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Is Interactive Brokers bad?


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Is Interactive Brokers bad?

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  #1 (permalink)
 muscleman 
Seattle, WA
 
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I am considering to swing trade futures so I need a broker that supports server side OCO.
There are only a few of them, and IB is the one that can also trade stocks, which is kind of nice.
However I searched in this forum and found a lot of horror stories with them. Looks very scary to me.
There also seem to be some IB hired folks trying to discredit real traders who filed a complaint.
But I also heard from a few people who used IB for 10+ years and really loved it.
I am really confused is it a good or bad broker.

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  #3 (permalink)
 sam028 
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I also know people who use it for a long time, it's a good choice if you want to trades all kind of instruments, stocks, futures, options, Fx, ..., and it's a serious company.
Their data feed is "prehistoric" compared to Kinetick/Rithmic/IQFeed/TT/..., and the fills can be better with some other brokers, but if you can live with this, why not...

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  #4 (permalink)
 Big Mike 
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Two main issues with IB:

a) Their data
b) The TWS interface with NinjaTrader

I think that if you are trading futures, and you are trading anything smaller than Dailies (and even then, if you value historical data accuracy) then you need a real data provider such as DTN IQFeed or Kinetick if you only use Ninja.

That solves A.

As for B, from what I've read, it really isn't a big deal so long as you don't upgrade TWS until NinjaTrader tells you to. It is a pain that it forces you to log out, but get over it. Not a big deal.

So if you really want IB, then just supplement with a quality data feed and you'll be fine.

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  #5 (permalink)
 muscleman 
Seattle, WA
 
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Big Mike View Post
Two main issues with IB:

a) Their data
b) The TWS interface with NinjaTrader

I think that if you are trading futures, and you are trading anything smaller than Dailies (and even then, if you value historical data accuracy) then you need a real data provider such as DTN IQFeed or Kinetick if you only use Ninja.

That solves A.

As for B, from what I've read, it really isn't a big deal so long as you don't upgrade TWS until NinjaTrader tells you to. It is a pain that it forces you to log out, but get over it. Not a big deal.

So if you really want IB, then just supplement with a quality data feed and you'll be fine.

Mike

How about trade execution? Some people say the execution is pretty bad.
I love the idea that I could trade stocks and futures in one broker, but they seem to have a prop trading desk, so I am a bit concerned if they will have the same risk as MF global.

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 Big Mike 
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muscleman View Post
How about trade execution? Some people say the execution is pretty bad.

Don't recall ever hearing that complaint about IB.

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  #7 (permalink)
mRoss21
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I've been using IB for many years with no problems.

First of all, IB is a BROKER. Their business is not a chart and data provider.
They do provide charts.... not very good. They provide data.... usable, but far from perfect.

You're better off getting your charting and data from another source.

But if you're looking for a good broker with EXCELLENT EXECUTION, IB would not be a bad choice.

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 Traderji 
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I have used IB for about 3 years now. No issues with execution.

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  #9 (permalink)
 muscleman 
Seattle, WA
 
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mRoss21 View Post
I've been using IB for many years with no problems.

First of all, IB is a BROKER. Their business is not a chart and data provider.
They do provide charts.... not very good. They provide data.... usable, but far from perfect.

You're better off getting your charting and data from another source.

But if you're looking for a good broker with EXCELLENT EXECUTION, IB would not be a bad choice.

Thank you. Do you know if they have a prop trader on board and trade against you?
I am a bit scared of the MF global case, where the supposedly segregated funds were illegally used by MF Global to make their own bets. If a broker has a prop trader on board, and losing a lot of money, they will have the incentive to risk and illegally use client funds. If they only do the clearing, then there is less incentive to illegally use client funds.
Is IB also the clearing firm, or just an introducing broker?

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  #10 (permalink)
 muscleman 
Seattle, WA
 
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Big Mike View Post
Don't recall ever hearing that complaint about IB.

Mike

Do you know if they have prop traders on board? I viewed their SEC filings, and it does seem like they have market making business and prop trading. I am concerned if they may do the same thing as MF global, and illegally use client funds in segregated accounts to bet that they can survive.

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  #11 (permalink)
 Fadi 
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I have been with IB for a long time too, and I am not planning to leave them at all.
As said previously, they are a BROKER, and as such they perform extremely well in my opinion.

It is worth noting that they are very strict and severe on margin calls, they don't grant you any grace period to refund your account or liquidate your positions yourself to meet the call. This is something to take very good note of if you use margin a lot.

On the other hand, and to answer your direct question, they manage their brokerage and market making businesses in separate companies, which are both registered with local securities and/or commodities regulators.

Of course that won't prevent them from cheating, but let me nonetheless quote from their website the following:


Quoting 
Customer money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of customers of IB. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the customer’s assets, if no money or stock is borrowed and no futures positions are held by the customer, then the customer’s assets are available to be returned to the customer in the event of a default by or bankruptcy of the broker.

