Interactive Brokers

[MrMarcus]

The online broking company "Interactive Brokers" looks attractive with its promises of $6 per trade commissions. However, it appears to be designed for professional traders who deal in big bucks than with the everyday traders.

I'd be grateful if anybody who uses or knows about this broker can give me some advice. In particular, if there are any hidden nasties like fees, minimum trades, commissions etc involved. Or, if you have had great and reliable dealings with these guys and there are no hidden extras I'd be interesting in hearing about it.

 

[tech/a]

The best I have found.
Easy to use.
Great security.
Love the conditional orders just set and forget.

Pain in the butt to open an account but once done eazzzi.
I can and do recommend

 

[Trembling Hand]

I would say if you are just doing the odd share trade they aren't worth the hassle. Quite a complex account and trade set up which seems to confuse a few starting out.

But if you are an active trader you will not find anything better IMO. Not only cheapest but every market you would want to trade.

 

[professor_frink]

The online broking company "Interactive Brokers" looks attractive with its promises of $6 per trade commissions. However, it appears to be designed for professional traders who deal in big bucks than with the everyday traders.

I'd be grateful if anybody who uses or knows about this broker can give me some advice. In particular, if there are any hidden nasties like fees, minimum trades, commissions etc involved. Or, if you have had great and reliable dealings with these guys and there are no hidden extras I'd be interesting in hearing about it.

If you only trade once every couple of months, then they might not be for you, they do have a minimum activity level,which minimum is $10USD, so if you only rack up $6 in comms over the course of a month, then it will cost you $4 on top of that at the end of the month.

There is also a market data fee of $37.50 per month for live data(though you don't have to have this to trade)

Hope this helps

 

[jackjones]

For an IB individual trader over 25 the starting balance is 6,500 with Minimum Balance 2,500,.. is this correct? thanks

 

[Seneca60BC]

For an IB individual trader over 25 the starting balance is 6,500 with Minimum Balance 2,500,.. is this correct? thanks

The starting balance is $10,000 US.

Cheers

 

[K-B]

There seems to be quite a lot of chat about the functions and features of IB's platform, Trader Workstation.

For those of you who would like to see how the platform functions, you can register for IB's weekly Australian webinars. They cover a range of topics and are an easy way to learn how to trade numerous products on a number of worldwide exchanges.

Go to the below website to view available webinars and select the International tab to view the Australian webinars.

http://www.interactivebrokers.com/en/general/education/webinars.php?ib_entity=llc


If you have any further questions on IB, feel free to contact me on 02 9240 5146.

 

[cutz]

G'Day,

I’m in the process of setting up an IB account to trade options, I mainly put on credit spreads with the occasional naked put position. In the Account Configuration/Trading configuration setup page there are 3 options for account types, Reg.T.Margin, Portfolio Margin and Cash.
Could someone please advise me on the appropriate account type to select, it appears that portfolio margin seems to be the correct config, and I would have to submit 100K US to enable short options. If I am to use the Cash Account Type I would not have to submit 100K but is appears like it may be a restricted account not allowing naked short option positions.

Could someone please advise me on the correct setup for an Aussie trader.

Thanks in advance,


Cutz,

PS. I have already trawled the pages of ASF but haven’t been able to find the above query.

 

[IBTrader]

Interactive Brokers - Trading Platform of Choice

For more active/ experienced traders, then Interactive Brokers is an excellent choice, offering a multi-asset class platform, exposure to 70 market centres across 17 countries, and are also the cheapest online broker in Australia:

Stocks from AUD 6 a trade (0.08% of trade value)
Options: AUD 3 per contract (incl ACH fee)
Futures AUD 5 (incl. of all exchange fees)
Forex From 1/2 PIP wide
CFDs: 0.05%

Once comfortable using the TWS platform you won't look back. If you want further information IB now has an Australian office (02.9240.5148).

 

[CanOz]

Re: Interactive Brokers - Trading Platform of Choice

CFDs: 0.05%

CFDs? Since when?

CanOz

 

[IBTrader]

To answer a couple queries:

All clients opening an IB account should select Reg T Margin, unless they will be funding with 100K USD + then select Portfolio margin- view the difference under trading>>margin on the IB website.

CFD's- we recently added Exchange listed CFDs, listed under the product tab on teh website.

Contact me for further information (02 9240 5148)

 

[chops_a_must]

Cutz. Choose the margin option.

Once it is set up, you can activate the options trading capability... well... that's what I did.

Cheers.

