it's a new, separate entity from IB US. If it's similar, I don't think there will be an issue for those given your trading is well over the minimums they look for.

https://www.interactivebrokers.com/en/index.php?f=4969#required-minimums

IB commissions are generally better than other retail brokers for those who make many small trades rather than fewer larger trades (small/large in terms of number of shares).

As for odd lots, I don't fully understand how brokers and market makers handle these in Canada, but it seems they don't get particularly good execution most of the time.
 
I have a US IB account. I don't know how it is different than IB Canada.

No problems trading odd lots at IB. As for data fees, if you do $30 in commission per month, they waive the fees for the products I think you might be interested in. And it appears they have a free data option, but it looks like it only shows a fraction of the market. From their home page, select Pricing --> Research, News, and Market Data, then scroll down to the Market Data section.

There are other types of fees that IB can charge, but from what you describe I don't think you will qualify to be charged for any of them.
 
I am new to IB. Apparently they don't like to hold your hand with phone support if you have a small account, like under $100k, but by message system or chat you can get plenty of support. Minimum to open an acct. is $10k here in US.
Their default routing is called SMART, and they try to get you the fastest, best-priced fill. I just use that, no worries.
I am tempted to over trade with their tiny $1 commissions, and yes, that is great!!! Buy another tiny odd lot, and another, and another. Scaling in was never cheaper. (If you buy multiple shares of one stock/etf, and sell it all back the same day, ie: 30+30+30, then sell 90, that counts only as one day trade--total cost, $4 and a few cents).
If you cancel/modify orders they charge you a little bit, but if you fill the order instead of just canceling it, you get all or most of that small charge back. If you do lots of modifying or canceling orders without filling the original orders, you might get enough charges that the low commission does not look very good anymore.
Call them with any questions. But after you open your account, try to learn the TWS (or whichever platform you choose) thru their video tutorials and books, articles. They will not like it if you bug them about little issues that you could easily have learned by reading a bit, or asking a question here on ET.
Learning the platform can be intimidating since it is vast...but just learn what you really need to know at first, and try the practice account for awhile. It is good that you are already experienced with another broker.
So far I am pretty happy with IB. Good luck! I mean skill.
 
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Thanks for the feedback. I was aware of IB customer service not holding your hand. But I think it may be worth it for the savings I'd have. 1-3$ per trade I would be spending instead of 9.99.

TD direct investing has been amazing the few times I have called about any issue or question but I haven't had to call many times. And haven't had to call in a few months either so it's not really worth the fees.
 
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