A portion of customer funds are typically invested in U.S. Treasury securities and FDIC-backed bonds. Although permitted by regulations, given the credit concerns over foreign sovereign debt IB does not currently invest any customer money in money market funds.

As a practice, IB holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all customers.

Securities accounts with no borrowing of cash or securities
Securities customer money is protected as follows:

A portion is deposited at 13 large U.S. banks in special reserve accounts for the exclusive benefit of IB’s customers. These deposits are distributed across a number of banks with investment-grade ratings so that we can avoid a concentration risk with any single institution. No single bank holds more than 5% of total customer funds held by IB. As of February 29, 2012, the following banks held deposits from IB (this list is subject to change over time at IB’s discretion). Certain banks, which are affiliates or branches of foreign financial institutions, are subject to regulatory oversight by the Federal Reserve and the Office of the Comptroller of the Currency.

-Branch Banking and Trust Company
-Bank of America, N.A.
-Bank of the West
-Citibank, N.A.
-Deutsche Bank AG
-Fifth Third Bank
-HSBC Bank USA, N.A.
-JPMorgan Chase Bank, N.A.
-KeyBank National Association
-Royal Bank of Canada
-SunTrust Bank
-The Bank of Nova Scotia
-Wells Fargo Bank, N.A.

A portion is invested in U.S. Treasury securities, including direct investments in short-term Treasury bills and reverse repurchase agreements, where the collateral received is in the form of U.S. Treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (Fixed Income Clearing Corp., or "FICC"). The collateral remains in the possession of IB and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. U.S. Treasury securities may also be pledged to a clearing house to support customer margin requirements on securities options positions.
A small portion is invested in FDIC-backed corporate bonds, which are held in IB’s customer depository account at the Depository Trust and Clearing Corp. (DTCC).

Customer cash is maintained on a net basis in the reserve accounts, which reflects the long balances of some customers and loans to others. To the extent any one customer maintains a margin loan with IB, that loan will be fully secured by stock valued at up to 140% of the loan. The security of the loan is enhanced by IB’s conservative margin policies, which do not allow the borrower to correct a margin deficiency within days, as permitted by regulation. Instead, IB monitors and acts on a real-time basis to automatically liquidate positions and repay the loan. This brings the borrower back into margin compliance without putting IB and other customers at risk.
Current SEC regulations require broker-dealers to perform a detailed reconciliation of customer money and securities (known as the “reserve computation”) at least weekly to ensure that customer monies are properly segregated from the broker-dealer’s own funds.

In order to further enhance our protection of our customers’ assets, Interactive Brokers recently sought and received approval from FINRA (the Financial Industry Regulatory Authority), to perform and report the reserve computation on a daily basis, instead of once per week. IB initiated daily computations in December 2011, along with daily adjustments of the money set aside in safekeeping for our customers. Reconciling our accounts and customer reserves daily instead of weekly is just another way that Interactive Brokers seeks to provide state-of-the-art protection for our customers.
Customer-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of customers. IB reconciles positions in securities owned by customers daily to ensure that these securities have been received at the depositories and custodians.

Commodities accounts
Commodities customer money is protected as follows:

A portion is invested in short-term U.S. Treasury securities and pledged to futures clearing houses to support customer margin requirements on futures and options on futures positions or held in custody accounts identified as segregated for the benefit of IB’s customers.
A portion is held at commodities clearing banks/brokers in accounts identified as segregated for the benefit of IB’s customers to support customer margin requirements.
As prescribed by commodities regulations, customer funds are subject to real-time protection. IB performs a detailed reconciliation of customer equity on a daily basis to ensure that customer monies are properly segregated. This computation is submitted to the regulators daily.

Securities accounts with margin loans
For customers who borrow money from IB to purchase securities, IB is permitted by securities regulations to utilize for financing purposes up to 140% of the loan value of the stock these customers hold with IB. In simple terms, IB borrows money from a third party (such as a bank or broker-dealer), using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s margin purchases. Typically, IB lends out a small portion of the total stock it is permitted to lend out.

As an example, at June 30, 2011, IB lent $0.8 billion of customers’ stock out of the $13.0 billion made available to it by margin customers.
When IB lends customers’ stock, it must put additional money into the special reserve accounts set aside for the benefit of customers. In the example above, the full value of $0.8 billion of customer stock that was lent was segregated in the special reserve accounts.

The Importance of Choosing a Safe Broker
In light of the recent bankruptcy of MF Global, customers should understand how it is possible to lose money in the event of their broker’s bankruptcy. Despite all of the protections described above, there are still two ways a customer can lose money without losing it to the market:

If, in violation of the reserve and segregation rules, the broker does not keep some customer monies segregated, either by not putting newly deposited monies in the segregated account or if money is transferred out of segregated accounts for some other purpose, then there can be a shortfall. This may have happened at MF Global.
Customers can lose more money in the market than they hold with the broker. When this happens the broker is obligated to make up the deficit from its own funds. If the broker fails to do so, (i.e., has not sufficient capital of its own to make up for the losses) and SIPC (and, if offered, excess-SIPC) coverage is insufficient or unavailable, then the other customers bear the cost of that shortfall. This, too, may have happened at MF Global.

