Interactive Brokers (Best Kept Secret)

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muffins14
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Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

Tanelorn wrote: Sat May 07, 2022 9:17 pm
richard.h.gao wrote: Fri May 06, 2022 3:45 am I ACH margin cash out from IBKR to another broker that offers commission free trades, then ACAT transfer those shares back into IBKR. Rinse and repeat. The best of both worlds.
I would definitely not recommend this. All it takes is one brokerage snafu, on the side of your other broker, in sending the tax basis information to IB, and you’ll have a tax mess on your hands that will waste way more time than whatever pennies you might have saved in commissions. If you really think free commissions are better for you, you can use IB Lite instead of IB Pro.

https://www.interactivebrokers.com/en/index.php?f=45500
muffins14 wrote: Wed Jan 26, 2022 12:52 pm It also feels like I have a lot of commissions in general... I'm using tiered pricing.

For example I submitted an order for like 800 shares of ITOT, and the total commission divided by the number of shares comes to 0.0067 per share, when I thought tiered pricing was 0.0035 per share.

Am I missing some way to actually reduce the commissions?
Sounds like you placed a market (or marketable limit) order. Note that with Tiered Pricing, you also pay exchange fees or receive exchange rebates based on how your order is filled. Roughly speaking, those vary from paying $0.0030/share for market orders to receiving $0.0020/share for posting limit orders that didn’t immediately fill when placed. 35 mils for Tiered + 30 mils for exchange fees on a market order plus another 2 mils for misc regularly fees like SEC/FINRA stuff gets you to right around the 67 mils / $0.0067 cost you saw.

You should check out the third party fee section here

https://www.interactivebrokers.com/en/i ... commission

And for example in more detail here to understand what’s going on.

https://www.interactivebrokers.com/en/i ... =936&nhf=T

Thanks, I’ve since moved to fixed pricing and just use limit orders. Still, it’s $0.005 per share, so trading like 3000 shares of ITOT is $15, which feels like a lot, but I will earn it back with the tax savings from TLH… very far in the future
Crom laughs at your Four Winds
richard.h.gao
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Re: Interactive Brokers (Best Kept Secret)

Post by richard.h.gao »

Tanelorn wrote: Sat May 07, 2022 9:17 pm I would definitely not recommend this. All it takes is one brokerage snafu, on the side of your other broker, in sending the tax basis information to IB, and you’ll have a tax mess on your hands that will waste way more time than whatever pennies you might have saved in commissions.
That's like saying I should never buy stocks because my broker could snafu recording of the cost basis.

Or I should never sell stocks because my broker could snafu calculating the tax basis.
Tanelorn
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Re: Interactive Brokers (Best Kept Secret)

Post by Tanelorn »

richard.h.gao wrote: Sat May 07, 2022 9:55 pm
Tanelorn wrote: Sat May 07, 2022 9:17 pm I would definitely not recommend this. All it takes is one brokerage snafu, on the side of your other broker, in sending the tax basis information to IB, and you’ll have a tax mess on your hands that will waste way more time than whatever pennies you might have saved in commissions.
That's like saying I should never buy stocks because my broker could snafu recording of the cost basis.

Or I should never sell stocks because my broker could snafu calculating the tax basis.
Not at all. You’re doing something rare and unusual for pennies in savings. Brokers record the tax basis for buys and sells millions of times per day and they still get some of them wrong (rarely). I know because I’ve found those large errors on my 1099s, but those are a few errors in 10,000s or 100,000s. But securities transfers are much more rare and I’ve often (maybe 1/5) had the sending broker fail to deliver the tax cost information to the receiving broker even though they’re required to under the rules, or somehow it gets lost in someone’s computer system, etc. plus they’re annoying to set up, track, confirm they go through, etc. I wouldn’t be doing securities transfers for $50, let alone to save fractions of pennies a share on commissions, especially when IB has better execution if you know how to use it than the “free” trades you’ll get elsewhere.
Last edited by Tanelorn on Sun May 08, 2022 6:05 am, edited 1 time in total.
AlohaJoe
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Re: Interactive Brokers (Best Kept Secret)

Post by AlohaJoe »

richard.h.gao wrote: Fri May 06, 2022 3:45 am I ACH margin cash out from IBKR to another broker that offers commission free trades, then ACAT transfer those shares back into IBKR. Rinse and repeat. The best of both worlds.
It's not the best of both worlds unless the other broker has trade execution quality better than IBKR.

IBKR fees are, what?, $6 per $100,000 order? Trade execution quality will usually be more than that. Then add in exchange rebates for providing liquidity.

Without knowing how the two brokers compare on those kind of metrics it is impossible to say whether you're doing better or worse compared to trading at IBKR.
muffins14
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Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

AlohaJoe wrote: Sun May 08, 2022 12:59 am
richard.h.gao wrote: Fri May 06, 2022 3:45 am I ACH margin cash out from IBKR to another broker that offers commission free trades, then ACAT transfer those shares back into IBKR. Rinse and repeat. The best of both worlds.
It's not the best of both worlds unless the other broker has trade execution quality better than IBKR.

IBKR fees are, what?, $6 per $100,000 order? Trade execution quality will usually be more than that. Then add in exchange rebates for providing liquidity.

Without knowing how the two brokers compare on those kind of metrics it is impossible to say whether you're doing better or worse compared to trading at IBKR.
How much better can trade execution be? For example if I’m placing a limit order for 3000 shares of ITOT, and the commission is $15 at IBKR, is it really possible that the trade execution saves me $15 compared to executing this trade at Fidelity?
Crom laughs at your Four Winds
AlohaJoe
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Re: Interactive Brokers (Best Kept Secret)

Post by AlohaJoe »

muffins14 wrote: Sun May 08, 2022 8:51 am How much better can trade execution be? For example if I’m placing a limit order for 3000 shares of ITOT, and the commission is $15 at IBKR, is it really possible that the trade execution saves me $15 compared to executing this trade at Fidelity?
On 3,000 shares? Good execution is worth around $30-40 or so compared to the NBBO for that number of shares. At Fidelity you aren't getting the NBBO, though. You're doing some amount better than that already. Unfortunately, it is hard to compare brokers on trade execution quality because there is no federally mandated standard reporting and no pressure from individual investors because everyone is focused on free trades.

