teslamotorclub: Brokerages & Trading Tools part 1

sleepyhead said: ?

Kevin, I actually learned it from ongba and I have been doing this with LEAPS.

But for some reason I didn't do this with my weekly options last time, and then you pointed out that I could have done this. Don't know why it didn't cross my mind to do it with weeklies, so it was thanks to you I did it this time.

I am using this strategy for all of my calls now, whether long or short. I looked at my brokerage statement last month and it had more transactions than my phone bill has calls, lol. I showed it to my wife, who is a CPA and does our taxes, and told her: "these are the transactions you are going to have to type in for our tax return, and this is only for one month." She said that she is not typing those in, LOL.
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All cool! Your next steps solving your good problem is:
1. find a brokerage that can import all your trading transaction into tax software. Mine works.
2. find a brokerage that can negotiate on the commission, including cost per trade, cost per contract, once you have some trading volume.

These are real problems for me and I got a handle on them before I increase my trading size.
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kevin99 said: ?

All cool! Your next steps solving your good problem is:
1. find a brokerage that can import all your trading transaction into tax software. Mine works.
2. find a brokerage that can negotiate on the commission, including cost per trade, cost per contract, once you have some trading volume.

These are real problems for me and I got a handle on them before I increase my trading size.
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for extra credit is #3
Use a broker that gives you direct market access and gives the best execution quality as that is the hidden cost all the major retail brokers don't want you to know about. Over time and with lots of trades this cost can be heavily compounded to become very large to your return on your trading.
i may be partial because i work for a broker that I know is the best but if you want to do your own research try going to a forum like Day Trading - Day Trader - Automated Trading - Day Trading Software - EliteTrader.com to see what other traders much more experienced than us who have used all different brokers are saying
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kevin99 said: ?

I realize many people use Tapatalk on mobile will not see my signature. Here it is:

http://www.investnaire.com/?q=groups/tesla-investment-and-trading/tezillionaire-how-i-made-1-million-single-day-tesla-investment
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Nice. Thanks for sharing. Are you planning to write non-Telsa investing articles since you went with investnaire.com instead of teslanaire (even though the Tesla emblem is in the logo)? Specifically on TSLA, it would be great if you could write a post sharing your thought process on your options strategy for normal day-to-day kinda trading. Thanks again.

kevin99 said: ?

But I could not fathom how bad their software was back then, compare to other brokers. I wonder how they survive as a business.
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Didn't they almost go bankrupt in 2008? I have the experience with them. Just park my ESPP shares there and use TD Ameritrade for everything else (loved thinkofswim).
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borat99 said: ?

Didn't they almost go bankrupt in 2008? I have the experience with them. Just park my ESPP shares there and use TD Ameritrade for everything else (loved thinkofswim).
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Have heard lots of good things about TD Ameritrade and thinkorswim and want to give them a try. Using Fidelity and it's good but fees are too high for option trading. Looked at OptionsHouse but also didn't really like their tools. Don't know why most of the finance software out there is so crappy and not user friendly.

I usually just create an account with a new service without funding it and play with the software for a bit.
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justdoit said: ?

Have heard lots of good things about TD Ameritrade and thinkorswim and want to give them a try. Using Fidelity and it's good but fees are too high for option trading. Looked at OptionsHouse but also didn't really like their tools. Don't know why most of the finance software out there is so crappy and not user friendly.

I usually just create an account with a new service without funding it and play with the software for a bit.
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Well I'm using interactive brokers and relatively happy. Well officially I'm using LHV which is an Estonian investment bank, but their backend and software is IB so I actually get their app from IB website The only thing that really bogs me is the $4 / contract fee for options. The last few months my fees alone have been between 300-800 usd for an account of ~$25k and loads of day-trading. Dunno how big my monthly volumes would have to be to get lower per contract rates
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Mario Kadastik said: ?

Well I'm using interactive brokers and relatively happy. Well officially I'm using LHV which is an Estonian investment bank, but their backend and software is IB so I actually get their app from IB website The only thing that really bogs me is the $4 / contract fee for options. The last few months my fees alone have been between 300-800 usd for an account of ~$25k and loads of day-trading. Dunno how big my monthly volumes would have to be to get lower per contract rates
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$4 is much higher than the normal IB fee (my last trade was $0.52 per contract).
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Norbert said: ?

$4 is much higher than the normal IB fee (my last trade was $0.52 per contract).
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jeez, 8x price difference. I'm asking my brokers for a discount. Just checked and since April I've paid well over $2k in fees for ~500 contract trades.
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Mario Kadastik said: ?

jeez, 8x price difference. I'm asking my brokers for a discount. Just checked and since April I've paid well over $2k in fees for ~500 contract trades.
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Ouch. Fidelity is 75 cents per contract. OptionsHouse is only 15cents. TD Ameritrade seems to be .75 cents also. Anyone able to get something lower?
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justdoit said: ?

Ouch. Fidelity is 75 cents per contract. OptionsHouse is only 15cents. TD Ameritrade seems to be .75 cents also. Anyone able to get something lower?
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It's not just about the fee, also about how well they execute orders. (And other things.)
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Norbert said: ?

It's not just about the fee, also about how well they execute orders. (And other things.)
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+100

IB is the only broker who sends your orders directly to the exchanges. All the others sell your orders to 'internalizers' who then can use your order as an 'option' for themselves and are only required to give you the fill after there is a print below your limit price for example. So with IB you will also get 'price improvement' n the highest percentage of orders as well. The first time you do some trades on IB's platform is a similar experience to the first time driving the Model S...you won't really understand how good it is compared to ICEs or appreciate it until you try it.
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TSLAopt said: ?

+100

IB is the only broker who sends your orders directly to the exchanges. All the others sell your orders to 'internalizers' who then can use your order as an 'option' for themselves and are only required to give you the fill after there is a print below your limit price for example. So with IB you will also get 'price improvement' n the highest percentage of orders as well. The first time you do some trades on IB's platform is a similar experience to the first time driving the Model S...you won't really understand how good it is compared to ICEs or appreciate it until you try it.
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Agree with all of the above. I switched from thinkorswim to IB for my taxable accounts about 2 years ago and haven't looked back. The desktop platform can be confusing at first, but learning to navigate it in order to receive the best execution and commissions is well worth it. Still have my retirement account with optionsxpress, which is good compared to most other brokerage firms, but can't hold a candle to IB.
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ongba said: ?

Agree with all of the above. I switched from thinkorswim to IB for my taxable accounts about 2 years ago and haven't looked back. The desktop platform can be confusing at first, but learning to navigate it in order to receive the best execution and commissions is well worth it. Still have my retirement account with optionsxpress, which is good compared to most other brokerage firms, but can't hold a candle to IB.
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IB is awesome for their API.
TOS is still the most awesome for drawing narwhals on a chart.
Personally I say use both anyway since you'll need to spread your federal insurance amount on cash and asset.
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So I was about to jump to TOS, and now I have to consider IB... IB is interactive brokers right?

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And TSLA will apparently close above 161.88 today. Hmm......
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twinklejet said: ?

So I was about to jump to TOS, and now I have to consider IB... IB is interactive brokers right?

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And TSLA will apparently close above 161.88 today. Hmm......
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yes, IB is interactive brokers. Like Causalien, I also kept my thinkorswim account to use their desktop platform for charting and options analysis. Thinkorswim's desktop platform is still the best, IMO, but IB beats it on commissions and executions.
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Also, I will never abandon my TOS account. It's a special one of a kind account that has been grandfathered down from when they were just a tiny bitsy Startup.
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ongba said: ?

Agree with all of the above. I switched from thinkorswim to IB for my taxable accounts about 2 years ago and haven't looked back. The desktop platform can be confusing at first, but learning to navigate it in order to receive the best execution and commissions is well worth it. Still have my retirement account with optionsxpress, which is good compared to most other brokerage firms, but can't hold a candle to IB.
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Music to my ears ongba and others who use IB.

On another note, what I think as good news just published by Nasdaq! short interest increased by over 1mm shares between end of trading day on Aug 12th(147.38) and end of trading day on Aug 27th(167.01) and the price had gone up in that time frame almost 20 points despite the 1.3mm increase in shares held short during that time period.

on Tues Sept 24th after the close we will get the short interest as of the end of trading yesterday (sept 10th 166.37) so it will be interesting to see if the short interest was further increased to keep the price from rising over the past two weeks and if so by how much.
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ongba said: ?