P.S. - And you may not want to trade Aussie options through there for reasons I can't remember...

 

[cutz]

thanks for the replies guys,

P.S. - And you may not want to trade Aussie options through there for reasons I can't remember...

chops, i didn't get the last bit, you mean aussie options could present a problem?

 

[chops_a_must]

thanks for the replies guys,

chops, i didn't get the last bit, you mean aussie options could present a problem?

There is something very problematic on expiry day iirc.

You don't get a chance to close out... I think.

From memory, sails was the one that had that problem.

I guess not an issue if you are prepared to close out before expiry.

But I don't trade options in Oz, so I can't really give you any first hand experience. Might be worth PMing Sails.

 

[cutz]

Yes, it vaguely rings a bell; in that case it could be a problem if I want to do a diagonal roll on the last day.

Thanks for the tip.

 

[sails]

From what I remember (my IB account has been closed for over a year now) - the problem is if you are assigned on a short option. IB was only giving the first 10 mins of the day before randomly closing out positions in your account and if you have multiple positions, the ones they close out may have nothing to do with the option assigned. If they close out covering longs - it potentially leaves naked short positions

If it is a naked option, then you have no choice but to close the stock position and that's not too hard in the first 10 minutes - although a bit close for comfort for stocks lower in the alphabet...

The problem comes in with the likes of short positions covered by another long position - eg calendars, verticals, etc. It puts the profitable side at a huge risk. Eg. an ITM call debit vertical that has almost reached max profit. You are planning to close soon, but find you have been assigned on the shorts. Quick enough to get out of the stock position, but if the market decides to go south while you are trying to close the long calls, especially as our MMs are often reluctant to start quoting for at least half to one hour in the morning. And they usually have horrendously wide spreads even if one can get a quote out of them.

It's the main reason I like to have most of the next day to deal with assignment in order a good price for the covering long (or whatever adjustment I decide) - and then usually do the deal as a stock/option combo so that the original limited risk trade is retained.

They are quick to remind people that you can always list the option you want removed from your account to last - but that doesn't help much if you have a lot of varied positions.

Anyway, that's not the reason I closed the account. Their software allowed a crebit trade go through wrongly as a debit. Technically ended up paying for a calendar spread twice - paid to own it - then paid again to sell it I believe they are supposed to have some safety filters for the Oz market and this trade should never have gone through at those prices. At the very least, it should have gone through at lowest bid price.

Once I mistakenly entered a sell price in Iress at 19.5c instead of 29.5c. However, the bid was 26 and so the order was done at 26. IMO, this is how it should have been with my IB order which would at least still have been a credit, albeit lower than anticipated.

The IB software had my order mixed around and it became very confusing. Spent nearly an hour trying to work out how to close a simple calendar spread. Even got on the customer help and they told me how to do it - and by following their instructions - I got into that mess.

It may work better with US options, however, I have read many horror stories of traders over the years on other option related forums that have had their fingers burnt with the assignment issues as mentioned above... But the lack of filters for Oz options is a bit scary...

Cutz, you should still be able to trade on expiry day - as far as I know. I didn't trade with them that long to find out! I have zero tolerance in these situations.

Sorry for the rant - still quite upsetting

 

[cutz]

Thanks for the info Sails,

10min on expiry day could be cutting it a little fine, and the fact that I only trade the aussie market IB may not suit me, I think I’ll stick to where I am for the moment.

 

[chops_a_must]

Thanks for the info Sails,

10min on expiry day could be cutting it a little fine, and the fact that I only trade the aussie market IB may not suit me, I think I’ll stick to where I am for the moment.

No, I think Sails is saying the day after expiry before randomly closing positions you may not then have enough margin for.

 

[sails]

No, I think Sails is saying the day after expiry before randomly closing positions you may not then have enough margin for.

Actually, technically it's the day after assignment of a short option - in other words - the morning you find out you have been assigned. Can be any time - not just at expiry...

And you're right chops - I believe it's only if there are insufficient funds to pay for a short put assignment they only give that 10 min window of opportunity to close the stock position.

While assignment of short calls means funds are coming into your account, if you don't own the underlying shares to offset that short stock, I think IB again only give 10 mins.

Also, the exercise of long options would have the same effect. Most brokers automatically exercise all ITM options at expiry often only ITM by a tiny amount. Just another trap for the unwary...

IMHO anyone at risk of being assigned or exercised with IB should know exactly what IB's rules are...

 

[cutz]

Yep,

I got it guys, thanks for the info.