So of the $40 available ... how much does IBKR's trade execution get you? How much does Fidelity's get you? I know that Fidelity's trade execution is worse than Schwab's. I don't know how it compares to IBKR's. It is possible that IBKR sucks and is actually worse than Fidelity at trade execution. Though that would be somewhat surprising given that trade execution is IBKR's entire business model as a public company, whereas Fidelity's is running mutual funds at high expense ratios for the Johnson family.

In any case, you can see that losing $15 by using Fidelity is at least within the scope of what could happen.
MatthewLM
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Re: Interactive Brokers (Best Kept Secret)

Post by MatthewLM »

I've been waiting a week for my application to be approved. Their KYC is the worst I've dealt with. That might be due to KYC being stricter in the USA compared to the UK where I live. So far it's been a bit of a hassle. On the application they said there would be some sort of test before allowing access to margin so hopefully that would be easy enough assuming they eventually approve the account.

It's a shame there are no alternative brokers/platforms in the UK that allow for withdrawing cash on margin and comprehensive access to options.
richard.h.gao
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Re: Interactive Brokers (Best Kept Secret)

Post by richard.h.gao »

AlohaJoe wrote: Sun May 08, 2022 9:28 am On 3,000 shares?
IBKR has a minumum commission per trade. I trade a lot of small shares, especially when the market is going down like it is now. I'm talking 1 to 20 shares per trade. I would get killed by commissions.
Last edited by richard.h.gao on Sun May 08, 2022 11:11 am, edited 1 time in total.
richard.h.gao
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Re: Interactive Brokers (Best Kept Secret)

Post by richard.h.gao »

MatthewLM wrote: Sun May 08, 2022 11:01 am I've been waiting a week for my application to be approved. Their KYC is the worst I've dealt with.
I got approved, for a margin account, literally less than 30 mins after I applied.
MatthewLM
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Re: Interactive Brokers (Best Kept Secret)

Post by MatthewLM »

richard.h.gao wrote: Sun May 08, 2022 11:10 am I got approved, for a margin account, literally less than 30 mins after I applied.
I think I just got unlucky as they must classify me as high-risk. Perhaps they do random detailed KYC on some applicants, or do stricter checks on clients outside of the US.
hithere
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Re: Interactive Brokers (Best Kept Secret)

Post by hithere »

MatthewLM wrote: Sun May 08, 2022 11:01 am I've been waiting a week for my application to be approved. Their KYC is the worst I've dealt with. That might be due to KYC being stricter in the USA compared to the UK where I live. So far it's been a bit of a hassle. On the application they said there would be some sort of test before allowing access to margin so hopefully that would be easy enough assuming they eventually approve the account.

It's a shame there are no alternative brokers/platforms in the UK that allow for withdrawing cash on margin and comprehensive access to options.
To my knowledge, withdrawing cash on margin is not possible with the European subsidiaries of IBKR. You will need to sell some of your equities, withdraw the cash and then buy the equities again on margin. This is how you "withdraw on margin" in Europe. It makes no sense, but it is what it is.

Alternatively, you can just sell a box spread and you will be able to withdraw the cash without selling any equities, although you will be asked to wait for the box transaction to settle before withdrawing if you don't have enough settled assets in your account to cover the withdrawal.
MatthewLM
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Re: Interactive Brokers (Best Kept Secret)

Post by MatthewLM »

hithere wrote: Mon May 09, 2022 4:20 am To my knowledge, withdrawing cash on margin is not possible with the European subsidiaries of IBKR. You will need to sell some of your equities, withdraw the cash and then buy the equities again on margin. This is how you "withdraw on margin" in Europe. It makes no sense, but it is what it is.

Alternatively, you can just sell a box spread and you will be able to withdraw the cash without selling any equities, although you will be asked to wait for the box transaction to settle before withdrawing if you don't have enough settled assets in your account to cover the withdrawal.
Thanks for letting me know. There is no mention of this anywhere and it doesn't make any sense indeed. Is this still the case with the UK entity? Many of these nuances are not clear so if the account is approved with margin I'll have to play around with it.

I also see some people suggest shorting a stock to receive cash and then closing the short after withdrawal. If I'm approved for options I can jump straight ahead to box spreads. If I don't pick an expiry too far in the future it appears I can borrow smaller amounts with smaller strike intervals.
hithere
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Re: Interactive Brokers (Best Kept Secret)

Post by hithere »

MatthewLM wrote: Mon May 09, 2022 5:20 am
hithere wrote: Mon May 09, 2022 4:20 am To my knowledge, withdrawing cash on margin is not possible with the European subsidiaries of IBKR. You will need to sell some of your equities, withdraw the cash and then buy the equities again on margin. This is how you "withdraw on margin" in Europe. It makes no sense, but it is what it is.

Alternatively, you can just sell a box spread and you will be able to withdraw the cash without selling any equities, although you will be asked to wait for the box transaction to settle before withdrawing if you don't have enough settled assets in your account to cover the withdrawal.
Thanks for letting me know. There is no mention of this anywhere and it doesn't make any sense indeed. Is this still the case with the UK entity? Many of these nuances are not clear so if the account is approved with margin I'll have to play around with it.

I also see some people suggest shorting a stock to receive cash and then closing the short after withdrawal. If I'm approved for options I can jump straight ahead to box spreads. If I don't pick an expiry too far in the future it appears I can borrow smaller amounts with smaller strike intervals.
Now that I think about it, I'm not 100% sure about IBUK, because I was a customer of theirs years ago and could be misremembering. But I'm sure about their IBCE and IBIE subsidiaries. Your best best is to ask them or just try it out.
MatthewLM
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Re: Interactive Brokers (Best Kept Secret)

Post by MatthewLM »

IBKR is asking me for even more information now. Does anyone recommend Degiro as an alternative?

Box spreads appear to be a possibility and the margin requirements seem to be very low (equal to payoff loss from what I can tell). There's no need to upgrade to portfolio margin as portfolio-risk-based margin is provided out of the gate. It's not clear what the margin requirements are on ETFs though and I'm yet to determine how wide their instrument range is for ETFs and options. I don't know if their account signup process is smoother than IBKR but I can't imagine it being worse! I know they have an appropriateness test for margin accounts but hopefully that's no hurdle.
hithere
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Re: Interactive Brokers (Best Kept Secret)

Post by hithere »

MatthewLM wrote: Mon May 09, 2022 9:13 am IBKR is asking me for even more information now. Does anyone recommend Degiro as an alternative?