Thinkorswim's desktop platform is still the best, IMO, but IB beats it on commissions and executions.
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ongba, do you have real life order comparisons that gives you this conclusion IB's executions is better? I have yet to find the time to do that. I know TSLAOpt includes some 3rd party result but I like to hear from live example. What I plan to do is place two option rolling limit order in both TD and IB to see which one get executed first. Or place option roll market order to see the actual price filled. If you have done something like that, (does not have to be option roll, any order will do), I will be all ears to learn your finding.
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Kevin,

i haven't done it with thinkorswim in awhile (as I only have a minimal account balance with them currently), but did test it a couple years ago when I switched. IB execution was faster and commissions were cheaper than thinkorswim when I made the switch. I still have an optionxpress account which I trade my retirement funds with. I have placed trades nearly simultaneously with IB and optionxpress, and IB always fills faster with better fills and a cheaper commission. Looking to move my retirement account to IB by the end of the year. Also, I trade primarily on my ipad with LTE and IB's tablet platform is much faster the optionsxpress' app.
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When people switch brokerages is there a way to move your securities? or do you have to sell everything and then rebuy everything in the other account?
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Jonathan Hewitt said: ?

When people switch brokerages is there a way to move your securities? or do you have to sell everything and then rebuy everything in the other account?
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Good question, You can easily move everything over with their cost basis intact. It's called an ACAT transfer (Automated Customer Account Transfer) and takes about 3-5 business days to process. It is suggested you do not trade during that process and if it includes options then not to do it during options expiration week.
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Jonathan Hewitt said: ?

When people switch brokerages is there a way to move your securities? or do you have to sell everything and then rebuy everything in the other account?
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you can move the entire account, with securities included when you transfer. Only problem, is during the transfer, you can't access your holdings so can't take advantage of buying/selling shares or options. The holdings, as far as i can tell, are essentially frozen until the move is complete.
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TSLAopt said: ?

Good question, You can easily move everything over with their cost basis intact. It's called an ACAT transfer (Automated Customer Account Transfer) and takes about 3-5 business days to process. It is suggested you do not trade during that process and if it includes options then not to do it during options expiration week.
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Thanks! I may want to do that at some point. I use USAA for my non retirement accounts and Fidelity for retirement. For USAA my commissions are ok since they have a lower rate for higher volume trading...but I'm pretty limited in what I can do as far as trading platform. Plus they won't give me L3 or L4 trading privileges. Not that anyone else will either necessarily, but a maybe is better than a no! haha. Too bad TSLA is so volatile that I don't foresee a 3-5 business day window that I would feel comfortable doing it in anytime soon...
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justdoit said: ?

Ouch. Fidelity is 75 cents per contract. OptionsHouse is only 15cents. TD Ameritrade seems to be .75 cents also. Anyone able to get something lower?
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I pay zero commissions however I am part of schwabs ABP program. (Asset based pricing). They charge a monthly fee based on your assets. So for I stance if my port is worth 25,000 I would pay roughly 28$ for that month. Unlimited trades options or equity.
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Acmykguy said: ?

I pay zero commissions however I am part of schwabs ABP program. (Asset based pricing). They charge a monthly fee based on your assets. So for I stance if my port is worth 25,000 I would pay roughly 28$ for that month. Unlimited trades options or equity.
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Interesting. When you have more asset, does the fee increase or decrease? Both argument could be valid.
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Also, is there a minimum for the abp from schwabb?
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Acmykguy said: ?

I pay zero commissions however I am part of schwabs ABP program. (Asset based pricing). They charge a monthly fee based on your assets. So for I stance if my port is worth 25,000 I would pay roughly 28$ for that month. Unlimited trades options or equity.
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Wouldn't mind that Right now I've spent between 200-800 usd / month on fees. Plus a 30 usd fee for market access (i.e. live data). However the fun part is that after yesterdays feedback from all you guys here I wrote to my brokerage a disgruntled e-mail with the fees and highlighted to them what others are getting from IB and they said they have a discounted tariff for active traders that is half of the usual (i.e. still $2 / contract) and that they've activated it for me upon my request now. Well at least it'll immediately cut my costs by half and I'll have to check about the direct IB account because there are tax laws that might prevent me from using them. Right now any investment and reinvestment is tax free until I take out money from the trading account more than I've put in. Therefore allowing me to reinvest the profit and delay income tax until some time in the far future. That however holds I think only for accounts based in Estonian banks. So if I were to open an IB account straight up I would lose that benefit :/
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I use TD Ameritrade!

Their tools are unbelievable, though some say they are a little bit on the pricey side..Trade Architect might be a little gimmicky but its easy to use, and Think or Swim is fantastic albeit complex for most.
Their APEX pricing program = good value, free Wire transfers (in/out) $0 stop payments, checks, debit card, free atms.

Also if you trade freq. I may be able to help with the commission rates as I work for TD Bank (banking arm)
I currently pay $.015 per share, min $5 a share. so you essentially pay $5 for every 300 shares you buy. and $1.5 per option contract flat

So depending on the market caps you guys trade in, this may be better. But for Tesla! I find that this pricing method works great
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i've tried to buy shares on a margin account in IB and the news is that IB won't allow to buy TSLA on margin anymore.
you can only buy with money you have, that's a blow
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redharel said: ?

i've tried to buy shares on a margin account in IB and the news is that IB won't allow to buy TSLA on margin anymore.
you can only buy with money you have, that's a blow
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I have no problem trading TSLA on margin with my fidelity account. Neither did they change margin requirements on me.
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BTW short is possible on margin for now, *******

http://ibkb.interactivebrokers.com/node/2113
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You can't buy TSLA common shares on margin at IB? That's odd.

Schwab still lets you. Due to the notorious volatility of TSLA, they have a margin requirement of 50% equity on the stock. With others like AAPL they are much more lenient.
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vgrinshpun said: ?

I have no problem trading TSLA on margin with my fidelity account. Neither did they change margin requirements on me.
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fidelity is not IB or vise versa

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brianstorms said: ?

You can't buy TSLA common shares on margin at IB? That's odd.

Schwab still lets you. Due to the notorious volatility of TSLA, they have a margin requirement of 50% equity on the stock. With others like AAPL they are much more lenient.
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i just spoke to one of their representative now and he said it's a management decision cause they see tesla as a risky share or something...
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redharel said: ?

fidelity is not IB or vise versa
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Exactly my point, was trying to lure you to Fidelity :smile:
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vgrinshpun said: ?

Exactly my point, was trying to lure you to Fidelity :smile:
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i like IB but this decision is a kick in the teeth for me.
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redharel said: ?

i just spoke to one of their representative now and he said it's a management decision cause they see tesla as a risky share or something...
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Wow...haven't had many problems with IB so far....but they do see extremely volatile in their margin policies. Not good at all.

They might have noticed that most of their clients were extremely long on Tesla and got worried about a possible pullback........still extremely weird....no problems with TSLA options so far though.
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Maybe I get more responses here:
Does anybody here uses OptionVue or does have an opinion on that?
I'm looking for a good Options front end for Interactive brokers, since Think or Swim is ridiculously expensive.
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Moderator's note: a post moved here: Brokerages Trading Tools

When posting anew (i.e., not a reply), please try to find the most on-topic thread for your post. You might even find that your question/idea has already been discussed!
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Has anyone here worked with the IB API? I have a question with their Market data subscription, specifically subscribing to their MktDepth() view. It seems to me like their API is broken, and I sent the API team an email but haven't heard back yet.
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I have been with Fidelity for 30 years & I am tired of their Active Trader Pro platform not working properly on Macs, if you are on a Mac you can't use Active Trader Pro instead you are forced to use Active Trader Pro.com that requires Microsoft Silverlight plug in :cursing:. Ever since Mavericks was released Active Trader Pro.com doesn't work with Safari so I have to run it on Google chrome.

So I am looking for a good brokerage that offers a good trading platform for Macs, any suggestions?

update

Got Active Trader Pro.com working after allowing Silverlight to run is safe mode in security preferences, not the preferred solution but up & running for now.
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Lump said: ?

I have been with Fidelity for 30 years & I am tired of their Active Trader Pro platform not working properly on Macs, if you are on a Mac you can't use Active Trader Pro instead you are forced to use Active Trader Pro.com that requires Microsoft Silverlight plug in :cursing:. Ever since Mavericks was released Active Trader Pro.com doesn't work with Safari so I have to run it on Google chrome.

So I am looking for a good brokerage that offers a good trading platform for Macs, any suggestions?
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Interactive Brokers has a Java one that is the same across all platforms and works quite well on a Mac.
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Mario Kadastik said: ?

Interactive Brokers has a Java one that is the same across all platforms and works quite well on a Mac.
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Thanks will give it a try along with TD & hopefully a few more.
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redharel said: ?

i've tried to buy shares on a margin account in IB and the news is that IB won't allow to buy TSLA on margin anymore.
you can only buy with money you have, that's a blow
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I just investigated Interactive Brokers, because their margin interest rate (~1.6%) is so much less than my current broker's. As of today, IB's Initial Margin requirement for TSLA is 100% (cash only), but their Maintenance Margin requirement is only 40%, meaning after you buy TSLA shares, 60% of their value can collateralize other purchases. That could be worked around.
Securities with Special Margin Requirements

More disappointing for me is the fact that my Chinese solar stocks (except CSIQ) have both Initial and Maintenance Margin requirements of 100% (cash only, no value as collateral). I guess I won't be switching to IB very soon.
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I know many of members here do a lot of market research and crunching numbers. Can anyone advice on a service or a platform that can be used for comprehensive market data research and algorithm testing? I mean not only a technical analysis but also something beyond it. Something that will allow for example to combine price data with SEC insider trading forms and make tests on a retrospective data? It will be even better if it will include some media and social media signals as well. Anyone is aware of such tools or they are available only for hedge funds analysts?
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New $0 Trade Brokerage - RobinHood -

Check out the newest disruptive company on the block. They are starting very soon, no options yet but will have them soon.
RobinHood
https://www.robinhood.com/?ref=3LmNTX
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Clprenz said: ?