This is the reason why it is vitally important to choose a broker that has a massive amount of capital and very good, automated credit controls.


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  #12 (permalink)
 GFIs1 
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muscleman View Post
...
There are only a few of them, and IB is the one that can also trade stocks, which is kind of nice...

In search of a trustful broker/bank there is only ONE question of importance:

stock listed @ a stock exchange?

If yes - the company needs to report frequently and is observed from different authorities / stock holders etc.
If not - do NOT burn your fingers...

Just a little observation.
IB is a listed company under NASDAQ: IBKR
and the latest reports are to find here: https://investors.interactivebrokers.com/ir/main.php

GFIs1

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  #13 (permalink)
cusp
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Another vote for IB.

Their executions are excellent. Their data is good if you don't require tick data - it all depends what you need and how you trade.

The upside of ib is that they focus on low cost and excellent execution with a data feed suited for some but not all; hence they have a huge customer base amongst experienced traders and even seem to be the biggest fx business (a chart I saw put them ahead of Oanda, Fxcm etc). The downside is that they are not in the customer service for newbies business - if you are new to the game and might want some hand holding you should probably go somewhere else. Also, if you want tick data or sub minute data is important to you (they send a data packet 10 times a second only) then you'll also want a different data feed.

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 sam028 
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cusp View Post
Another vote for IB.

Their executions are excellent. Their data is good if you don't require tick data - it all depends what you need and how you trade.

The upside of ib is that they focus on low cost and excellent execution with a data feed suited for some but not all; hence they have a huge customer base amongst experienced traders and even seem to be the biggest fx business (a chart I saw put them ahead of Oanda, Fxcm etc). The downside is that they are not in the customer service for newbies business - if you are new to the game and might want some hand holding you should probably go somewhere else. Also, if you want tick data or sub minute data is important to you (they send a data packet 10 times a second only) then you'll also want a different data feed.

AFAIK, it's 4 times/second, one snapshot every 250 ms.

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 muscleman 
Seattle, WA
 
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cusp View Post
Another vote for IB.

Their executions are excellent. Their data is good if you don't require tick data - it all depends what you need and how you trade.

The upside of ib is that they focus on low cost and excellent execution with a data feed suited for some but not all; hence they have a huge customer base amongst experienced traders and even seem to be the biggest fx business (a chart I saw put them ahead of Oanda, Fxcm etc). The downside is that they are not in the customer service for newbies business - if you are new to the game and might want some hand holding you should probably go somewhere else. Also, if you want tick data or sub minute data is important to you (they send a data packet 10 times a second only) then you'll also want a different data feed.

Thank you! I am investing stocks only in a cash account, and trade futures. I think IB's advantage is obvious for my strategy.
If I have all my cash in the underlying commodity account, and one day I decide to buy some stocks, can I immediately buy, or I need to transfer money to the securities account first, wait for a few days to clear, and then trade?
I am not going to do intraday trading so tick data is not that important to me.
The futures data is all from CME and other future centralized exchanges, right? That should be good to prevent stop loss gunning. I heard a lot of Forex brokers do not actually put your orders into the open market, but instead just gamble against you, and shot your stop loss orders. Every forex broker's data feed shows a slightly different quote.

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 Luger 
Nashville, TN
 
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No need to wait. You can trade with your money however you want regardless of the account it is in, as long as it is not tied up in margin on another trade.

Also a happy IB customer that swing trades futures and tinkers with options when I have gambling fever. From what you described, it sounds as if IB would be fine for your purposes.

My only experience with customer service was on a trade related matter several years back, and it was handled quickly and correctly. I believe it was closing a position when I had a major computer failure. But I would agree that IB expects you to know what you are doing. Customer service won't hold your hand, but they do have good documentation and a bunch of webinars and educational stuff like that...however I don't know the quality of said educational material.

Anyways, I have not come across any reason that swing traders should not choose IB during my 6 years with them. You can even yield enhance and let the stock you buy get borrowed.

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cusp
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Once upon a time the maximum packet frequency for IB was 4 per second (actually it might have been 5).

Then, when they were upgrading their servers they increased it to 10 per second (100ms).

Of course if nothing happens no packet is received.



It's worth noting that some of the broker vendors that people believe send every tick don't always do that. From time to time some of them ease their load - I say this only because I've seen surprised complaints on the Sierra Chart board.

Edit: Answering BM's question.

True data is called 5 second data by IB. In answer to the problem that their live data doesn't necessarily catch all prices (its one price per 100ms) they created a new data feed that supplies the true OHLCV for the 5 second period at the end of each 5 second period.

With Sierra Chart the TD feed can be used to correct any errors in the live feed. That way you get prices instantaneously (well, within 100ms) but they are corrected for any missing ticks as each 5 second true data packet arrives. IB seem to do the same with their charting.