Box spreads appear to be a possibility and the margin requirements seem to be very low (equal to payoff loss from what I can tell). There's no need to upgrade to portfolio margin as portfolio-risk-based margin is provided out of the gate. It's not clear what the margin requirements are on ETFs though and I'm yet to determine how wide their instrument range is for ETFs and options. I don't know if their account signup process is smoother than IBKR but I can't imagine it being worse! I know they have an appropriateness test for margin accounts but hopefully that's no hurdle.
For 25 days, I've been getting an internal server error on one of the steps in Degiro's sign up process. I'm still waiting for them to fix it. From what I gather, the issue may be caused by the fact that on one of the previous steps I entered a bank account that is apparently not supported by Degiro (they don't like some banks, especially online ones), even though their software accepted the bank account. Go figure. But you may have better luck with them than me.

Either way, I won't use them for margin because I suspect that they will pull the rug underneath me (i.e. increase the margin requirements) at the slightest sign of shaky markets. IMO only big, stable and proven brokers should be used for margin. The fintech brokers like Degiro are questionable in that regard.

Drop an email to IB or ask them in the chat. They can prioritize your application. I'm not sure why it's taking so long, perhaps they need to run some external checks that take time, or there's UK-specific regulation they need to comply with that delays things. For me, it's never taken more than a day or two to switch an account from cash to margin or to get a brand new margin account verified. Although I'm a long-time customer of theirs and that may be playing a role as well, i.e. they already know me and might not need to do many additional checks.
MatthewLM
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Re: Interactive Brokers (Best Kept Secret)

Post by MatthewLM »

hithere wrote: Mon May 09, 2022 10:25 am For 25 days, I've been getting an internal server error on one of the steps in Degiro's sign up process. I'm still waiting for them to fix it. From what I gather, the issue may be caused by the fact that on one of the previous steps I entered a bank account that is apparently not supported by Degiro (they don't like some banks, especially online ones), even though their software accepted the bank account. Go figure. But you may have better luck with them than me.

Either way, I won't use them for margin because I suspect that they will pull the rug underneath me (i.e. increase the margin requirements) at the slightest sign of shaky markets. IMO only big, stable and proven brokers should be used for margin. The fintech brokers like Degiro are questionable in that regard.

Drop an email to IB or ask them in the chat. They can prioritize your application. I'm not sure why it's taking so long, perhaps they need to run some external checks that take time, or there's UK-specific regulation they need to comply with that delays things. For me, it's never taken more than a day or two to switch an account from cash to margin or to get a brand new margin account verified. Although I'm a long-time customer of theirs and that may be playing a role as well, i.e. they already know me and might not need to do many additional checks.
Thanks for sharing your experience. I know IB have increased margin requirements before. I'm not sure they are much safer in that regard. Degiro supposedly gives some opportunity to fund an account that is in margin call too, though I'm not sure what their exact policy is.

The problem with IB are their KYC checks thanks to some c-word trades I've made in the past. I've never had issues with UK brokers and platforms in the past so I suspect it's either specific to them or due to US regulations. Trading 212, Vanguard, iWeb (Halifax) and Hargreaves Lansdown have allowed me to sign up with immediate approval without even needing proof of identity. It's very easy. T212 occasionally ask where a deposit has come from but that's a simple checkbox list and no evidence is required.

Degiro probably is no better than IB when it comes to KYC looking at this topic: viewtopic.php?t=304529

If only there was a UK domiciled broker that offers margin and options.
richard.h.gao
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Re: Interactive Brokers (Best Kept Secret)

Post by richard.h.gao »

LadyGeek wrote: Fri Jul 09, 2021 8:19 am Several wiki editors have updated the article (thanks!). The page was updated in several areas, not just for cost structure.

See: Interactive Brokers
Wiki needs to be updated to include their other mobile apps - IMPACT and the newer, more streamlined GlobalTrader.

https://play.google.com/store/apps/deta ... impact.app
https://play.google.com/store/apps/deta ... bkr.gt.app
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Re: Interactive Brokers (Best Kept Secret)

Post by LadyGeek »

Thanks! I added the apps to the wiki: Interactive Brokers (Interfaces for trading)

If there are any Apple apps, post here and I'll add those as well.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

AlohaJoe wrote: Sun May 08, 2022 9:28 am
muffins14 wrote: Sun May 08, 2022 8:51 am How much better can trade execution be? For example if I’m placing a limit order for 3000 shares of ITOT, and the commission is $15 at IBKR, is it really possible that the trade execution saves me $15 compared to executing this trade at Fidelity?
On 3,000 shares? Good execution is worth around $30-40 or so compared to the NBBO for that number of shares. At Fidelity you aren't getting the NBBO, though. You're doing some amount better than that already. Unfortunately, it is hard to compare brokers on trade execution quality because there is no federally mandated standard reporting and no pressure from individual investors because everyone is focused on free trades.

So of the $40 available ... how much does IBKR's trade execution get you? How much does Fidelity's get you? I know that Fidelity's trade execution is worse than Schwab's. I don't know how it compares to IBKR's. It is possible that IBKR sucks and is actually worse than Fidelity at trade execution. Though that would be somewhat surprising given that trade execution is IBKR's entire business model as a public company, whereas Fidelity's is running mutual funds at high expense ratios for the Johnson family.