Check out the newest disruptive company on the block. They are starting very soon, no options yet but will have them soon.
RobinHood
https://www.robinhood.com/?ref=3LmNTX
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yes, this will not work...it's been tried before.
The compliance/service costs will be too great and they can't make enough selling their customer orderflow to generate a profit.
they have good backers (ie. Google) but if this was a stock I would short it or buy some puts.

if anyone tries it out though and uses them I'd be curious to know know what they think and what broker they used prior to using Robinhood
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I think that Zecco started this way, and it only lasted a few years before they charged commisions.
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TSLAopt said: ?

yes, this will not work...it's been tried before.
The compliance/service costs will be too great and they can't make enough selling their customer orderflow to generate a profit.
they have good backers (ie. Google) but if this was a stock I would short it or buy some puts.

if anyone tries it out though and uses them I'd be curious to know know what they think and what broker they used prior to using Robinhood
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I have no position or opinion of it. I think it's a cool idea. I am skeptical that they can make enough money off margin interest to survive. It does seem possible that
$1 or $2 dollar trades would work very well
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Clprenz said: ?

I have no position or opinion of it. I think it's a cool idea. I am skeptical that they can make enough money off margin interest to survive. It does seem possible that
$1 or $2 dollar trades would work very well
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i actually think I could start an online brokerage firm myself that does better than what Robinhood is offering believe it or not.
perhaps if TSLA makes it to 1000+ I will retire from my job and start that up
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This seems like an awesome service, i put my email address in to see if i can get a spot.
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Based on what everyone has posted the last 5 pages it sounds like if one had to pick a "best brokerage" then IB would win. The stocks I have very high margin maintenance requirements with IB so I don't think switching to IB would be a good idea for me. I was thinking of optionshouse. It has a pretty low cost per trade for stock and options (important to me), pretty low margin interest rate (not as good as IB though), and the trading interface looks much better than the brokerage I'm using right now. Maybe they'll even give me the ability to do spreads? (my current brokerage doesn't).

Assuming I go ahead and do the switch, I know I have to allow a week or so for the ACATS to go through. I was wondering how cost basis and everything is going to work? According to optionshouse it looks like it will come through with the ACATS:
I funded my account with an ACAT from another brokerage firm, what happens to my cost basis? | OptionsHouse

This sounds too good to be true, anyone else have personal experience doing this? I really don't want to switch because of the headaches involved but it sounds like I'd be stupid not too. Thanks!
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Jonathan Hewitt said: ?

Based on what everyone has posted the last 5 pages it sounds like if one had to pick a "best brokerage" then IB would win. The stocks I have very high margin maintenance requirements with IB so I don't think switching to IB would be a good idea for me. I was thinking of optionshouse. It has a pretty low cost per trade for stock and options (important to me), pretty low margin interest rate (not as good as IB though), and the trading interface looks much better than the brokerage I'm using right now. Maybe they'll even give me the ability to do spreads? (my current brokerage doesn't).

Assuming I go ahead and do the switch, I know I have to allow a week or so for the ACATS to go through. I was wondering how cost basis and everything is going to work? According to optionshouse it looks like it will come through with the ACATS:
I funded my account with an ACAT from another brokerage firm, what happens to my cost basis? | OptionsHouse

This sounds too good to be true, anyone else have personal experience doing this? I really don't want to switch because of the headaches involved but it sounds like I'd be stupid not too. Thanks!
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It's now law (as of Jan 1) that they have to maintain and transfer all the cost basis information on Stocks and Options.
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I'm glad I read through this thread, i'm trying to figure out where to move my account. I have setup an IB account and was looking to test their API, but I was unaware of the margin issue with TSLA. I don't use margin very often and when I do it's only a small percentage that I have available, but I don't want to be constrained. I also want to be able to sell naked, does IB allow this? I've been approved for margin and options but I'm unclear what level that is. I was just getting ready to transfer some money in there this morning. I'm currently with Scottrade and can't wait to leave, to restrictive and expensive, however they do not have margin limits on TSLA that I have ever noticed.
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sub said: ?

I'm glad I read through this thread, i'm trying to figure out where to move my account. I have setup an IB account and was looking to test their API, but I was unaware of the margin issue with TSLA. I don't use margin very often and when I do it's only a small percentage that I have available, but I don't want to be constrained. I also want to be able to sell naked, does IB allow this? I've been approved for margin and options but I'm unclear what level that is. I was just getting ready to transfer some money in there this morning. I'm currently with Scottrade and can't wait to leave, to restrictive and expensive, however they do not have margin limits on TSLA that I have ever noticed.
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There are tight margin restrictions on TSLA at IB (100% initial). For options, yes you can do whatever you want, assuming you have enough money in your account to cover the margin requirements.
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I setup an account at TDameritrade this morning. They have API and i'm think no restrictions on TSLA margin? I was really looking forward to using IB, i'll keep my account so I can use it in the future, assuming they won't close it if it goes unfunded.
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IB closes unfunded accounts after 45 days IIRC... not a big deal IMO since it doesn't take much time to open an account online if you ever need to.
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For those who use OptionsHouse, does TSLA have a higher maintenance margin then other stocks? I see that if you have a "concentrated account" it does. I can't find a list of specific stocks that have higher maintenance margins, maybe it doesn't exist.
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I opened a Just2Trade account as it seemed a good fit for my trades and...ugh, nothing but a pain so far. The account transfer from Ameritrade has taken 10 days so far and still isn't right. They only have the options, not the stocks and cash. Ameritrade locks you out while a transfer is in progress, so I've had no trade access for 1 1/2 weeks.

The UI is abysmally bad. Stupid little things that show a complete lack of attention to detail (I'm a software programmer). Looking at options, they say "Monthly" or "Week3" rather than showing the dates of expiration. The bid/ask values are horribly inaccurate compared to Ameritrade or even Google finance. I guess they show the last one maybe as they look completely off in some cases.

I don't think they got the cost basis stuff transferred over either, not that I can tell.

Not recommended. I'll have to try and unwind those positions and get into yet another broker.
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I've always used tradeking, I don't use the research tools too much, but when it comes to executing trades for cheap in either PC or smartphone, I have had almost 100% satisfaction. I've also called a couple times and gotten answers to a couple questions within 5 minutes. Only other broker I have used is Fidelity, and comparatively Tradeking's web portal is very minimalist and easy to use. I really like the way they show options tables and don't think I'll be switching anytime soon.
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Any problems with margin?

Has anybody had any problems with their brokerage firm raising the margin maintenance requirements with TSLA during times of volatility? I've heard IB has done this in the past and some people have gotten burned (ie., margin calls). I'm planning to create a few new accounts at different brokerages and want to avoid the firms that have stricter/volatile TSLA margin requirements. Please share.
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DaveT said: ?

Has anybody had any problems with their brokerage firm raising the margin maintenance requirements with TSLA during times of volatility? I've heard IB has done this in the past and some people have gotten burned (ie., margin calls). I'm planning to create a few new accounts at different brokerages and want to avoid the firms that have stricter/volatile TSLA margin requirements. Please share.
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Vanguard gave me a several house calls during the past month (horrible time to exit my positions). I had nearly the same percent drop in my TD Ameritrade account, and got Zero House Calls.
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No changes in maintenance requirements on TSLA by Fidelity, at least since March of last year when I started using margin. I also found out by chance that buying certain puts increases available margin, but did not take the time to fully understand the mechanics of it. I was able to use this several times by experimenting with different put strikes using their margin calculator.
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vgrinshpun said: ?

No changes in maintenance requirements on TSLA by Fidelity, at least since March of last year when I started using margin. I also found out by chance that buying certain puts increases available margin, but did not take the time to fully understand the mechanics of it. I was able to use this several times by experimenting with different put strikes using their margin calculator.
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vgrinshpun - I was reading that Fidelity adds an extra 30% add-on margin requirement for accounts with concentrated holdings of 75% or more in one stock (Trading FAQs: Margin - Fidelity). This is in addition to their standard 30% margin maintenance requirement. Have you experienced this?

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EnergyMax said: ?