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 Big Mike 
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I have seen mention of a product suffix "-TD" aka "True Data". Can anyone clarify what this is? I was hopeful it meant they sent unfiltered data, but am quite certain that is not what it means

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 bijeremiad 
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I have used IB for the last year and a half. I have watched prices side by side with bloomberg prices, and have not seen any naked eye discrepancies. I have also been happy with the execution, barring the liquidity-fee collecting snipers on the other side.

My wife worked in the accounting office for IB. She was very impressed with Thomas Peterffy and how he handled the issues that arose in the normal course of business.

I have been underwhelmed with the help desk, but have always found an answer to what I was looking into.

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 traderwerks 
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GFIs1 View Post
In search of a trustful broker/bank there is only ONE question of importance:

stock listed @ a stock exchange?

If yes - the company needs to report frequently and is observed from different authorities / stock holders etc.
If not - do NOT burn your fingers...

Just a little observation.
IB is a listed company under NASDAQ: IBKR
and the latest reports are to find here: https://investors.interactivebrokers.com/ir/main.php

GFIs1

Yeah, good thing MF Global was listed on a stock exchange , I feel so safe .

NYSE:MF

MF GLobal IPO in 2007


All kidding aside, if a company wants to do what they did, being listed or not will not stop them. MF Global reported regularly.

Now look at them
MF Global Holdings Ltd

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 muscleman 
Seattle, WA
 
Experience: Beginner
Platform: Fidelity active trader, Sierra Chart
Broker: Fidelity, Infinity futures
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Luger View Post
No need to wait. You can trade with your money however you want regardless of the account it is in, as long as it is not tied up in margin on another trade.

Also a happy IB customer that swing trades futures and tinkers with options when I have gambling fever. From what you described, it sounds as if IB would be fine for your purposes.

My only experience with customer service was on a trade related matter several years back, and it was handled quickly and correctly. I believe it was closing a position when I had a major computer failure. But I would agree that IB expects you to know what you are doing. Customer service won't hold your hand, but they do have good documentation and a bunch of webinars and educational stuff like that...however I don't know the quality of said educational material.

Anyways, I have not come across any reason that swing traders should not choose IB during my 6 years with them. You can even yield enhance and let the stock you buy get borrowed.

Thanks a lot to everyone here.
Two more questions:
1. In the year end, if I use turbo tax to file my tax, does it support IB? I am currently with Fidelity, and I can just do a few clicks in Turbo tax, and my transactions from Fidelity will be loaded. That makes it much easier to file tax.
2. Has anyone used their server side OCO for futures? I am worried what if one order is triggered but they fail to cancel the other one.

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cusp
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They cancel the other one correctly.

They don't guarantee it because IB (unlike a bucket shop) will let you place the OCO so close together that they can both get hit before IB's server can cancel the other half. But if you don't do that then they have been very consistent.


From my last post in case BM misses it: Answering BM's question.

True data is called 5 second data by IB. In answer to the problem that their live data doesn't necessarily catch all prices (its one price per 100ms) they created a new data feed that supplies the true OHLCV for the 5 second period at the end of each 5 second period.

With Sierra Chart the TD feed can be used to correct any errors in the live feed. That way you get prices instantaneously (well, within 100ms) but they are corrected for any missing ticks as each 5 second true data packet arrives. IB seem to do the same with their charting.

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  #23 (permalink)
 muscleman 
Seattle, WA
 
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cusp View Post
They cancel the other one correctly.

They don't guarantee it because IB (unlike a bucket shop) will let you place the OCO so close together that they can both get hit before IB's server can cancel the other half. But if you don't do that then they have been very consistent.


From my last post in case BM misses it: Answering BM's question.

True data is called 5 second data by IB. In answer to the problem that their live data doesn't necessarily catch all prices (its one price per 100ms) they created a new data feed that supplies the true OHLCV for the 5 second period at the end of each 5 second period.

With Sierra Chart the TD feed can be used to correct any errors in the live feed. That way you get prices instantaneously (well, within 100ms) but they are corrected for any missing ticks as each 5 second true data packet arrives. IB seem to do the same with their charting.

Really? They said they do not guarantee cancellation of the OCO?
I am going to do swing trades so I will place the two sides relatively far away. ES for example, at least 20 points away. But if the market gets volatile (Remember the flash crash in 2010?), then it is still possible for this to happen. If they do not have statements like, if you place the two sides at least xxx points apart then we will not guarantee cancellation of the other side, then it is still too dangerous for me. One bad trade can wipe my life time's cumulative profits out.

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 djkiwi 
Mercer Island WA
 
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muscleman View Post
Really? They said they do not guarantee cancellation of the OCO?
I am going to do swing trades so I will place the two sides relatively far away. ES for example, at least 20 points away. But if the market gets volatile (Remember the flash crash in 2010?), then it is still possible for this to happen. If they do not have statements like, if you place the two sides at least xxx points apart then we will not guarantee cancellation of the other side, then it is still too dangerous for me. One bad trade can wipe my life time's cumulative profits out.