In any case, you can see that losing $15 by using Fidelity is at least within the scope of what could happen.
I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
This would apply to small trades probably applicable to most retail traders. (You can also split larger trades.) Very large trades would incur higher potential spreads, with higher potential savings from trade execution.
I personally sometimes trade low liquidity / low volume stocks and ETFs, where I might be able to benefit from submitting non-marketable passive limit orders to multiple exchanges with IB. (Big question mark what the best trade execution strategy and what the all-in trading cost is.) But that's another story.
AlohaJoe
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Re: Interactive Brokers (Best Kept Secret)

Post by AlohaJoe »

comeinvest wrote: Sun May 15, 2022 11:15 pm I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

AlohaJoe wrote: Mon May 16, 2022 5:16 am
comeinvest wrote: Sun May 15, 2022 11:15 pm I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
I'm not understanding what you are trying to say in response to my post. If the (lit) bid/ask spread is $0.01 (which I just checked for ITOT), then the max (theoretical upper limit) you can save on average with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares. Because your roundtrip cost of trading without any price improvement is $0.01. I think that's a mathematical fact. How can you argue that?
saver007
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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 »

comeinvest wrote: Mon May 16, 2022 6:17 am
AlohaJoe wrote: Mon May 16, 2022 5:16 am
comeinvest wrote: Sun May 15, 2022 11:15 pm I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
I'm not understanding what you are trying to say in response to my post. If the (lit) bid/ask spread is $0.01 (which I just checked for ITOT), then the max (theoretical upper limit) you can save on average with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares. Because your roundtrip cost of trading without any price improvement is $0.01. I think that's a mathematical fact. How can you argue that?
There could be better price ( more than implied by the .01 NBBO spread) in the one of the ~50 non lit/ dark pools in US market. Whichever broker is connected to the largest number of dark pools have a better chance of getting clients the most price improvement.
comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

saver007 wrote: Mon May 16, 2022 7:01 am
comeinvest wrote: Mon May 16, 2022 6:17 am
AlohaJoe wrote: Mon May 16, 2022 5:16 am
comeinvest wrote: Sun May 15, 2022 11:15 pm I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
I'm not understanding what you are trying to say in response to my post. If the (lit) bid/ask spread is $0.01 (which I just checked for ITOT), then the max (theoretical upper limit) you can save on average with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares. Because your roundtrip cost of trading without any price improvement is $0.01. I think that's a mathematical fact. How can you argue that?
There could be better price ( more than implied by the .01 NBBO spread) in the one of the ~50 non lit/ dark pools in US market. Whichever broker is connected to the largest number of dark pools have a better chance of getting clients the most price improvement.
How can that dark pool spread be better than $0.01 - $0.01 = $0, so that you would save more than $0.01 per round trip or $0.005 per trade in comparison to the NBBO? I'm not getting it.
saver007
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Re: Interactive Brokers (Best Kept Secret)

Post by saver007 »

comeinvest wrote: Mon May 16, 2022 4:50 pm
saver007 wrote: Mon May 16, 2022 7:01 am
comeinvest wrote: Mon May 16, 2022 6:17 am
AlohaJoe wrote: Mon May 16, 2022 5:16 am
comeinvest wrote: Sun May 15, 2022 11:15 pm I just checked, the bid/ask spread of ITOT is usually $0.01 during regular hours. Every U.S. broker is obliged to fill at NBBO or better. So the max (theoretical upper limit) you can save with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares, isn't it?
The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
I'm not understanding what you are trying to say in response to my post. If the (lit) bid/ask spread is $0.01 (which I just checked for ITOT), then the max (theoretical upper limit) you can save on average with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares. Because your roundtrip cost of trading without any price improvement is $0.01. I think that's a mathematical fact. How can you argue that?
There could be better price ( more than implied by the .01 NBBO spread) in the one of the ~50 non lit/ dark pools in US market. Whichever broker is connected to the largest number of dark pools have a better chance of getting clients the most price improvement.
How can that dark pool spread be better than $0.01 - $0.01 = $0, so that you would save more than $0.01 per round trip or $0.005 per trade in comparison to the NBBO? I'm not getting it.
Looks to me like you are assuming NBBO spread/quote you see is the best available price. There could be much better price available in dark pools compared to NBBO since dark pool quotes are not fed into NBBO tabulation eventhough they represent significant (~50%) volume of US market. So NBBO quotes/spreads you see are not best indication of real prices.

This Bloomberg article shed some light https://www.bloomberg.com/news/newslett ... order-flow
comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

saver007 wrote: Mon May 16, 2022 10:03 pm
comeinvest wrote: Mon May 16, 2022 4:50 pm
saver007 wrote: Mon May 16, 2022 7:01 am
comeinvest wrote: Mon May 16, 2022 6:17 am
AlohaJoe wrote: Mon May 16, 2022 5:16 am

The NBBO is only the best "lit" price. Something 40% of all trading is "dark" and won't show up in the NBBO. It is very common for your broker to get you better prices than the NBBO. Schwab says that 96.6% of orders fill at better than the NBBO.

That's what "price improvement" is, a price better than the NBBO.

All of which is to say, I don't think you can draw the conclusion you've drawn from looking at public bid-ask spreads. It's also why it is borderline impossible for retail investors to have any idea if their broker is giving them good trade execution, since there's almost no easily comparable public information.
I'm not understanding what you are trying to say in response to my post. If the (lit) bid/ask spread is $0.01 (which I just checked for ITOT), then the max (theoretical upper limit) you can save on average with trade execution (price improvement) is $0.005 per share, or $15 per 3,000 shares. Because your roundtrip cost of trading without any price improvement is $0.01. I think that's a mathematical fact. How can you argue that?
There could be better price ( more than implied by the .01 NBBO spread) in the one of the ~50 non lit/ dark pools in US market. Whichever broker is connected to the largest number of dark pools have a better chance of getting clients the most price improvement.
How can that dark pool spread be better than $0.01 - $0.01 = $0, so that you would save more than $0.01 per round trip or $0.005 per trade in comparison to the NBBO? I'm not getting it.
Looks to me like you are assuming NBBO spread/quote you see is the best available price. There could be much better price available in dark pools compared to NBBO since dark pool quotes are not fed into NBBO tabulation eventhough they represent significant (~50%) volume of US market. So NBBO quotes/spreads you see are not best indication of real prices.

This Bloomberg article shed some light https://www.bloomberg.com/news/newslett ... order-flow
I never in my life said that NBBO is the best bid and ask, but you keep repeating and reminding me that NBBO is not the best bid and ask. I think you never read or never digested my comment. What I said and what I am saying the fourth time is that if the cost (from bid/ask spread) of a trade without price improvement (i.e. at NBBO) is $x, then you cannot possibly save more than $x with price improvement. Almost a tautology.