Vanguard gave me a several house calls during the past month (horrible time to exit my positions). I had nearly the same percent drop in my TD Ameritrade account, and got Zero House Calls.
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Thanks. I'll put Vanguard on my blacklist. Do you know what their maintenance requirement for TSLA was raised to? Do they have an add-on requirement for accounts with concentrated holdings?
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DaveT said: ?

vgrinshpun - I was reading that Fidelity adds an extra 30% add-on margin requirement for accounts with concentrated holdings of 75% or more in one stock (Trading FAQs: Margin - Fidelity). This is in addition to their standard 30% margin maintenance requirement. Have you experienced this?
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Most certainly :smile:. My TSLA position has an elevated 40% margin requirement. I believe that the normal requirement (for non concentrated positions) is 30%. I am very careful with leaving a cushion, and despite using margin quite often, had never had any type of call yet.
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vgrinshpun said: ?

Most certainly :smile:. My TSLA position has an elevated 40% margin requirement. I believe that the normal requirement (for non concentrated positions) is 30%. I am very careful with leaving a cushion, and despite using margin quite often, had never had any type of call yet.
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Thanks. Fidelity scares me because of the concentration add-on margin requirement which would be 30% for me in addition to their existing 30% margin requirement. And then I fear them raising that 30% to 50% for TSLA in a time of great volatility (stock drops over 50%) and that would make my margin requirement 80%.
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I think you are misinterpreting Fidelity margin requirements. My TSLA position is 98% percent of the holdings in one of the fidelity accounts and my TOTAL margin requirement is 40% vs. normal 30% for other positions. It is not 30%+30% = 60% as you seem to assume.

I am also absolutely certain that their margin requirements were not changed during high volatility time when IB raised their margin maintenance requirements.
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vgrinshpun said: ?

I think you are misinterpreting Fidelity margin requirements. My TSLA position is 98% percent of the holdings in one of the fidelity accounts and my TOTAL margin requirement is 40% vs. normal 30% for other positions. It is not 30%+30% = 60% as you seem to assume.

I am also absolutely certain that their margin requirements were not changed during high volatility time when IB raised their margin maintenance requirements.
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Hmm, that's strange. Maybe I'm misreading it, but I just read Fidelity's margin requirements over again and it does seem like your margin requirement should be 60% if your TSLA holding is 98% of your holdings.

"Example: If you purchase $20,000 of marginable stock with a 30% house margin requirement, you would need to initially deposit $10,000, which is the 50% Fed requirement. You would not need to deposit additional money beyond the $10,000 because the house maintenance requirement is below the 50% Fed requirement.Let�s say, however, the security purchased now makes up 80% of the gross market value of your portfolio. This security would be subject to an RBR add-on of 30%, bringing the house requirement to 60%. Since the account has a maintenance requirement higher than the Fed requirement, you would need to deposit funds to meet the higher requirement, rather than 30%. In this example, the security purchased increased the house maintenance requirement to 60%, requiring a deposit totaling $12,000. This amount is equal to 60% of the purchase price."

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I've been at fidelity for 3 years and have had a margin call due every other day. I've had times when I had 150k in the account and using leverage I've had at least 200k in tesla and at least another 100k in other stocks and options.
They have been great. Never changed the margin requirements for tesla. They did change the margin requirements once for a drug company- they called me up that day to let me know. I do get periodically sold out, mostly when i miscalculate a margin call and only once when i didn't have a call because I doubled down with a 50k margin call due the next day and they thought I was too risky. other than that, I think fidelity pretty much lets me do my thing and they are really, really good about tesla.
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DaveT said: ?

Hmm, that's strange. Maybe I'm misreading it, but I just read Fidelity's margin requirements over again and it does seem like your margin requirement should be 60% if your TSLA holding is 98% of your holdings.

"Example: If you purchase $20,000 of marginable stock with a 30% house margin requirement, you would need to initially deposit $10,000, which is the 50% Fed requirement. You would not need to deposit additional money beyond the $10,000 because the house maintenance requirement is below the 50% Fed requirement.Let�s say, however, the security purchased now makes up 80% of the gross market value of your portfolio. This security would be subject to an RBR add-on of 30%, bringing the house requirement to 60%. Since the account has a maintenance requirement higher than the Fed requirement, you would need to deposit funds to meet the higher requirement, rather than 30%. In this example, the security purchased increased the house maintenance requirement to 60%, requiring a deposit totaling $12,000. This amount is equal to 60% of the purchase price."
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This is interesting indeed. My Margin Calculator screen lists TSLA requirement at 40%, while this position is 98% of the total of that account. I will investigate, call Fidelity if necessary, and post an update (would be a nice test of their customer support, which was always superb for me).

This is might have something to do with the fact that TSLA (excluding options) that is being added on margin will add margin as it will be counted for a calculation of new basis before applying the margin requirement percentage, but this is just a theory off the top of my head. I will check it out and post an update.
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I recently switched from schwab to fidelity. Loyal schwab account for over 5 years. Over hundred trades a year with CASH balance on average 5 million with more than that in securities. Cash carries less than one tenth of a percent interest. Had an idea to ask for free trades since I had never asked for anything before. I asked for what I thought was crazy (1000 free trades). My local broker said sure but he had to check with corporate. Corporate called me back and said they couldn't. They suggested I call around and they would match my best offer. I asked if they could extend any but they only said that I would have to call around to find someone else's offer. I told them that if anyone offered me more, I would go with them since without knowing me they would give me more. They asked why I wouldn't work with them and told them I had for 5 years done that. The next morning I heard a schwab tv ad offering new accounts 300 free trades, no mention of balance requred. Fidelity offered me cash and 500 free trades. Don't be afraid to shop your business around. Loyal customers are taken for granted
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Thank you all contributors for sharing your experience with different trading accounts. Trading tools are quite relevant and it is great to be able to hear from investors on this forum.

The factors that I found relevant when comparing different accounts:

- the cost per trade is relevant, but generally most brokerages are competitive, so trading cost is not my primary concern, as it is usually insignificant for my orders
- order execution is more relevant to me than the trade cost, as good execution often provides more benefit
- good order control, visibility of the market, ability to change order limit price in response to market moves instantaneously. Some accounts that I had were so bad that I was not sure if my order was accepted, the order visibility was atrocious. Something like that affects trading ability a great deal.
- free data feed (or cheap)
- access to all trading instruments
- ability to place various types of orders or automated trading (so I can go back to sleep)
- access to most relevant world markets
- quick and easy way to transfer holdings, easy funding and withdrawing money out
- clear, customizable reporting
- good training on how to use the platform
- 24hrs phone support
- both web platform (so I can place orders whilst at work, if I have to) and fancy customizable trader workstation for home computer
- secure access, codes are a must
- margin rate, but this one is not relevant to me as I have cash account only

I am very happy with IB so far. The only problem with IB is that as non US citizen I can have only cash account. Maybe that is for my own good.
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Auzie said: ?

Thank you all contributors for sharing your experience with different trading accounts. Trading tools are quite relevant and it is great to be able to hear from investors on this forum.

The factors that I found relevant when comparing different accounts:

- the cost per trade is relevant, but generally most brokerages are competitive, so trading cost is not my primary concern, as it is usually insignificant for my orders
- order execution is more relevant to me than the trade cost, as good execution often provides more benefit
- good order control, visibility of the market, ability to change order limit price in response to market moves instantaneously. Some accounts that I had were so bad that I was not sure if my order was accepted, the order visibility was atrocious. Something like that affects trading ability a great deal.
- free data feed (or cheap)
- access to all trading instruments
- ability to place various types of orders or automated trading (so I can go back to sleep)
- access to most relevant world markets
- quick and easy way to transfer holdings, easy funding and withdrawing money out
- clear, customizable reporting
- good training on how to use the platform
- 24hrs phone support
- both web platform (so I can place orders whilst at work, if I have to) and fancy customizable trader workstation for home computer
- secure access, codes are a must- margin rate, but this one is not relevant to me as I have cash account only

I am very happy with IB so far. The only problem with IB is that as non US citizen I can have only cash account. Maybe that is for my own good.
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I'm from Norway in Europe, and have had no problems opening a portifolio margin account at IB. Opened it just about a month ago.
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Wenche said: ?

I'm from Norway in Europe, and have had no problems opening a portifolio margin account at IB. Opened it just about a month ago.
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I am glad for you Wenche, make the most of it. Unfortunately in Australia IB does not have a permission from ASIC to give locals margin accounts. It seems that IB had a wrong licence in Australia. Hopefully that will be sorted out.
In a way having no margin is ok with me as I do not fully trust myself.:biggrin:
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Market Data Subscriptions for TSLA on Interactive Brokers (Non Professional) Help !

I just switched to IB and I am looking at which Market data subscription I should get. I need real time data on nasdaq stocks and options. I have never seen L2 trading and I am not sure what that is about but I would love advice on what ya'll think the best bet would be for cheapest data and maybe someone's take on the L2 data and if its worth paying extra for it.

Thanks for any help,
Blake
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Chickenlittle said: ?