Hi, it is highly unlikely you will get guarantees like this from any brokerage. I'd be surprised if their liability insurers would allow it for a start.

I can tell you this though I do swing trade futures through IB and have been doing so for awhile. I've also been swing trading stocks for much longer and use TD Ameritrade, IB and lightspeed for my stock and option portfolio.

I would rate IB superior than the others in terms of product offering, execution and fee structure. I have never had an issue with OCO cancellation, not once. Having said that my stops and targets are never close. The biggest weakness with IB is their data feed and I use another for that.

As an additional piece of information I only use TD for longer term low $ amount shares. If you are trading shares for $1 you are better off using TD and if you are trading $100 shares use IB. However the slippage on TD is atrocious so limit orders are recommended.

It is important to look at the bigger picture on this type of thing in my opinion. Where will your funds be the safest? For a start IB is a publicly listed company which has more stringent regulatory and reporting requirements. I feel much more secure in this environment than some small brokerage with a handful of staff. Of course Ib can go bankrupt but normally you have a pretty good idea when this will happen with slide in the stock price.

You are much more likely to get better controls and less likely to get a "Bernie Madeoff". At least if I want to look at the financial condition of IB I can pick up an annual report. These other outfits report a one line on a disclosure statement.

You also read people on this forum raving about the customer service of some these smaller brokers and how they answer the phone on the 5th ring and how IB is useless and is rude etc. If you want hand holding then IB is probably not the best but I'd pick safety over customer service any day.

Like anything, this is not a recommendation for IB just my experience so far. It is up to the individual to do their own due diligence and select the broker that best meets their needs.

Cheers
DJ

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 bibulous 
Germany
 
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I am a happy IB customer for over 6 years. Never had a problem with them. And since they have release the IB Gateway some time ago the integration with MultiCharts is quite good. As many others have already mentioned before the feed is unusable if you use any other bar type than minute or daily.. For this reason I have added IQFeed to the mix.

HTH

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 muscleman 
Seattle, WA
 
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djkiwi View Post
Hi, it is highly unlikely you will get guarantees like this from any brokerage. I'd be surprised if their liability insurers would allow it for a start.

I can tell you this though I do swing trade futures through IB and have been doing so for awhile. I've also been swing trading stocks for much longer and use TD Ameritrade, IB and lightspeed for my stock and option portfolio.

I would rate IB superior than the others in terms of product offering, execution and fee structure. I have never had an issue with OCO cancellation, not once. Having said that my stops and targets are never close. The biggest weakness with IB is their data feed and I use another for that.

As an additional piece of information I only use TD for longer term low $ amount shares. If you are trading shares for $1 you are better off using TD and if you are trading $100 shares use IB. However the slippage on TD is atrocious so limit orders are recommended.

It is important to look at the bigger picture on this type of thing in my opinion. Where will your funds be the safest? For a start IB is a publicly listed company which has more stringent regulatory and reporting requirements. I feel much more secure in this environment than some small brokerage with a handful of staff. Of course Ib can go bankrupt but normally you have a pretty good idea when this will happen with slide in the stock price.

You are much more likely to get better controls and less likely to get a "Bernie Madeoff". At least if I want to look at the financial condition of IB I can pick up an annual report. These other outfits report a one line on a disclosure statement.

You also read people on this forum raving about the customer service of some these smaller brokers and how they answer the phone on the 5th ring and how IB is useless and is rude etc. If you want hand holding then IB is probably not the best but I'd pick safety over customer service any day.

Like anything, this is not a recommendation for IB just my experience so far. It is up to the individual to do their own due diligence and select the broker that best meets their needs.

Cheers
DJ

Thank you.
I don't think I would need much customer support. I may need some initially to get familiar with the tws interface though.
So for OCO, if one side is executed, are they going to actively check the other side and make sure it is cancelled, and if it is too late to cancel that side, then immediately place a market order to flatten that new position? I think it is reasonable not to guarantee cancellation of the other side, but it is reasonable that they actively check for that, and flatten the new position if it is unfortunately not cancelled successfully. Maybe I need to directly ask IB about that.
For the real time data feed, it costs $10 per month and as many of you said, it is no good. Can I choose not to use that data feed and don't pay the $10, and if I do that, will I at least still see real time bid and ask when I place my order?

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 djkiwi 
Mercer Island WA
 
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muscleman View Post
Thank you.
I don't think I would need much customer support. I may need some initially to get familiar with the tws interface though.
So for OCO, if one side is executed, are they going to actively check the other side and make sure it is cancelled, and if it is too late to cancel that side, then immediately place a market order to flatten that new position? I think it is reasonable not to guarantee cancellation of the other side, but it is reasonable that they actively check for that, and flatten the new position if it is unfortunately not cancelled successfully. Maybe I need to directly ask IB about that.
For the real time data feed, it costs $10 per month and as many of you said, it is no good. Can I choose not to use that data feed and don't pay the $10, and if I do that, will I at least still see real time bid and ask when I place my order?