More generically, if the regular cost of a product or service - for example a banana - is $y, then you cannot possibly save more than $y by comparison shopping. The value of your comparison shopping effort cannot exceed $y. If someone charges you $z (z > y) for comparison shopping for your banana, then you know you overpaid for the service of comparison shopping.
Marseille07
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Re: Interactive Brokers (Best Kept Secret)

Post by Marseille07 »

IBKR's ACH is terrible.

Here is what happened to me just today (the numbers aren't real but enough to tell a story).

I transferred 50K to IBKR. I checked ACH on IBKR to see how much I can withdraw. They said 30K because the transaction hasn't settled yet. I said OK fine, let me withdraw 30K so I scheduled an ACH pull from a bank for 30K.

Next thing I know it, my ACH is rejected because IBKR says they only allow 28K, not 30K.

I double checked ACH at IBKR and the amount is still 30K, which means they have different limits on ACH initiated at IBKR vs ACH pull initiated elsewhere. But...how the hell do we find out what the ACH pull limit is? It seems like they're asking mission impossible here.
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Re: Interactive Brokers (Best Kept Secret)

Post by tj »

Marseille07 wrote: Sat May 28, 2022 11:09 am IBKR's ACH is terrible.

Here is what happened to me just today (the numbers aren't real but enough to tell a story).

I transferred 50K to IBKR. I checked ACH on IBKR to see how much I can withdraw. They said 30K because the transaction hasn't settled yet. I said OK fine, let me withdraw 30K so I scheduled an ACH pull from a bank for 30K.

Next thing I know it, my ACH is rejected because IBKR says they only allow 28K, not 30K.

I double checked ACH at IBKR and the amount is still 30K, which means they have different limits on ACH initiated at IBKR vs ACH pull initiated elsewhere. But...how the hell do we find out what the ACH pull limit is? It seems like they're asking mission impossible here.

Use the monthly free wire transfer out - it avoids all that nonsense.
Marseille07
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Re: Interactive Brokers (Best Kept Secret)

Post by Marseille07 »

tj wrote: Sat May 28, 2022 3:02 pm
Marseille07 wrote: Sat May 28, 2022 11:09 am IBKR's ACH is terrible.

Here is what happened to me just today (the numbers aren't real but enough to tell a story).

I transferred 50K to IBKR. I checked ACH on IBKR to see how much I can withdraw. They said 30K because the transaction hasn't settled yet. I said OK fine, let me withdraw 30K so I scheduled an ACH pull from a bank for 30K.

Next thing I know it, my ACH is rejected because IBKR says they only allow 28K, not 30K.

I double checked ACH at IBKR and the amount is still 30K, which means they have different limits on ACH initiated at IBKR vs ACH pull initiated elsewhere. But...how the hell do we find out what the ACH pull limit is? It seems like they're asking mission impossible here.

Use the monthly free wire transfer out - it avoids all that nonsense.
So I just set up wire from IBKR to my banking. Apparently I don't have a free wire, I must have withdrawn something sometime this month. I *think* they go by calendar month, so I'll try to wire out on June 1st when the whole 50K settles anyway.

What's interesting is that they have the following limits in my situation:
ACH initiated at IBKR to push money elsewhere: 30K
ACH initiated outside, pulling from IBKR: 28K (this was the gotcha that I had no way of knowing)
Wire initiated at IBKR: 28K (new discovery, turned out the amount is the same as ACH initiated outside trying to pull from IBKR)
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Re: Interactive Brokers (Best Kept Secret)

Post by tj »

Marseille07 wrote: Sat May 28, 2022 7:41 pm
tj wrote: Sat May 28, 2022 3:02 pm
Marseille07 wrote: Sat May 28, 2022 11:09 am IBKR's ACH is terrible.

Here is what happened to me just today (the numbers aren't real but enough to tell a story).

I transferred 50K to IBKR. I checked ACH on IBKR to see how much I can withdraw. They said 30K because the transaction hasn't settled yet. I said OK fine, let me withdraw 30K so I scheduled an ACH pull from a bank for 30K.

Next thing I know it, my ACH is rejected because IBKR says they only allow 28K, not 30K.

I double checked ACH at IBKR and the amount is still 30K, which means they have different limits on ACH initiated at IBKR vs ACH pull initiated elsewhere. But...how the hell do we find out what the ACH pull limit is? It seems like they're asking mission impossible here.

Use the monthly free wire transfer out - it avoids all that nonsense.
So I just set up wire from IBKR to my banking. Apparently I don't have a free wire, I must have withdrawn something sometime this month. I *think* they go by calendar month, so I'll try to wire out on June 1st when the whole 50K settles anyway.

What's interesting is that they have the following limits in my situation:
ACH initiated at IBKR to push money elsewhere: 30K
ACH initiated outside, pulling from IBKR: 28K (this was the gotcha that I had no way of knowing)
Wire initiated at IBKR: 28K (new discovery, turned out the amount is the same as ACH initiated outside trying to pull from IBKR)
it's 1 per calendar month, if you already pulled the $$$ that you were allowed to withdraw, there's not going to be anything for you to wire out.

If they aren't letting you withdraw, you must have transferred it in fairly recently...why are you trying to withdraw so soon after depositing?
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Re: Interactive Brokers (Best Kept Secret)

Post by Marseille07 »

tj wrote: Sat May 28, 2022 7:56 pm it's 1 per calendar month, if you already pulled the $$$ that you were allowed to withdraw, there's not going to be anything for you to wire out.

If they aren't letting you withdraw, you must have transferred it in fairly recently...why are you trying to withdraw so soon after depositing?
My ACH got rejected by IBKR as explained in my original post. My bank thinks the transaction succeeded but I know it's a matter of time when they'll reverse ACH and possibly disable my IBKR linkage. This has happened before; I learned to be careful and checked the amount allowed to withdraw, but little I knew there is another gotcha which is that IBKR has 2 different limits depending on how the ACH was initiated.