I recently switched from schwab to fidelity. Loyal schwab account for over 5 years. Over hundred trades a year with CASH balance on average 5 million with more than that in securities. Cash carries less than one tenth of a percent interest. Had an idea to ask for free trades since I had never asked for anything before. I asked for what I thought was crazy (1000 free trades). My local broker said sure but he had to check with corporate. Corporate called me back and said they couldn't. They suggested I call around and they would match my best offer. I asked if they could extend any but they only said that I would have to call around to find someone else's offer. I told them that if anyone offered me more, I would go with them since without knowing me they would give me more. They asked why I wouldn't work with them and told them I had for 5 years done that. The next morning I heard a schwab tv ad offering new accounts 300 free trades, no mention of balance requred. Fidelity offered me cash and 500 free trades. Don't be afraid to shop your business around. Loyal customers are taken for granted
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Those free trades have to be used in 90 days, correct?
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mershaw2001 said: ?

Those free trades have to be used in 90 days, correct?
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No time limit, large account can negotiate terms
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Chickenlittle said: ?

No time limit, large account can negotiate terms
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Mershaw/ChickenLittle,
If you guys think they are 'free' please read "Flash boys" by Michael Lewis. around page 180 is where he cites some really juicy material on the online retail brokers and what they are doing with your 'free' orders. The larger the orders the more money they make selling it to HFTs and the worse avg price you get on a market order, or in the case of a limit order the more likely you will not get filled even if the market comes down to touch your limit price and then goes back up(that is a huge opportunity cost by the way if you think about it).

if you really want to drill down to what true 'transaction costs' are then please read/digest this letter sent to the SEC last month by the chairman/founder of Interactive Brokers:
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

if either of you are interested in learning more about what your true 'transaction costs' are or in opening an account with IB (even for testing) then please PM me your email address and I'll be happy to discuss.
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blakegallagher said: ?

I just switched to IB and I am looking at which Market data subscription I should get. I need real time data on nasdaq stocks and options. I have never seen L2 trading and I am not sure what that is about but I would love advice on what ya'll think the best bet would be for cheapest data and maybe someone's take on the L2 data and if its worth paying extra for it.

Thanks for any help,
Blake
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Hi Blake, I opened my account at IB about a year ago. I didn't ask for the level 2 (L2) trading, but marked for subscription in front of every free option. The only one with fee, that I subscribed, was the real time market data for Nasdaq, including some other stock exchanges. I think it was only $10/month, and waved, if you use the same amount or more in transaction fee. I think I received an e-mail, not long ago, that informed they would not charge, if you have a certain level of balance in your account. I have never seen the subscription fee drawn out of my account, and there have been several months where I've done less than 10 trades. I get all the information I need real time, but it took me some time to get to know the platform, and build the mosaic windows according to my needs.
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TSLAopt said: ?

Mershaw/ChickenLittle,
If you guys think they are 'free' please read "Flash boys" by Michael Lewis. around page 180 is where he cites some really juicy material on the online retail brokers and what they are doing with your 'free' orders. The larger the orders the more money they make selling it to HFTs and the worse avg price you get on a market order, or in the case of a limit order the more likely you will not get filled even if the market comes down to touch your limit price and then goes back up(that is a huge opportunity cost by the way if you think about it).

if you really want to drill down to what true 'transaction costs' are then please read/digest this letter sent to the SEC last month by the chairman/founder of Interactive Brokers:
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

if either of you are interested in learning more about what your true 'transaction costs' are or in opening an account with IB (even for testing) then please PM me your email address and I'll be happy to discuss.
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Agree but my trades are executed just as all the other fidelity trades are but no commission that others pay
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Chickenlittle said: ?

Agree but my trades are executed just as all the other fidelity trades are but no commission that others pay
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Yes, but unless you are doing small trades the 'commission' is just a very small proportion of the money they make off your trades. They could let you trade 'for free forever' and your actual cost would still be very high for each trade...read that Flash Boys book...it's entertaining as well.
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what do you consider small trades? i thought that if the number of shares was less than 1000 it was relatively hard to front run that. I thought most of the front running happens when mutual funds buy big.

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TSLAopt said: ?

Yes, but unless you are doing small trades the 'commission' is just a very small proportion of the money they make off your trades. They could let you trade 'for free forever' and your actual cost would still be very high for each trade...read that Flash Boys book...it's entertaining as well.
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what do you consider small trades? i thought that if the number of shares was less than 1000 it was relatively hard to front run that. I thought most of the front running happens when mutual funds buy big.
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mershaw2001 said: ?

what do you consider small trades? i thought that if the number of shares was less than 1000 it was relatively hard to front run that. I thought most of the front running happens when mutual funds buy big.

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what do you consider small trades? i thought that if the number of shares was less than 1000 it was relatively hard to front run that. I thought most of the front running happens when mutual funds buy big.
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Well the HFT firms (e.g. citadel, Knight, Susquehanna) pay all the retail e-brokers (e.g. Fidelity/Schwab/TD/Etrade) for all the 'flow' on a per share basis...therefore the larger orders the e-brokers make more money. If they are getting paid 1-2 pennies per share then submitting an order for 200 shares would just net them $2-$4 in revenue from the HFT firms and the $9.95 ticket charge the e-broker is upfront about would become a larger portion of their revenue for that 200 share order.

so if you are a larger account and doing orders for thousands of shares then this $9.95 upfront ticket charge becomes a much smaller portion of their revenue they generate on your orders and so they are fine giving that up and letting you think you are trading 'for free'...the only problem there is that smarter/sophisticated people start realizing 'wait a minute, don't you still need to make money off my business?' And then put it all together by reading books like 'Flash Boys' etc.

this is what that upstart RobinHood everyone is talking about is trying to do, is eliminate the ticket charge altogether and let people trade 'for free' by only collectng money from the orderflow which they sell to HFT firms....I suspect the execution quality will be horrid there and the small retail investor will truly get robbed on that from RobinHood. I actually think Robin Hood will never make it for other reasons though that don't relate to execution quality.
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TSLAopt said: ?

Mershaw/ChickenLittle,
If you guys think they are 'free' please read "Flash boys" by Michael Lewis. around page 180 is where he cites some really juicy material on the online retail brokers and what they are doing with your 'free' orders. The larger the orders the more money they make selling it to HFTs and the worse avg price you get on a market order, or in the case of a limit order the more likely you will not get filled even if the market comes down to touch your limit price and then goes back up(that is a huge opportunity cost by the way if you think about it).

if you really want to drill down to what true 'transaction costs' are then please read/digest this letter sent to the SEC last month by the chairman/founder of Interactive Brokers:
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

if either of you are interested in learning more about what your true 'transaction costs' are or in opening an account with IB (even for testing) then please PM me your email address and I'll be happy to discuss.
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TSLAopt, most likely HFTs are skimming from all the brokers. I do not know enough on the subject to be able to have a solution for myself, on how to protect from HFT skimming. Maybe the only way is to have limit orders and even that is limited protection.

In relation to choosing a good broker, if HFTs are skimming from all of them, then the brokers are on a level playing field in respect to HFTs and they compete on other comparative criteria. Am I missing something here, or is there something specific to IB that is worse than on other brokers platforms?

I think I read somewhere, maybe on TMC, that some traders, in search of the best platform, placed the same order simultaneously through few different brokers. IB returned the best execution and price, according to these traders. Imo such test is the only test that matters to me as long as there is not much we can do about skimming by HFT.
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Auzie said: ?

TSLAopt, most likely HFTs are skimming from all the brokers. I do not know enough on the subject to be able to have a solution for myself, on how to protect from HFT skimming. Maybe the only way is to have limit orders and even that is limited protection.

In relation to choosing a good broker, if HFTs are skimming from all of them, then the brokers are on a level playing field in respect to HFTs and they compete on other comparative criteria. Am I missing something here, or is there something specific to IB that is worse than on other brokers platforms?

I think I read somewhere, maybe on TMC, that some traders, in search of the best platform, placed the same order simultaneously through few different brokers. IB returned the best execution and price, according to these traders. Imo such test is the only test that matters to me as long as there is not much we can do about skimming by HFT.
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IB is the only honest and transparent broker out there not 'double dipping' on customer order flow. In other words, IB is the only broker that makes money on customers' orders solely on the upfront commission, all of the other brokers out there choose to make money by also selling the customer orderflow to 'Internalizers' (AKA high frequency tradings firms) as described in "Flash Boys".

the reason IB is the only honest/transparent broker is because of its very unique management structure. If you haven't read "Automate This" then read chapter 1 as it is pretty much a bio on how Interactive Brokers evolved and why it is very unique.
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I made the switch to IB from Merrill about a month ago, but I'm discovering that it takes 5 business days to move money into the account using an ACH transfer. Is this normal? I guess I got accustomed to being able to move money between my checking and brokerage accounts at BofA/Merrill pretty much instantly.
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willowspuppy said: ?

I made the switch to IB from Merrill about a month ago, but I'm discovering that it takes 5 business days to move money into the account using an ACH transfer. Is this normal? I guess I got accustomed to being able to move money between my checking and brokerage accounts at BofA/Merrill pretty much instantly.
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yes, for instantaneous movements of cash you should wire the funds. A wire in or out of IB is free from IB's perspective but the other broker/bank may or may not charge some fee to send or receive a wire.
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willowspuppy said: ?