Hi, I suggest you ask IB directly all these questions otherwise you are getting things third hand.

Cheers
DJ

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daxbr
Bangkok, Thailand
 
 
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been using them for 12 years. Couple minor problems over the years but nothing memorable. Pretty satisfied overall.

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 Nathamus 
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bibulous View Post
I am a happy IB customer for over 6 years. Never had a problem with them. And since they have release the IB Gateway some time ago the integration with MultiCharts is quite good. As many others have already mentioned before the feed is unusable if you use any other bar type than minute or daily.. For this reason I have added IQFeed to the mix.

HTH

I haven been using IB with an advisory account for many years now. I also use(d) Zen-Fire / Dorman, TradeStation,... I am happy with IB besides the data quality. If you go for aggressive hf scalping Zen-Fire / Dorman is the better choice in combination with Ninja Trader.
IB Gateway can be used with NinjaTrader for order execution without disconnects, although it is not officially supported. The accounts cash amounts are only updated on executions.

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 muscleman 
Seattle, WA
 
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Nathamus View Post
I haven been using IB with an advisory account for many years now. I also use(d) Zen-Fire / Dorman, TradeStation,... I am happy with IB besides the data quality. If you go for aggressive hf scalping Zen-Fire / Dorman is the better choice in combination with Ninja Trader.
IB Gateway can be used with NinjaTrader for order execution without disconnects, although it is not officially supported. The accounts cash amounts are only updated on executions.

Thanks a lot.
I currently have an account with AMP futures with CQG, so I will try this out first.
I really hope I could find a broker that trades both stocks and futures. The problem with IB is that tax filing is not easy. I am currently using Fidelity and I can just do a one click to import all trades into turbo tax.

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 muscleman 
Seattle, WA
 
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Does anyone have filing tax problems with IB?
They don't integrate with turbo tax so you have to manually type in your transactions.

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 Bookworm 
Long Island, NY
 
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Section 1256 trades do not need to be itemized. Stock and stock option trades go on form 8949. You can download the 8949 worksheet with all your trades from IB and try to mail a copy to the IRS if there are too many transactions to list manually.

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 manualtrader 
California
 
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I used SC with IB -TD for 5 minutes and 1 minutes chart, it works well, but yesterday and today, there are about half of the bars (5 minutes) are not correct, and I checked TWS chart, it has the same issue. I compared their chart with TOS and chart from other source. Does anyone have the same issue?

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 muscleman 
Seattle, WA
 
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manualtrader View Post
I used SC with IB -TD for 5 minutes and 1 minutes chart, it works well, but yesterday and today, there are about half of the bars (5 minutes) are not correct, and I checked TWS chart, it has the same issue. I compared their chart with TOS and chart from other source. Does anyone have the same issue?

Oh... That sounds fishy.

I have decided not to use IB.
I think it is important to separate stocks with futures in different brokers, so if one broker is down, that is still ok.
IB is not great for futures trading(data issues), and not that great for stocks trading( tax filing not convenient).
So I would rather pay the occasional wire transfer cost between my stock broker and my futures broker than having everything in IB.

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 manualtrader 
California
 
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muscleman View Post
Oh... That sounds fishy.

I have decided not to use IB.
I think it is important to separate stocks with futures in different brokers, so if one broker is down, that is still ok.
IB is not great for futures trading(data issues), and not that great for stocks trading( tax filing not convenient).
So I would rather pay the occasional wire transfer cost between my stock broker and my futures broker than having everything in IB.

I have been using SC with IB for 6 months, but this is the first time I had the issue, and hope they will correct after holiday.

I do occasionally use Fidelity Active Trader for swing stocks with my IRA, but I feel so awkward to place a trade, even if the minute bar is not that important for swing.

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 muscleman 
Seattle, WA
 
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manualtrader View Post
I have been using SC with IB for 6 months, but this is the first time I had the issue, and hope they will correct after holiday.

I do occasionally use Fidelity Active Trader for swing stocks with my IRA, but I feel so awkward to place a trade, even if the minute bar is not that important for swing.

I use fidelity for stocks. I only do very long term investing for stocks. (Warren Buffet's value investing method) So it doesn't matter to me. I normally hold a stock for years.

For futures, I need very high quality broker. There are lots of better choices. I am still learning. If I determined my style and it is swing trading, I may choose IB because of the low commission, so I am not sure yet.

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usfbzy
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neither commissions nor data feed are good enough for futures trading.

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 heywally 
Pismo Beach CA
 
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I have some concerns (but likely unfounded) about IB's business model and so I've recently moved all of our money out of there but I have never -- in 10+ years of use -- had a problem with executions or commissions over there - solid on that front.