I will wire it out on June 1 when my fund settles. Should be a free wire.
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Re: Interactive Brokers (Best Kept Secret)

Post by richard.h.gao »

Marseille07 wrote: Sat May 28, 2022 7:41 pm I must have withdrawn something sometime this month.
Maybe you forgot you already withdrew 2k. 30k - 2k = 28k :oops:
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Re: Interactive Brokers (Best Kept Secret)

Post by Marseille07 »

richard.h.gao wrote: Sat May 28, 2022 10:27 pm
Marseille07 wrote: Sat May 28, 2022 7:41 pm I must have withdrawn something sometime this month.
Maybe you forgot you already withdrew 2k. 30k - 2k = 28k :oops:
There are two limits.
a) ACH initiated at IBKR: 30K (in this example). I just checked today as well.
b) ACH initiated outside of IBKR: 28K (in this example). This is what bit me, as I had no idea they have a different limit. As poster tj mentioned, I added wire and this happens to show 28K (the same amount as what IBKR claimed as available for ACH initiated outside), so I now know to look for this number.

As far as free ACH, I must have ACH'ed at the beginning of this month when I updated my finances last month. I should get a free wire on June 1st.
Marseille07
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Re: Interactive Brokers (Best Kept Secret)

Post by Marseille07 »

tj wrote: Sat May 28, 2022 3:02 pm Use the monthly free wire transfer out - it avoids all that nonsense.
Thank you very much for this suggestion. I just wired out my settled $ and it arrived after a couple of hours or so; much better than ACH.
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Possible US Inheritance Tax Implications For NonUs Resident/Citizen with IBKR Account?

Post by Park »

https://milliondollarjourney.com/intera ... canada.htm

The following is written from the perspective of a Canadian resident, but it's relevant to anyone who is not a US citizen/resident:

"there is a very important question mark when it comes to using any US-based online brokerage as a Canadian resident. This question mark comes in the form of the interpretation of US Tax Law. It’s not that Interactive Brokers is in and of itself unsafe for Canadians to use from a tax standpoint, it’s that the USA has some unique tax rules when it comes to inheritance tax.

It gets complicated in a hurry, but the basic idea is that the USA taxes “US In Situs Assets” at the time a person passes away. The estate of any Canadian resident who owns over $60,000 worth of assets at the time of their death must file a tax return in the USA. IB is obviously located in the USA, so the question quickly becomes – do investments in my Interactive Brokers account fall under USA inheritance tax law, are they considered “US In Situs Assets”?

The answer is… *drumroll*… no one really knows.

It appears to boil down to if your investments are considered “domiciled” in the USA. That phrase is being debated by people smarter than myself each year in the USA. I know that my go-to resource for international personal finance is author Andrew Hallam, and he does not use IB for this exact reason.

Now if you’re a USA resident, or a USA Citizen, then you’re going to have to deal with US estate taxes anyway – so this drawback to going with IB is not really relevant. If you live in Canada however, I just don’t think saving a couple of bucks on non-ETF transactions are worth it.

So while your investments are likely as safe as possible from hackers or fraud, it’s perhaps the US taxman that you have to be most careful of...

It has yet to be definitively stated anywhere that I’m aware of that “domiciled” refers to only where the ETFs are listed, and not the company you are using to broker the purhcasing and holding of the assets. Hopefully it’s just where the ETF is based, but I personally know several millionaires who refuse to hold their assets in IB because of this hazy legal quandry."
Tanelorn
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Re: Interactive Brokers (Best Kept Secret)

Post by Tanelorn »

tj wrote: Sat May 28, 2022 3:02 pm Use the monthly free wire transfer out - it avoids all that nonsense.
And after your one free wire, think hard about paying the $10 for subsequent wires to avoid the ACH headaches.

https://www.interactivebrokers.com/en/p ... r-fees.php
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Re: Possible US Inheritance Tax Implications For NonUs Resident/Citizen with IBKR Account?

Post by international001 »

Park wrote: Fri Jun 24, 2022 11:45 pm https://milliondollarjourney.com/intera ... canada.htm

The following is written from the perspective of a Canadian resident, but it's relevant to anyone who is not a US citizen/resident:

"there is a very important question mark when it comes to using any US-based online brokerage as a Canadian resident. This question mark comes in the form of the interpretation of US Tax Law. It’s not that Interactive Brokers is in and of itself unsafe for Canadians to use from a tax standpoint, it’s that the USA has some unique tax rules when it comes to inheritance tax.

It gets complicated in a hurry, but the basic idea is that the USA taxes “US In Situs Assets” at the time a person passes away. The estate of any Canadian resident who owns over $60,000 worth of assets at the time of their death must file a tax return in the USA. IB is obviously located in the USA, so the question quickly becomes – do investments in my Interactive Brokers account fall under USA inheritance tax law, are they considered “US In Situs Assets”?

The answer is… *drumroll*… no one really knows.

It appears to boil down to if your investments are considered “domiciled” in the USA. That phrase is being debated by people smarter than myself each year in the USA. I know that my go-to resource for international personal finance is author Andrew Hallam, and he does not use IB for this exact reason.

Now if you’re a USA resident, or a USA Citizen, then you’re going to have to deal with US estate taxes anyway – so this drawback to going with IB is not really relevant. If you live in Canada however, I just don’t think saving a couple of bucks on non-ETF transactions are worth it.

So while your investments are likely as safe as possible from hackers or fraud, it’s perhaps the US taxman that you have to be most careful of...

It has yet to be definitively stated anywhere that I’m aware of that “domiciled” refers to only where the ETFs are listed, and not the company you are using to broker the purhcasing and holding of the assets. Hopefully it’s just where the ETF is based, but I personally know several millionaires who refuse to hold their assets in IB because of this hazy legal quandry."
You can move this to the international section
But from what I got there, ETFs like VTI are 'US in Situs Assets'. A non-US citizen nor US-resident having more than $60k there (for instance, after an inheritance), should move all the $$ out because of the estate tax you mention.
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

Does anybody know what logic IB uses for calculating the days in "Interactive Brokers’ fee waived no transaction fee (NTF) program offers over 150 exchange-traded funds (ETFs) which reimburse IBKR Pro clients for commissions paid on ETF shares held for at least 30 days" ?
https://www.interactivebrokers.com/en/t ... fs-mkt.php
First in first out, last in first out, the shared selected by the tax reporting method, ...?
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Re: Interactive Brokers (Best Kept Secret)

Post by squirrel1963 »

Tanelorn wrote: Sun May 08, 2022 12:17 am
richard.h.gao wrote: Sat May 07, 2022 9:55 pm
Tanelorn wrote: Sat May 07, 2022 9:17 pm I would definitely not recommend this. All it takes is one brokerage snafu, on the side of your other broker, in sending the tax basis information to IB, and you’ll have a tax mess on your hands that will waste way more time than whatever pennies you might have saved in commissions.
That's like saying I should never buy stocks because my broker could snafu recording of the cost basis.

