Interactive Brokers: Asking for opinion?

[sbrain000]

Hi people,
I need your thoughts and opinions so please hear me out.

I am a new to stock market. I am sorely interested in investing in stocks of companies and ETFs in Global markets.(Ex: AUS, USA, Poland, Europe, etc.)

As an Australian resident, it has been quite challenging few weeks to search for the right brokerage platform as the most of Australian brokers' commission for international tradings were quite expensive. (Ex: CommSec charges $20USD for USA stock per trade, and $40USD for European Stock per trade). Also, most of them don't deal with various global markets. And, even if they do, the commissions seem to be too expensive for me.

During the search, I've found Interactive Brokers. It offers quite cheap commission for global markets as well as Australian stock market.

I am aware that, if you have less than $100,000USD(or equivalent) in your account, Interactive Brokers charge you $20 USD per month(if you have less than $2k USD in your account), or $10 USD per month(if you have at least more than $2k USD in your account). And, I am also aware that, to avoid this monthly charge for this account maintenance, you have to generate matching commissions.(Ex: if you have more than $2k USD in your account, as long as you generate $10USD commission, you won't be charged with the account maintenance fee)

In my case, I am not planning to be a day trader. I am more of an Investor who searches for companies that I'd like to invest by my own research based on their financial statements and business reports.
The thing is, I don't have big money to start with like, I assume, most of you guys have.
I am planning to start with maybe $5k AUD and to invest a few hundreds dollars every months in purchasing shares of a few different companies, which automatically generate commissions.

My question is, would you think that it would be the right choice for me to go with Interactive Brokers? Because, if I were planning to spend a few hundred dollars every months to invest in a few different companies, it will cost commissions anyway no matter what brokerage platforms I choose. CommSec charges $10 AUD per trade whereas IB charges only $6 per trade. I know that CommSec doesn't charge account maintenance fee but the commissions that would incur during the purchase would cover more than $10USD for IB commission anyway.

Does anyone have some similar thought that I have before? Please any advice and opinion are very much appreciated.

(Ps: I am not planning to do any Margin trading or some sort. I am planning to open Cash account only and trade with my own cash/capital only. And, again, please remember that I am planning to spend a few hundreds every month in order to purchase more shares.)

 

[Dundee2]

Hello sbrain000,
I don't have an account with IB, but I have trialled their platform a couple of times, I just do not like it, I find it difficult to find my way around.
Considering your low frequency of trading, IMHO the brokerage is going to be insignificant, focus on ease of access to the markets you want..

My 2 cents worth.
Cheers.

 

[peter2]

You haven't got enough capital to diversify immediately and be able to keep your costs down. I'd consider investing a larger amount every quarter (3 mths) rather than a few hundred each month. This will lower your costs significantly and it won't matter which broker you start with.

How about investing in ASX companies or ETFs initially, then when your capital is much larger diversifying into overseas markets? IB or another less expensive broker will be available in a few years when your account capital is much larger.

 

[sbrain000]

Hello sbrain000,
I don't have an account with IB, but I have trialled their platform a couple of times, I just do not like it, I find it difficult to find my way around.
Considering your low frequency of trading, IMHO the brokerage is going to be insignificant, focus on ease of access to the markets you want..

My 2 cents worth.
Cheers.

Thank you for the response.
Yeah, I don't mind what brokerage I would go with as long as its offer and commissions can work out well with my plan. So far, IB was the best chose in terms of the markets that I wanted to access with low commissions. Only thing that worries me about using IB is that I would somehow lose money due to some unknown elements that I haven't noticed yet.

 

[sbrain000]

You haven't got enough capital to diversify immediately and be able to keep your costs down. I'd consider investing a larger amount every quarter (3 mths) rather than a few hundred each month. This will lower your costs significantly and it won't matter which broker you start with.

How about investing in ASX companies or ETFs initially, then when your capital is much larger diversifying into overseas markets? IB or another less expensive broker will be available in a few years when your account capital is much larger.

Thank you for the response.
My initial plan is to go invest one or two ASX listed companies and one or two ETFs first. And, maybe one or two oversea companies. And, just go with them for a while until I can put in more of my own capitals. So, I thought it would be achievable with IB? Because, in average, $10USD is approximately $15AUD. And, IB charges $6AUD per trade for ASX listed companies. Which means, all I need to do to make at least 3 trades per month. I thought a few hundreds every months would be enough to achieve this plan? Of course, I wouldn't be able to buy quite expensive Bluechip-stocks or a bulk of penny stocks. I just believed that it would become quite a lot within a year or two as long as I choose the right company or ETFs?