I made the switch to IB from Merrill about a month ago, but I'm discovering that it takes 5 business days to move money into the account using an ACH transfer. Is this normal? I guess I got accustomed to being able to move money between my checking and brokerage accounts at BofA/Merrill pretty much instantly.
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ML and BoA are the same entity, that is why the transfer is instantaneous.

I use Bpay to transfer cash from Australian bank to IB account. It takes as long as any Bpay to come through, 2-3 days, depending on exact time of payment, do I catch business hours of IB, time zone differences etc.
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willowspuppy said: ?

I made the switch to IB from Merrill about a month ago, but I'm discovering that it takes 5 business days to move money into the account using an ACH transfer. Is this normal? I guess I got accustomed to being able to move money between my checking and brokerage accounts at BofA/Merrill pretty much instantly.
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Well this is poor. Both scottrade and fidelity let me use funds transferred from BOA instantly to trade stocks even though the actual transfer takes 2 business days to complete.
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dalalsid said: ?

Well this is poor. Both scottrade and fidelity let me use funds transferred from BOA instantly to trade stocks even though the actual transfer takes 2 business days to complete.
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So does IB if you send money into the IB account with a wire transfer.
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dalalsid said: ?

Well this is poor. Both scottrade and fidelity let me use funds transferred from BOA instantly to trade stocks even though the actual transfer takes 2 business days to complete.
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TSLAopt said: ?

So does IB if you send money into the IB account with a wire transfer.
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Are you sure that trade is not on margin until cash transfer settles? I have a cash account and that is a real pain due to restrictions. Often I can not place good trades as previous trade has not settled, etc. If you guys have margin accounts than money transfer and settlement into account lag does not really matter that much.
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Auzie said: ?

Are you sure that trade is not on margin until cash transfer settles? I have a cash account and that is a real pain due to restrictions. Often I can not place good trades as previous trade has not settled, etc. If you guys have margin accounts than money transfer and settlement into account lag does not really matter that much.
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It is not a wire transfer, just regular ACH and not margin either (at least at Scottrade).
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dalalsid said: ?

It is not a wire transfer, just regular ACH and not margin either (at least at Scottrade).
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Strange as I have a bank acct with the two of the biggest US banks (B of A and Chase) and whenever I do an ACH transfer involving those accounts in or out anywhere there is also always a 2-3 business day hold until the transfer goes through.

in any case, any large transfers of money are typically done via wire which is instant and free at IB both in and out...I think most banks brokers limit 50k as the max you can transfer via ACH.
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TSLAopt said: ?

Strange as I have a bank acct with the two of the biggest US banks (B of A and Chase) and whenever I do an ACH transfer involving those accounts in or out anywhere there is also always a 2-3 business day hold until the transfer goes through.

in any case, any large transfers of money are typically done via wire which is instant and free at IB both in and out...I think most banks brokers limit 50k as the max you can transfer via ACH.
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Transfers between my checking accts take 2-3 days. But transfers to Scottrade let me use the money to trade instantly before the actual transaction has completed. There is no easy transfer out from Scottrade though.
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I still have yet to open a fidelity account (call me lazy), but it appears that OptionsHouse is merging with TradeMonster which they are basically giving us access to TradeMonster for free! So on the positive side I think I might be able to avoid opening a fidelity account after all if the new platform is as good as their website is trying to suggest.

I think what kept me pushed away from Fidelity is that they have a decent rise in fees if I were to try to actually make it my trading platform. And besides, who needs charting tools when you have access to the best TSLA website out there!
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dalalsid said: ?

Transfers between my checking accts take 2-3 days. But transfers to Scottrade let me use the money to trade instantly before the actual transaction has completed. There is no easy transfer out from Scottrade though.
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That would be very useful to me, the ability to trade on unsettled transactions. I do not have that, quite a pain. On the other side, transferring money in and out of my IB account is very easy and quick, no limits or restrictions apart from having to wait for settlement to complete.

It would be helpful to compile a spreadsheet of various brokerage accounts and list all these features for easy comparison, so we can all chip in with our info on various accounts. Good account is quite relevant if one wishes to make money in it :smile:

I might do it one day, but I do hope someone beats me to it.

I am curious about the fees that people pay for various market data and for trading. IB charges $15/month for level 2 on Nasdaq, and similar for other markets, $1.5/month for level 1 per market.
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Well this might be a good starting place

I am not sure what they are basing their ratings on the "cost" category on, since I think there is a lot of dynamics that go into that one that might change depending on the individual investor. I don't have a very large account so can't take advantage of the lower commissions for having a higher volume of trades... but that would be different for someone else who does make those decisions. Or margin costs... or other subscription costs. For example, if cost wasn't a factor in anyone's decision we would all be rocking Bloomberg terminals which cost like 20k a year! But I do like the rest of the category ratings since I think they are very helpful in letting you find a decent balance between cost and functionality.

For those using OptionsHouse note that thanks to the merger we are essentially getting the best of both platforms by them picking up the trademonster platform but keep all the costs the same.
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True cost is not just commissions or ticket charges, but really is the execution quality. Reading "Flash Boys" should help anyone understand that. If you have read "Flash Boys" then it is important to know Interactive Brokers is the only broker out there that will let you route all of your orders to IEX if you wanted to at no extra cost. No other broker would let you route all of your orders to IEX as they would be losing money on their payment for orderflow business where as Interactive Brokers is the only broker out there that doesn't engage in this.

Anyone who understands the mechanics of trading should read this letter submitted to the SEC on Aug 1st
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

no other broker would want to publish this simple statistic because it would expose them to how much they are truly making off of their clients.

if you read and digest and understand the logic for that stats in the above letter then this press release is the latest stats as of the end of Oct showing that the all in cost for making a trade using IB is less than 1 basis point
Interactive Brokers Group Reports Brokerage Metrics for October 2014, Includes Reg.-NMS Execution Statistics - Yahoo Finance

i would love to see the SEC make other brokers publish this same stat

some people say "well a limit order is a limit order no matter what broker I put it with" and this is not true, I'd be happy to go through a specific example of how you can get screwed with your limit order because of the payment for orderflow business all of the brokers are engaged in (think 'opportunity cost' of not getting filled at the bottom price of a stock vs. getting filled at your limit price at the bottom for what would then be a great trade)
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Oh and they have another nifty chart based on what you want to get out of a trading platform:

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TSLAopt said: ?

True cost is not just commissions or ticket charges, but really is the execution quality. Reading "Flash Boys" should help anyone understand that. If you have read "Flash Boys" then it is important to know Interactive Brokers is the only broker out there that will let you route all of your orders to IEX if you wanted to at no extra cost. No other broker would let you route all of your orders to IEX as they would be losing money on their payment for orderflow business where as Interactive Brokers is the only broker out there that doesn't engage in this.

Anyone who understands the mechanics of trading should read this letter submitted to the SEC on Aug 1st
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

no other broker would want to publish this simple statistic because it would expose them to how much they are truly making off of their clients.

if you read and digest and understand the logic for that stats in the above letter then this press release is the latest stats as of the end of Oct showing that the all in cost for making a trade using IB is less than 1 basis point
Interactive Brokers Group Reports Brokerage Metrics for October 2014, Includes Reg.-NMS Execution Statistics - Yahoo Finance

i would love to see the SEC make other brokers publish this same stat

some people say "well a limit order is a limit order no matter what broker I put it with" and this is not true, I'd be happy to go through a specific example of how you can get screwed with your limit order because of the payment for orderflow business all of the brokers are engaged in (think 'opportunity cost' of not getting filled at the bottom price of a stock vs. getting filled at your limit price at the bottom for what would then be a great trade)
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While I don't dispute this, you would have to somehow come up with a method of figuring out how much money you are "losing" by using, for example TOS vs IB based on how they screw you over on the routing in order to get an idea of if it would actually be profitable to start paying more for the more expensive service. (using TOS as an example only, I don't know enough about either to say definitively that one is more or less expensive than another)

For me, and the peanuts I trade, I cannot see myself justifying a higher commission for the *chance* that I don't get screwed over on a limit/market order by a few pennies. Especially when most all of my contract order sizes are normally <5 at one go.
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chickensevil said: ?