Or I should never sell stocks because my broker could snafu calculating the tax basis.
Not at all. You’re doing something rare and unusual for pennies in savings. Brokers record the tax basis for buys and sells millions of times per day and they still get some of them wrong (rarely). I know because I’ve found those large errors on my 1099s, but those are a few errors in 10,000s or 100,000s. But securities transfers are much more rare and I’ve often (maybe 1/5) had the sending broker fail to deliver the tax cost information to the receiving broker even though they’re required to under the rules, or somehow it gets lost in someone’s computer system, etc. plus they’re annoying to set up, track, confirm they go through, etc. I wouldn’t be doing securities transfers for $50, let alone to save fractions of pennies a share on commissions, especially when IB has better execution if you know how to use it than the “free” trades you’ll get elsewhere.
I did a couple account transfers (from Wells Fargo to Schwab and from Fidelity to Schwab) and the cost basis was transferred correctly. The key here is to carefully monitor the transfer of securities and call up the broker immediately if the cost basis wasn't transferred properly.
LMP | Liability Matching Portfolio | safe portfolio: TIPS ladder + I-bonds + Treasuries | risky portfolio: US stocks / US REIT / International stocks
bogledogle87
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Re: Interactive Brokers (Best Kept Secret)

Post by bogledogle87 »

New IBKR Customer here trying to understand some of the nuances of a RegT Margin account. I understand the initial 50% margin overnight requirement and the 25% Maintenance margin, but I'm trying to understand what happens in the middle.

Here is an example: Let's say that today my current equity/margin breakdown was 50/50. In a few months, a significant recession were to drop my equity all the way down to 30% and may margin was 70%. I'm still above the margin call level, but want to increase my equity.

Now at this point, Which of the following am I allowed to do with $1000 new cash added to the account?
1) Pay down the cash margin balance to increase my Equity by $1000
2) Buy stocks to increase my Equity $1000
3) Buy $2000 in stocks ($1000 cash + additional $1000 Margin)

Option 1 is a given, but I am most curious about options 2 & 3.
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Re: Interactive Brokers (Best Kept Secret)

Post by Laurizas »

Remove new cash from equation and imagine that by some magic your loan was reduced by 1000 (because new money coming in does just that). What can you do then?
bogledogle87
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Re: Interactive Brokers (Best Kept Secret)

Post by bogledogle87 »

Laurizas wrote: Tue Jul 05, 2022 10:44 am Remove new cash from equation and imagine that by some magic your loan was reduced by 1000 (because new money coming in does just that). What can you do then?
If my equity value is anywhere between 25-50%, I'm not sure what my options will be. That is mostly what i am trying to find out.
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Re: Interactive Brokers (Best Kept Secret)

Post by Laurizas »

bogledogle87 wrote: Tue Jul 05, 2022 2:04 pm If my equity value is anywhere between 25-50%, I'm not sure what my options will be.
Then you have only option 1, I guess.
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Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

I’m re-consolidating to fidelity, and IBKR put a hold for 60 days for my last deposit, which came from the same account to which I am moving them back to.

Does a 60-day hold not seem extreme?
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typical.investor
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Re: Interactive Brokers (Best Kept Secret)

Post by typical.investor »

muffins14 wrote: Mon Aug 01, 2022 9:44 pm I’m re-consolidating to fidelity, and IBKR put a hold for 60 days for my last deposit, which came from the same account to which I am moving them back to.

Does a 60-day hold not seem extreme?
Totally extreme.

It's my impression that they are pretty cautious when it comes to transferring money. It think it stems from 1) not wanting to get into regulatory trouble (laundering) 2) not wanting to have fraud issues and 3) mostly not wanting to dedicate any resources to staff to have to resolve those. Maybe they are 4) holding it for cash earnings.

I transferred money in, forgot about rent, and so set up a new bank to transfer it out. Set up went find but approval for the transfer was molasses and by the time they had responded to my message asking about it, I had long since cancelled the transfer and paid rent another way.

I'm guessing it's 1 and 3 but that's just speculation.

Hmmm, reconsolidating? You had everything at Fidelity, then spread it out and now are putting it back. Sounds suspicious to me .... you money shuffler.
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

muffins14 wrote: Mon Aug 01, 2022 9:44 pm I’m re-consolidating to fidelity, and IBKR put a hold for 60 days for my last deposit, which came from the same account to which I am moving them back to.

Does a 60-day hold not seem extreme?
I personally think IB is better in just about every category. Why again are you consolidating with Fidelity and not with IB?
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Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

comeinvest wrote: Mon Aug 01, 2022 10:54 pm
muffins14 wrote: Mon Aug 01, 2022 9:44 pm I’m re-consolidating to fidelity, and IBKR put a hold for 60 days for my last deposit, which came from the same account to which I am moving them back to.

Does a 60-day hold not seem extreme?
I personally think IB is better in just about every category. Why again are you consolidating with Fidelity and not with IB?
Current 401k, Roth IRA, HSA are at fidelity. I also use a fidelity Visa and use my brokerage as my bank (ATM, autopay for bills etc).

Having one account/login rather than 2 just seems satisfying. Additionally, all the commissions I’ve accrued during my tax loss harvesting this year feel a little high, even if I’ve recovered some from share lending revenue. it’s hard for me to quantify something like “their execution is better”, when I can’t measure it but know for sure I’ve spent ~$650 in commissions since January.

I also don’t really need the low margin rates anymore. Fidelity came within 0.37% on margin, and 1) I’d use box spreads if needed and 2) I want to pay down my existing margin over the next 2-3 years.