 

[Sharkman]

The thing is, I don't have big money to start with like, I assume, most of you guys have.
I am planning to start with maybe $5k AUD and to invest a few hundreds dollars every months in purchasing shares of a few different companies, which automatically generate commissions.

we all had to start small somewhere (well, except for those born with a silver spoon maybe). i started investing as a teenager in the mid 90s with just $1500 or so.

My question is, would you think that it would be the right choice for me to go with Interactive Brokers? Because, if I were planning to spend a few hundred dollars every months to invest in a few different companies, it will cost commissions anyway no matter what brokerage platforms I choose. CommSec charges $10 AUD per trade whereas IB charges only $6 per trade. I know that CommSec doesn't charge account maintenance fee but the commissions that would incur during the purchase would cover more than $10USD for IB commission anyway.

i don't think that would be a good idea. if you're going to do 3 trades per month, even at IB rates that's $18 * 12 = $216 = 4.32% of your capital in a year's brokerage. considering that over the long term the market returns on average around 8-9% a year, a 4.32% hit is crippling, that basically means your net return will be half your gross return in an average type year. no offence, but if you're just starting out, you're unlikely to be generating that sort of alpha thru frequent trading, heck even fund managers would find it tough to achieve that year in year out.

if i was starting out again with 5K i'd just go for a regular CHESS broker, put the whole 5K into one index ETF in one go, pay $15 brokerage (nabtrade is equal to or better than commsec at all volumes except <1K, and you really don't want to be trading <1K, as brokerage will be a massive hit in percentage terms at those volumes), and leave it there to grow for a while. that's only a 0.3% hit, plus maybe 0.1% for the MER, so 1/10th the cost of the 3 trades a month in IB strategy.

don't get me wrong IB is an excellent broker, but i don't think they're the right choice to start with. i've been trading thru IB for about 12 years now, but that also means i only joined them about 12 years after i first started out. by that point i'd grown to about 400-500K, the brokerage incurred from frequent trading is far more insignificant at that size and it becomes much more viable then.

IB's "bang for buck" trade size (ie. the smallest trade for which you'll get the stated percentage rate) is 7,500 AUD, so if you're thinking about running half a dozen trading positions, i'd say you'd be better served building up to at least 50K before venturing into IB. but it's your money, do whatever you feel comfortable with.

 

[frugal.rock]

Well said Sharkman.
Looking to change brokers myself, and wish to lower my trading frequency for the foreseeable virus future.
I will be signing up with Selfwealth.
$9.50 any trade size.

 

[Sharkman]

i'm the opposite actually - my trading activity has ramped up quite a bit since the virus situation began, though i did lower my position sizes due to the uncertainty.

couple of reasons i think, with me being a stock investor but an options trader, my long term investments hate the heightened volatility, but my options trading arm absolutely loves it. and the MMs have been surprisingly willing, given the uncertainty, to deal at fair prices in the majors.

the other reason is less interruptions - now that we're all working from home due to the virus, people can't just walk up to my desk to ask things or drag me into pointless meetings. i have the freedom now to watch the market a bit more closely whilst it's still open, execute trades when i need to, get back to people after my trades are done with a "oh sorry i didn't see your chat request earlier, was too busy concentrating on fixing a problem" etc., and stay logged into the corporate network a bit later into the evening to catch up on my work after the market's closed.

 

[MovingAverage]

IB is a big NO for me--last time I checked they weren't CHESS. My personal preference is for CHESS so everything else about IB is moot for me.

 

[tech/a]

IB is a big NO for me--last time I checked they weren't CHESS. My personal preference is for CHESS so everything else about IB is moot for me.

I’m sure this puts some off
I’ve used IB for 22 years 3 accounts once funded I’ve had no issues
Taking out funds when needed.
Amazing reporting
Masses of help
A platform which is as simple or complex as you want.
You can literally trade ANYTHING listed.

 

[gartley]

Platform is powerful but clunky. Have used much better.
Mobile app not the best either, more complicated than it needs to be although it has gradually improved.

 

[MovingAverage]

I’m sure this puts some off
I’ve used IB for 22 years 3 accounts once funded I’ve had no issues
Taking out funds when needed.
Amazing reporting
Masses of help
A platform which is as simple or complex as you want.
You can literally trade ANYTHING listed.

don't get me wrong, i'm sure IB is a great broker and they've been around for a long time. personally i just like the thought of having CHESS, but if that doesn't bother you then no doubt it's IB all the way

 

[MovingAverage]

Mobile app not the best either, more complicated than it needs to be although it has gradually improved.

