When to switch to IB

A

ark93

Since I started trading stocks last year my account with TDAmeritrade has grown steadily from about 1000 to 5000, both from gains from the stock market and a frugal lifestyle. I don't mind the thinkorswim platform, however one thing that has always been cramping my style is the $7 flat commission per trade. When I consider that 10 round trips equates to $140 which is roughly what I cover in 1~2 months I think why not just use IB? Of course until recently they didn't let you make an account there with less than $10k. Now that's changed apparently. There's no account minimum anymore.

There's a $10/mo minimum commission, but for clients up to 25 it's only $3 and luckily I don't turn 26 until much later this year! Seems like an opportune time for me.

A lot of people seem to hail IB as their platform of choice, but until just recently it was out of reach for me until I managed to reach $10k. Now, however, it's there, arms wide open to people with small accounts such as myself. Is there any reason I shouldn't switch asap? Are there any downsides/reasons to stick with TDAmeritrade? Any catches?
 
ark93 said:
Since I started trading stocks last year my account with TDAmeritrade has grown steadily from about 1000 to 5000, both from gains from the stock market and a frugal lifestyle. I don't mind the thinkorswim platform, however one thing that has always been cramping my style is the $7 flat commission per trade. When I consider that 10 round trips equates to $140 which is roughly what I cover in 1~2 months I think why not just use IB? Of course until recently they didn't let you make an account there with less than $10k. Now that's changed apparently. There's no account minimum anymore.

There's a $10/mo minimum commission, but for clients up to 25 it's only $3 and luckily I don't turn 26 until much later this year! Seems like an opportune time for me.

A lot of people seem to hail IB as their platform of choice, but until just recently it was out of reach for me until I managed to reach $10k. Now, however, it's there, arms wide open to people with small accounts such as myself. Is there any reason I shouldn't switch asap? Are there any downsides/reasons to stick with TDAmeritrade? Any catches?
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There is no $10K account min. requirement anymore. You just need to pay $10 per month in account maintenance or whatever the difference between that and your commission charges in a month and if your account balance is below $2K starting in 9th month, you would need to pay $20 per month account maintenance fee or whatever the difference between that and your commission charges in a month. So I would say if you trade a lot of options, it would be worth it for you to move over to IB as TD Ameritrade's commissions on options is horrendous and totally unjustified. But if you trade mainly stocks especially in large trade size, then it's worth it to stay with Ameritrade as nothing beats $7 flat rate. IB's commissions in stocks is NOT competitive.

So what I would suggest is for you to keep two accounts, one with IB to just trade options (if you do) and another with Ameritrade for stocks. And besides the TOS is still a much better platform than IB's TWS. So you would want to get your charting from TOS still.
 
If you trade US stocks using IB and the position size is about 1 k USD, your commission per trade is somewhere in between 1 and 1.5 USD per trade. Say 2.5 USD for a round trip. Eight such round trips per month would fulfill IB's requirement for minimum monthly activity (20 USD) so they would not charge you anything extra.
But don't forget that you also need market data subscription for relevant exchanges. Which subscription you need depends on which markets you want to trade on. This subscription is charged monthly.
 
Sometimes it's better to pay higher commissions , you trade less vs trading in and out few times a day , since commission is a 1 dollar per trade , if you trade penny stocks IB can be pricey.
 
Thanks for the responses. I agree that the TOS platform is very nice and the great thing is, you can use it even if you're not actively trading with TDAmeritrade. So I think I will be switching to IB.
 
Its a good idea. Lower commissions will also allow you to scale in and out of trades. Fixed commission brokers are great if you trade penny stocks or if you are a big trader already, usually for 5,000 shares positions or more they are worth it. But for those starting out these fees can add up fast
 
Daal said:
Its a good idea. Lower commissions will also allow you to scale in and out of trades. Fixed commission brokers are great if you trade penny stocks or if you are a big trader already, usually for 5,000 shares positions or more they are worth it. But for those starting out these fees can add up fast
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That fixed commission without exchange fees is also great for things with high exchange fees like SPX options. In short no universal answer about which broker is "best" when it comes to cost. Now if we're talking about how much money you can lose when you get autoliquidated or hit by one of IB's dozen of arcane and unique to them rules....well you'll learn I guess that sometimes cheapest commissions isn't necessarily least expensive trading.
 
HobbyTrading said:
If you trade US stocks using IB and the position size is about 1 k USD, your commission per trade is somewhere in between 1 and 1.5 USD per trade. Say 2.5 USD for a round trip. Eight such round trips per month would fulfill IB's requirement for minimum monthly activity (20 USD) so they would not charge you anything extra.
But don't forget that you also need market data subscription for relevant exchanges. Which subscription you need depends on which markets you want to trade on. This subscription is charged monthly.
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Are you talking about DAS Trader here?
 
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