And maybe another thing is that fidelity doesn’t put a 60-day hold on incoming money from direct deposits. I could see this being annoying and forcing me to go on margin for things like rent payments, because I usually only hold about 5-10k cash. At fidelity I can spend the cash as soon as it arrives from my paycheck.
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comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

muffins14 wrote: Tue Aug 02, 2022 6:55 am
comeinvest wrote: Mon Aug 01, 2022 10:54 pm
muffins14 wrote: Mon Aug 01, 2022 9:44 pm I’m re-consolidating to fidelity, and IBKR put a hold for 60 days for my last deposit, which came from the same account to which I am moving them back to.

Does a 60-day hold not seem extreme?
I personally think IB is better in just about every category. Why again are you consolidating with Fidelity and not with IB?
Current 401k, Roth IRA, HSA are at fidelity. I also use a fidelity Visa and use my brokerage as my bank (ATM, autopay for bills etc).

Having one account/login rather than 2 just seems satisfying. Additionally, all the commissions I’ve accrued during my tax loss harvesting this year feel a little high, even if I’ve recovered some from share lending revenue. it’s hard for me to quantify something like “their execution is better”, when I can’t measure it but know for sure I’ve spent ~$650 in commissions since January.

I also don’t really need the low margin rates anymore. Fidelity came within 0.37% on margin, and 1) I’d use box spreads if needed and 2) I want to pay down my existing margin over the next 2-3 years.

And maybe another thing is that fidelity doesn’t put a 60-day hold on incoming money from direct deposits. I could see this being annoying and forcing me to go on margin for things like rent payments, because I usually only hold about 5-10k cash. At fidelity I can spend the cash as soon as it arrives from my paycheck.
You must have had lots of TLH to incur $650 in commissions. If you used market orders, you might have saved a lot with limit orders, which have only a fraction of the cost.
There is also IB Lite which also has no commissions.
But if you use box spreads diligently, use no futures etc. that can often lead to negative cash balances, and don't use any of the products (e.g. international equities) that IB has but most other brokers don't, and if you are approved for portfolio margin at Fidelity as well as for the level of options trading that you need for box spreads, then Fidelity (or Schwab) are the way to go.

What do you mean with "Fidelity came within 0.37% on margin" - 0.37% higher than IB? How did you achieve that?
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Re: Interactive Brokers (Best Kept Secret)

Post by muffins14 »

comeinvest wrote: Tue Aug 02, 2022 7:18 am
You must have had lots of TLH to incur $650 in commissions. If you used market orders, you might have saved a lot with limit orders, which have only a fraction of the cost.
There is also IB Lite which also has no commissions.
But if you use box spreads diligently, use no futures etc. that can often lead to negative cash balances, and don't use any of the products (e.g. international equities) that IB has but most other brokers don't, and if you are approved for portfolio margin at Fidelity as well as for the level of options trading that you need for box spreads, then Fidelity (or Schwab) are the way to go.

What do you mean with "Fidelity came within 0.37% on margin" - 0.37% higher than IB? How did you achieve that?
I did limit orders, but even at $0.005 per share, 3000 shares is $15. I was doing TLH on like 700k-800k of VXUS/VTI/ITOT/IXUS at a time.

I was at 2.58% margin at IB, and fidelity was willing to do 2.95%. It’s a discount off their benchmark, so will still float like IB floats. When I tried to negotiate it while at fidelity they offered like 6-7%, in Jan 2022, I said no thanks and left for IB, but when I offered to bring assets back to fidelity on the condition they try to match the margin rate, this is what I got.
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Re: Interactive Brokers (Best Kept Secret)

Post by bling »

muffins14 wrote: Tue Aug 02, 2022 7:30 am I did limit orders, but even at $0.005 per share, 3000 shares is $15. I was doing TLH on like 700k-800k of VXUS/VTI/ITOT/IXUS at a time.

I was at 2.58% margin at IB, and fidelity was willing to do 2.95%. It’s a discount off their benchmark, so will still float like IB floats. When I tried to negotiate it while at fidelity they offered like 6-7%, in Jan 2022, I said no thanks and left for IB, but when I offered to bring assets back to fidelity on the condition they try to match the margin rate, this is what I got.
you should try tiered pricing to see if it saves you money. for me, some trades are more expensive, and others cheaper, but overall i save more going tiered.

it's actually very annoying to see the commissions paid because every other broker is free. i just hope that IBKR actually has better execution than the competition.
comeinvest
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Re: Interactive Brokers (Best Kept Secret)

Post by comeinvest »

bling wrote: Tue Aug 02, 2022 1:29 pm
muffins14 wrote: Tue Aug 02, 2022 7:30 am I did limit orders, but even at $0.005 per share, 3000 shares is $15. I was doing TLH on like 700k-800k of VXUS/VTI/ITOT/IXUS at a time.

I was at 2.58% margin at IB, and fidelity was willing to do 2.95%. It’s a discount off their benchmark, so will still float like IB floats. When I tried to negotiate it while at fidelity they offered like 6-7%, in Jan 2022, I said no thanks and left for IB, but when I offered to bring assets back to fidelity on the condition they try to match the margin rate, this is what I got.
you should try tiered pricing to see if it saves you money. for me, some trades are more expensive, and others cheaper, but overall i save more going tiered.

it's actually very annoying to see the commissions paid because every other broker is free. i just hope that IBKR actually has better execution than the competition.
I feel I get better fills with IB when I trade thinly traded securities like closed-end funds, where I can submit orders simultaneously to multiple venues. I'm not sure how the effective execution quality compares for high volume ETFs or stocks that trade with one cent spreads. But I use marked-to-market futures among others in my accounts which means the cash position is variable, and I save more with IB's relatively tight spreads between deposit and margin interest rates than I could save with small differences in commissions or execution quality. I usually use limit orders at the bid for buys and at the ask for sells ("patient trading"), and I'm also not sure how my strategy compares to blindly using market orders. There is a possibility that I am disproportionally exposed to adverse selection, as with NYSE stocks most market orders seem to be internalized i.e. it's hard to get fills on the exchanges. I think the SEC is planning on changing this, but they have been proposing solutions for a long time. If you use market orders you know exactly your cost of execution, it's the spread minus price improvements if any. I hope that my implementation cost is better on average in the long run. My all-in commission+fees for non-marketable limit orders with IB Pro and tiered plan is typically around $0.002 per piece.
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