My experience with several brokers is their mobile platforms are all pretty crappy despite having reasonable desktop platforms. I'd be interested to know which brokers have great mobile platforms

 

[gartley]

I trade FX and Oanda has the best Mobile app I have used.
Most others I have used the font size is too small and hard to read or the general basic layout has not been a user friendly.
Commsec mobile app I don't like at all, was better before that upgraded it a few years back. In fact got out of them all together.

 

[wasp]

I’m sure this puts some off
I’ve used IB for 22 years 3 accounts once funded I’ve had no issues
Taking out funds when needed.
Amazing reporting
Masses of help
A platform which is as simple or complex as you want.
You can literally trade ANYTHING listed.

Hi Tech/A, as an experienced IB user, I was wondering if you would know the answer to this: Let's say I fund an IB account with $5,000 and buy $5,000 of $CSL, then I sell all my $CSL a while later for $5,200, how long do I need to wait before I can spend the $5,200 on purchasing more shares? If there is a settlement delay, is a margin account the solution?

 

[tech/a]

Straight away.

They do keep an amount in credit
when you get close to using all your funds
It must be a % as I've seen a warning pop up when this happens.
I've never gone over it as I usually sell something or part of something
too keep inside my own funds. If you didn't have the funds then the trade
wouldn't be executed.
Yes Margin would be a solution if you think this would impact on your trading.

Even when I did trade margin with BT I never had a call.
If you keep getting Margin calls then your not trading profitably.
There is a place for margin but covering loss isn't one of the reasons
you'd want to use it.

 

[wasp]

Straight away.

They do keep an amount in credit
when you get close to using all your funds
It must be a % as I've seen a warning pop up when this happens.
I've never gone over it as I usually sell something or part of something
too keep inside my own funds. If you didn't have the funds then the trade
wouldn't be executed.
Yes Margin would be a solution if you think this would impact on your trading.

Even when I did trade margin with BT I never had a call.
If you keep getting Margin calls then your not trading profitably.
There is a place for margin but covering loss isn't one of the reasons
you'd want to use it.

Thanks for the quick response!

 

[tech/a]

Thanks for the quick response!

Timing just happened to see your post.
Wish it was that good when I trade!

 

[Nabtower24]

Hi people,
I need your thoughts and opinions so please hear me out.

I am a new to stock market. I am sorely interested in investing in stocks of companies and ETFs in Global markets.(Ex: AUS, USA, Poland, Europe, etc.)

As an Australian resident, it has been quite challenging few weeks to search for the right brokerage platform as the most of Australian brokers' commission for international tradings were quite expensive. (Ex: CommSec charges $20USD for USA stock per trade, and $40USD for European Stock per trade). Also, most of them don't deal with various global markets. And, even if they do, the commissions seem to be too expensive for me.

During the search, I've found Interactive Brokers. It offers quite cheap commission for global markets as well as Australian stock market.

I am aware that, if you have less than $100,000USD(or equivalent) in your account, Interactive Brokers charge you $20 USD per month(if you have less than $2k USD in your account), or $10 USD per month(if you have at least more than $2k USD in your account). And, I am also aware that, to avoid this monthly charge for this account maintenance, you have to generate matching commissions.(Ex: if you have more than $2k USD in your account, as long as you generate $10USD commission, you won't be charged with the account maintenance fee)

In my case, I am not planning to be a day trader. I am more of an Investor who searches for companies that I'd like to invest by my own research based on their financial statements and business reports.
The thing is, I don't have big money to start with like, I assume, most of you guys have.
I am planning to start with maybe $5k AUD and to invest a few hundreds dollars every months in purchasing shares of a few different companies, which automatically generate commissions.

My question is, would you think that it would be the right choice for me to go with Interactive Brokers? Because, if I were planning to spend a few hundred dollars every months to invest in a few different companies, it will cost commissions anyway no matter what brokerage platforms I choose. CommSec charges $10 AUD per trade whereas IB charges only $6 per trade. I know that CommSec doesn't charge account maintenance fee but the commissions that would incur during the purchase would cover more than $10USD for IB commission anyway.

Does anyone have some similar thought that I have before? Please any advice and opinion are very much appreciated.

(Ps: I am not planning to do any Margin trading or some sort. I am planning to open Cash account only and trade with my own cash/capital only. And, again, please remember that I am planning to spend a few hundreds every month in order to purchase more shares.)

Hi
Not sure if you have found someone to trade with but SelfWealth has just introduced US stock trading as of this week so may be someone to look at. I have found them great at $9.95 per trade for Aus stocks so looking forward to being able to also trade US stocks

 

[investtrader]

WTF?