"The Future Ain't what it used to be"
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 Fadi 
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heywally View Post
I have some concerns (but likely unfounded) about IB's business model and so I've recently moved all of our money out of there but I have never -- in 10+ years of use -- had a problem with executions or commissions over there - solid on that front.

What concern? Where did you move?

Successful people will do what unsuccessful people won't or can't do!
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 beursindex 
Belgium
 
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I have a interactive brokers account for 2 years. No problems of any kind. Money transfers by wire are executed immediately, sometimes i got my money the same day. 100 % satisfied.

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 heywally 
Pismo Beach CA
 
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Fadi View Post
What concern? Where did you move?

I moved to TOS/TDamer

I have traded for about 12 years now (a lot of that with IB) and have ended up wanting a brokerage with a strong financial position that didn't encourage or allow quite as much risk or active trading as IB does (so I can feel more comfortable about the company (and its/my fellow clients) in an uncertain global economic/'geopolitical backdrop with any potential large market sell-offs and how those might affect the brokerage overall) and yet still had commissions I can live with. Also wanted an FDIC insured account for the cash sweeps from both futures and equities trades. Was able to negotiate TOS commish down a bit and I like their platform - it does everything I need for what I am trying to do, which is a combo of swing trades and some day trading. Some issues, like all brokerages but I see improvement over at TOS, a bit at a time.

I don't know anything about IB that everyone else doesn't know and I never had a problem with wires out, executions, commissions, or any of the core stuff, all solid. Over the last few years, always up (like most platforms now). IB is probably fine for most people and my concerns with them are on the paranoid side and likely unfounded. Still ....

Your mileage may vary.

"The Future Ain't what it used to be"
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 djkiwi 
Mercer Island WA
 
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heywally View Post
I moved to TOS/TDamer

I have traded for about 12 years now (a lot of that with IB) and have ended up wanting a brokerage with a strong financial position that didn't encourage or allow quite as much risk or active trading as IB does (so I can feel more comfortable about the company (and its/my fellow clients) in an uncertain global economic/'geopolitical backdrop with any potential large market sell-offs and how those might affect the brokerage overall) and yet still had commissions I can live with. Also wanted an FDIC insured account for the cash sweeps from both futures and equities trades. Was able to negotiate TOS commish down a bit and I like their platform - it does everything I need for what I am trying to do, which is a combo of swing trades and some day trading. Some issues, like all brokerages but I see improvement over at TOS, a bit at a time.

I don't know anything about IB that everyone else doesn't know and I never had a problem with wires out, executions, commissions, or any of the core stuff, all solid. Over the last few years, always up (like most platforms now). IB is probably fine for most people and my concerns with them are on the paranoid side and likely unfounded. Still ....

Your mileage may vary.

Hi @heywally, you can never be "too paranoid". My understanding with IB is if you elected to sweep excess funds into the IB securities account as opposed to the commodities account you had SIPC insurance up to $900k (See below) with SIPC which is why I used them. I'd prefer to have FDIC insurance over SIPC though.

https://www.interactivebrokers.com/en/p.php?f=ibgStrength&p=a

I still have unanswered questions with this though. For example I got this from another forum awhile ago and have it in my notes:

SIPC clarified this in a letter to the SEC in 2007 when they wrote:

"Under SIPA, a customer's claim for "cash" derives from a few sources. One, the "cash" arises from the broker's sale of securities for the account of the customer. Two, the "cash" has been deposited by the customer with the broker for the purpose of purchasing securities. Three, the cash consists of dividends or other return generated on securities held by the broker for the customer. 15 U.S.C. $78lJ(2). Key is the fact that the cash owed by the broker to the customer is on deposit in connection with the purchase or sale of a "security," as defined in SPA. The facile labelling of an asset as "cash"does not transform it into a protected asset if unrelated to the purchase or sale of a "security." http://www.sec.gov/comments/s7-08-07/s70807-16.pdf".


So this appears to suggest that if you only trade futures at IB and any sweeps from the sale of commodities into the securities account may not be eligible for SIPC coverage as the sale didn't arise from the sale of securities. Even if you had 25% stocks and 75% commodities they could deem the trader as predominantly a commodities trader and be ineligible. I guess you will only know in the case of a catastrophe and SIPC reviews the claim.

I've also considered Velocity and other brokers as a futures only broker but there is a big problem if you use Ninjatrader ATM strategies with other brokers besides IB. ATM strategies are a core part of my trading system.

If you have an outage with IB the OCO works correctly with the stops and targets correctly reflected at the broker/exchange end.

If you use ANY other futures broker the stops will trigger ok but the target orders are simulated on your PC meaning that if you get stopped out during the outage naked stop market orders are left in place in the broker's system.

This is a big problem for people who swing trade futures. The last thing I want is to be asleep at night and then wake up in the morning down $10k because there was an outage and naked buy or sell stops orders trigger without any stop in place. This happened to me on sim on a few occasions. Some broker systems let you go in and cancel the naked orders on their system which still is of no use if you are asleep or out for the day.