Oh and they have another nifty chart based on what you want to get out of a trading platform:
View attachment 63552

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While I don't dispute this, you would have to somehow come up with a method of figuring out how much money you are "losing" by using, for example TOS vs IB based on how they screw you over on the routing in order to get an idea of if it would actually be profitable to start paying more for the more expensive service. (using TOS as an example only, I don't know enough about either to say definitively that one is more or less expensive than another)

For me, and the peanuts I trade, I cannot see myself justifying a higher commission for the *chance* that I don't get screwed over on a limit/market order by a few pennies. Especially when most all of my contract order sizes are normally <5 at one go.
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please read carefully and digest the logic for the stat in the SEC letter linki gave above and you will find your solution on how to easily compare all in cost, the first time I read it, it took me 20-30 minutes to really let the steps outlined in that letter sink in where the light bulb went off and then it made perfect sense.
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TSLAopt said: ?

please read carefully and digest the logic for the stat in the SEC letter linki gave above and you will find your solution on how to easily compare all in cost, the first time I read it, it took me 20-30 minutes to really let the steps outlined in that letter sink in where the light bulb went off and then it made perfect sense.
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Thanks for posting. As usual, the devil is in the detail

I will devote my upcoming sunny weekend to attempts at understanding the details of that letter.

I must be doomed, actually looking forward to spending my sunny weekend in paradise trying to understand the devil in the detail
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TSLAopt said: ?

please read carefully and digest the logic for the stat in the SEC letter linki gave above and you will find your solution on how to easily compare all in cost, the first time I read it, it took me 20-30 minutes to really let the steps outlined in that letter sink in where the light bulb went off and then it made perfect sense.
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Seems like that is a feature of trading on IEX vice trading on some other exchange. So perhaps you can help clear something up for me with how the market actually works. Because assuming that IB only has access to IEX and not the other exchanges then that seems limited in and of itself, doesn't it? Options house and many others trade across a bunch of exchanges. I think mine has like 10 of them that they can trade on. You can specify a certain exchange if you want or just let the platform decide for you. Sadly they don't trade on IEX though.

So for already thinnly traded options and now you are restricting yourself to just one (albiet very large) exchange and that seems like it could hurt you just as much in the pricing. Looking across the different exchanges in real time on options house and there can be up to a 5 cent or more spread from the cheapest exchange to the mist expensive at any given moment. Which just trading one contract is the difference of 5$ which for me is basically paying out the commission fee.

I haven't had the time to really research any of the other exchanges other than AMEX and IEX but that seems like a decent flaw. Does IEX cross fill against the other exchanges if there are no compatible orders on their exchange? If so, then what are you actually saving in that instance since at some point it would have to negotiate with the "rigged" AMEX exchange which means you are still going to get shafted on the "best" price, right? That or they don't play together at all which means you could potentially have an order for 6.00 that never gets filled going to IEX but see AMEX drop to that price (or lower). Feel free to steer me straight on this because I am actually interested in some of the deeper workings of the different exchanges and such but it seems difficult to find good information on it.
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chickensevil said: ?

Seems like that is a feature of trading on IEX vice trading on some other exchange. So perhaps you can help clear something up for me with how the market actually works. Because assuming that IB only has access to IEX and not the other exchanges then that seems limited in and of itself, doesn't it? Options house and many others trade across a bunch of exchanges. I think mine has like 10 of them that they can trade on. You can specify a certain exchange if you want or just let the platform decide for you. Sadly they don't trade on IEX though.

So for already thinnly traded options and now you are restricting yourself to just one (albiet very large) exchange and that seems like it could hurt you just as much in the pricing. Looking across the different exchanges in real time on options house and there can be up to a 5 cent or more spread from the cheapest exchange to the mist expensive at any given moment. Which just trading one contract is the difference of 5$ which for me is basically paying out the commission fee.

I haven't had the time to really research any of the other exchanges other than AMEX and IEX but that seems like a decent flaw. Does IEX cross fill against the other exchanges if there are no compatible orders on their exchange? If so, then what are you actually saving in that instance since at some point it would have to negotiate with the "rigged" AMEX exchange which means you are still going to get shafted on the "best" price, right? That or they don't play together at all which means you could potentially have an order for 6.00 that never gets filled going to IEX but see AMEX drop to that price (or lower). Feel free to steer me straight on this because I am actually interested in some of the deeper workings of the different exchanges and such but it seems difficult to find good information on it.
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Glad you are curious to learn as the brokers do not want you to know how things work. Here are a couple of things to help clear things up for you:
#1)IEX is only for stocks, not options. It is not technically an exchange or an ECN but a dark pool, soon they may go through the process of becoming an official exchange.
#2)at IB not all orders go to IEX, probably most don't. As a customer of IB you have a choice of routing your order to a particular exchange, ECN, or dark pool (IEX being one) or you can use their "Smart routing" order router which does pretty much what IEX was designed to do only IB has been doing it for decades and is arguably much better at it. Nonetheless if you don't believe that then, as an IB customer, you are free to send any or even all of your stock orders to IEX directly if you want at the same cost as gong through the IB smart routing.
#3)what is described in "Flash Boys" and with IEX is only relating to US stock trading. However, rest assured that the payment-for-orderflow and internalization is much more rampant and profitable for HFTs and brokers with options instead of stocks. It's only not publicized with options as much because Main Street doesn't understand what options are and barely understands the basics of what stocks are, and stocks are much more prominently traded than options.

Ask yourself these questions:
1)When you submit your option limit order with Options House (or anyone but IB) do they show you what options exchange your order is resting on while you await for the market to come to your limit price? (IB does). Why doesn't anyone else do this?

2)are there ever times when you submit your limit order and you think it should be displayed as part of the NBBO (National Best Bid/Offer) on your quote monitor but it doesn't get shown? Why do you think this could be?

3)are you aware of the 'maker or taker' fees/rebates offered by options and stock exchanges? Many of the exchanges typically give a rebate of up to 85 cents per contract for adding liquidity (Ie. Posting a limit order waiting for someone to lift your bid or offer price)
you can see details of what these rebates can be here by scrolling down and then clicking on any of the 12 options exchanges
Commissions

4)For stocks, if you only pay a flat ticket charge of 8.95 per trade no matter how big the order size is then why don't large hedge funds use these same brokers (E*Trade, Schwab, Fidelity, TD, Scottrade, etc.) with the 8.95 ticket charge ever if they want to buy/sell a large amount of shares? (Instead they pay Goldman or Morgan Stanley or JP Morgan 1-2 pennies per share which comes out to be much more than 8.95 for their order sizes).
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I use to use Tradeking and switched over to IB awhile back. I love it.

I love setting the bid price for my favorite solar city option and that is just not possible with tradeking.

The very low transactions fees and my latest favorite is the very low cost of capital. I have been carrying way to margin lately (flirting with margin calls) and still my interst rates are crazy low ... since I dipped into margin I have only been charged 50 bucks which is incredible compared to what it would have been at my old broker or anywhere else for that matter (That I could have access to)

The other great thing about IB is the security card they send you for an extra layer of security .... does options house have anything like that? At IB it looks like a credit card and you have a 4 digit pin for it. When you enter it in it gives you a random 6 digit code to enter and you can enable that for anytime you log on.

The last benefit I had was Having TSLAopt available for any questions I had when I setup which was nice . It was an easy process but since I moved my whole account over there was a 2-3 day limbo that was a little scary when I could not see my stocks/options in either platform.
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TSLAopt said: ?

Glad you are curious to learn as the brokers do not want you to know how things work. Here are a couple of things to help clear things up for you:
#1)IEX is only for stocks, not options. It is not technically an exchange or an ECN but a dark pool, soon they may go through the process of becoming an official exchange.
#2)at IB not all orders go to IEX, probably most don't. As a customer of IB you have a choice of routing your order to a particular exchange, ECN, or dark pool (IEX being one) or you can use their "Smart routing" order router which does pretty much what IEX was designed to do only IB has been doing it for decades and is arguably much better at it. Nonetheless if you don't believe that then, as an IB customer, you are free to send any or even all of your stock orders to IEX directly if you want at the same cost as gong through the IB smart routing.
#3)what is described in "Flash Boys" and with IEX is only relating to US stock trading. However, rest assured that the payment-for-orderflow and internalization is much more rampant and profitable for HFTs and brokers with options instead of stocks. It's only not publicized with options as much because Main Street doesn't understand what options are and barely understands the basics of what stocks are, and stocks are much more prominently traded than options.

Ask yourself these questions:
1)When you submit your option limit order with Options House (or anyone but IB) do they show you what options exchange your order is resting on while you await for the market to come to your limit price? (IB does). Why doesn't anyone else do this?

2)are there ever times when you submit your limit order and you think it should be displayed as part of the NBBO (National Best Bid/Offer) on your quote monitor but it doesn't get shown? Why do you think this could be?

3)are you aware of the 'maker or taker' fees/rebates offered by options and stock exchanges? Many of the exchanges typically give a rebate of up to 85 cents per contract for adding liquidity (Ie. Posting a limit order waiting for someone to lift your bid or offer price)
you can see details of what these rebates can be here by scrolling down and then clicking on any of the 12 options exchanges
Commissions

4)For stocks, if you only pay a flat ticket charge of 8.95 per trade no matter how big the order size is then why don't large hedge funds use these same brokers (E*Trade, Schwab, Fidelity, TD, Scottrade, etc.) with the 8.95 ticket charge ever if they want to buy/sell a large amount of shares? (Instead they pay Goldman or Morgan Stanley or JP Morgan 1-2 pennies per share which comes out to be much more than 8.95 for their order sizes).
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I like learning how things tick, it is a flaw of mine so I am naturally curious even if I don't ever change a thing after taking in the new information I just like to know.

I had forgotten that the option exchanges were different from the stocks. So thanks for reminding me I also didn't know that IB pretty much seems to trade on whatever they want to which is pretty cool.

I can't tell you how good or bad options house is but I can at least attempt to answer your questions based on my experience.

I honestly never peered too deeply. If nothing else I could go to a thinly traded strike price and place a bid to see which one they throw me on should be easy enough to tell. It might be somewhere else in an easier to find fashion, but I do know that you can choose which exchange you want instead of going with the "best" option. They tack on an extra very small charge for this and I can pick from any of the choices in the list. I don't know if that helps anything? I always go with the "best" choice to just let their software handle it because I don't know enough to know why it would even be in my benefit to pock a specific exchange and eat the couple pennies of a fee they charge for it.

I have always seen my trade affect the board except when they are filled instantly as I place the limit order. This is usually because I am hastily purchasing something and don't try to haggle for the best price. When I do haggle it has ALWAYS bumped up the bid price to whatever I just set. It was a really weird and cool feeling to see my little ole tiny order actually move the price. The only time I ever had an issue with that was also around the same afternoon I experienced some weird connectivity issues with their service and couldn't really do anything for like 15 minutes. But that is not tied to manipulation and more of a technical difficulty. It struck me as odd though upon first seeing it and not knowing I had basically lost coonection to the tickers because the order would go in and nothing moved.... Like nothing... And I sat there watching all of the strikes and quickly realized that the stock was still moving around but all the options were frozen in time... So whatever technical difficulty they had I wouldn't call that manipulation (because the order NEVER executed because it was way out of strike by the time I put it in) and I point it out to say that I do watch the price movements very closely since pennies equals dollars in real money and these suckers move by 5 dollar jumps every second.

I wasn't aware of this and that is interesting. Can you expand on the subject some? Since I would be classified as "public" I clearly don't get a thing for this... But how does that help the broker? Would this be why they might favor one exchange over another or something?

I assume that would be because of a deal they are cutting in some form or another with the exchange or whatever because they are trading such a large volume. I have only ever held in the hundreds of share count for any one stock because I am not such a wealthy person (yet) so I assumed that is more what you get when you decide to ask for 10,000 shares of TSLA in one go without breaking a sweat and having that much cash to purchase such a large number you would want some guarantees about how the order was executed. But that was as much thought as I put into it. So if you have a thought on that beyond that scope feel free. I mean obviously the big firms have their own direct ties into the exchange and can execute orders "very carefully" I don't have enough money to even think about becoming a customer of GS or JP Morgan or whatever. *shrugs*
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chickensevil said: ?

I assume that would be because of a deal they are cutting in some form or another with the exchange or whatever because they are trading such a large volume. I have only ever held in the hundreds of share count for any one stock because I am not such a wealthy person (yet) so I assumed that is more what you get when you decide to ask for 10,000 shares of TSLA in one go without breaking a sweat and having that much cash to purchase such a large number you would want some guarantees about how the order was executed. But that was as much thought as I put into it. So if you have a thought on that beyond that scope feel free. I mean obviously the big firms have their own direct ties into the exchange and can execute orders "very carefully" I don't have enough money to even think about becoming a customer of GS or JP Morgan or whatever. *shrugs*
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Instead of me trying to explain it to you, I highly recommend you read Michael Lewis' explanation in a very entertaining book to read, "Flash Boys". It should enlighten you much more than I can articulate in a forum post on what really is happening with your orders and it is actually a very fun read that will be hard to put down.
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blakegallagher said: ?

I use to use Tradeking and switched over to IB awhile back. I love it.
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When I looked I was a little put off by their fees which is why I have stayed away from them for now. I think if and when I get higher volume it will be worth it without question but for the few contracts I trade I think that makes the fees a bit better for me with what I use, plus I liked that I could open an account and be approved in very short order. I don't use margin (yet) and again would probably factor into my decision to jump ship if I ever did. As long as I am not going to get royally screwed over the whole broker manipulation thing, I would be more worried about external threats manipulating the stocks and options than I would caring that my one single contract could have been had for 6.00 instead of 6.05 if that contract jumps to 12.00 I'm sure I'm not going to care one bit on a miss of 5$ profit since most of the getting in and out of contracts I find myself getting larger hits on just the volatility alone with how fast prices move than something shady being done underneath. If I find myself trading larger volume it will be a different story for sure... But right now for me I think the key is making good worthy trades because it is quite a hit to dump out of a raw deal.

And the security, no they don't. That's cool that IB offers that. I wish more companies would push toward a more secure authentication like a one-pass token. This is just in general.
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When you say fees you mean for access to the real time data? As for as actual trading fees it was the lowest that I have found.
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blakegallagher said: ?

When you say fees you mean for access to the real time data? As for as actual trading fees it was the lowest that I have found.
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Yeah, it seems like the counter on IB is that they have pretty low commissions but get you with the other fees. The other thing is that in order to even use them, they have a pretty high minimum amount (10k) and require you to have at least 10$ in commission charges a month or they charge you an "inactivity" fee of 10$. They also have fees for canceling orders and modifying orders. And that doesn't even get into if you want access to any of their research data which all has fees to it. IB seems a bit out of my league from those perspectives... Like I said, I am really small time on the money I play with for speculation. That was why I appreciated those who were suggesting a switch to TOS since it is a rather fantastic platform and doesn't cost you an arm and a leg. But I am going to hold off on the switch to TOS until I see how the merger between Options House and Trade Monster goes down, since everything I am seeing points to Trade Monster being a pretty fantastic platform. Since it isn't going to cost me anything to give them a go, I will see how that comes out.

Maybe someday I will get a big enough account that switching to IB would be worth it. That said, I do appreciate knowing how the brokers screw you over which makes me want to switch at some point, I just am too small time to be able to do it right now...
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TSLAopt said: ?

True cost is not just commissions or ticket charges, but really is the execution quality. Reading "Flash Boys" should help anyone understand that. If you have read "Flash Boys" then it is important to know Interactive Brokers is the only broker out there that will let you route all of your orders to IEX if you wanted to at no extra cost. No other broker would let you route all of your orders to IEX as they would be losing money on their payment for orderflow business where as Interactive Brokers is the only broker out there that doesn't engage in this.

Anyone who understands the mechanics of trading should read this letter submitted to the SEC on Aug 1st
https://www.interactivebrokers.com/download/execution_stats_comment_letter.pdf

no other broker would want to publish this simple statistic because it would expose them to how much they are truly making off of their clients.

if you read and digest and understand the logic for that stats in the above letter then this press release is the latest stats as of the end of Oct showing that the all in cost for making a trade using IB is less than 1 basis point
Interactive Brokers Group Reports Brokerage Metrics for October 2014, Includes Reg.-NMS Execution Statistics - Yahoo Finance

i would love to see the SEC make other brokers publish this same stat
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Very interesting, thanks for posting. It seems to me that IB is trying to push the metric, specifically execution, that shows them as the best broker in some respects. I could not fault their reasoning behind the metric. However, I doubt that the metric, as calculated in the paper, will be adopted by others to be published on a regular basis.

That is a pity. In reading that paper, I found some other interesting metrics that I would not mind watching on a regular basis.

All buy metrics are higher than sell metrics for every month this year. Money is obviously flowing into the market in higher volume than going out.

Perhaps these numbers can be used as an indicator of market bullishness. The difference between buy and sell metrics in any category and the trend of it may be an indicator of the degree of bullishness or the opposite.

chickensevil said: ?

Yeah, it seems like the counter on IB is that they have pretty low commissions but get you with the other fees. The other thing is that in order to even use them, they have a pretty high minimum amount (10k) and require you to have at least 10$ in commission charges a month or they charge you an "inactivity" fee of 10$. They also have fees for canceling orders and modifying orders. And that doesn't even get into if you want access to any of their research data which all has fees to it. IB seems a bit out of my league from those perspectives... Like I said, I am really small time on the money I play with for speculation. That was why I appreciated those who were suggesting a switch to TOS since it is a rather fantastic platform and doesn't cost you an arm and a leg. But I am going to hold off on the switch to TOS until I see how the merger between Options House and Trade Monster goes down, since everything I am seeing points to Trade Monster being a pretty fantastic platform. Since it isn't going to cost me anything to give them a go, I will see how that comes out.

Maybe someday I will get a big enough account that switching to IB would be worth it. That said, I do appreciate knowing how the brokers screw you over which makes me want to switch at some point, I just am too small time to be able to do it right now...
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Please let us know how you go with other brokers, I am curious to learn various ways of doing the same thing.
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Bumping this up.
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teslamotorclub

Thứ Ba, 24 tháng 1, 2017

Brokerages & Trading Tools part 1

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