Cheers
DJ

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 heywally 
Pismo Beach CA
 
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djkiwi View Post
Hi @heywally, you can never be "too paranoid". My understanding with IB is if you elected to sweep excess funds into the IB securities account as opposed to the commodities account you had SIPC insurance up to $900k (See below) with SIPC which is why I used them. I'd prefer to have FDIC insurance over SIPC though.

https://www.interactivebrokers.com/en/p.php?f=ibgStrength&p=a

I still have unanswered questions with this though. For example I got this from another forum awhile ago and have it in my notes:

.....
Cheers
DJ

Yes, I followed that whole thread on the IB futures cash sweeps, SIPC insurance (or not) and it left me with an unsettled sense. Maybe that got cleared up but I haven't seen anything. That was part of my decision along with some other stuff.

"The Future Ain't what it used to be"
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 djkiwi 
Mercer Island WA
 
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heywally View Post
Yes, I followed that whole thread on the IB futures cash sweeps, SIPC insurance (or not) and it left me with an unsettled sense. Maybe that got cleared up but I haven't seen anything. That was part of my decision along with some other stuff.

The other problem with this is if you choose the commodities option then you are reliant on segregation saving you. We saw in the case with MF Global where rules were pretty much ignored. I read an alarming article awhile ago how Merrill lynch was trying to co-mingle some "dirty laundry" into some BAC FDIC insured customer accounts. Check out this article which makes you wonder what the hell is really going on.....

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit - Bloomberg

Cheers
DJ

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 muscleman 
Seattle, WA
 
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djkiwi View Post
The other problem with this is if you choose the commodities option then you are reliant on segregation saving you. We saw in the case with MF Global where rules were pretty much ignored. I read an alarming article awhile ago how Merrill lynch was trying to co-mingle some "dirty laundry" into some BAC FDIC insured customer accounts. Check out this article which makes you wonder what the hell is really going on.....

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit - Bloomberg

Cheers
DJ

Oh that sucks.
With the MF global saga, I am really not sure if there is a safe futures broker because they can always try to co-mingle the assets.
Are regulators not planning to do anything?

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 djkiwi 
Mercer Island WA
 
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muscleman View Post
Oh that sucks.
With the MF global saga, I am really not sure if there is a safe futures broker because they can always try to co-mingle the assets.
Are regulators not planning to do anything?

They are doing something, they seem to be encouraging it and trying to pass the risk on to the FDIC. From the article:

"The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter".

I'm sure this is going on everywhere and could have even been the intention of the Fed when they encouraged these "marriages" after the crisis.

Cheers
DJ

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 muscleman 
Seattle, WA
 
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djkiwi View Post
They are doing something, they seem to be encouraging it and trying to pass the risk on to the FDIC. From the article:

"The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter".

I'm sure this is going on everywhere and could have even been the intention of the Fed when they encouraged these "marriages" after the crisis.

Cheers
DJ

OK.
Well, I think at least finding a futures clearing firm that does not do any prop trading will help greatly reduce the risk.

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 djkiwi 
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muscleman View Post
OK.
Well, I think at least finding a futures clearing firm that does not do any prop trading will help greatly reduce the risk.

Hi, I think that is wise. Unfortunately no broker suits my needs either and will probably end up splitting my account up further to more brokers and using an external data feed like Kinect. I'm a little disappointed ninjatrader doesn't support options as well but am finding futures to be a much more cost effective hedging strategy anyway.

What you can do with ninjatrader is run say an equities ATM strategy off a chart which will then process all other equities trades to a specified equities broker. Then you run your futures trades off multiple charts and route those to different futures brokers. It is cumbersome though and needs much more flexibility to be able to specify the account within a strategy itself.

This allows you to manage and track your risk to within the SIPC and FDIC limits of each broker so you don't get caught out with too much exposure.

Cheers
DJ

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  #49 (permalink)
 Sezor 
Nîmes France
 
Experience: Intermediate
Platform: NinjaTrader, Mt4
Broker: NinjaTrader Brokerage
Trading: Oil
 
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On an IB website for registering for a webinar:

"Join Event Now"
"You cannot join the event now because it has not started."

A client of IB, that seems to me in line with the general setup.
They seem to me to put most of their effort into
the means of trading a huge range of instruments.
(Not that TWS doesn't have stability problems now
and then).

Things like good and easily accessible help files
aren't part of that. The files exist but you have to
search for them. And then they're oriented more
"this is what this feature of the software does"
than the things traders want to do.

After (rare) updates, TWS instals a windows startup routine
to check for new updates - which the user has to okay every
day. Even if you've told to check only every n days.

For most of us there is a lot of stuff we will never use -
making it harder to find the stuff you do.

Those who trade a large range of instruments will
appreciate it.

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 Jaffels 
Wroclaw, Poland
 
Experience: Beginner
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IB may not be a bad broker, but they where definitely naughty

UPDATE 2-Interactive Brokers to pay $700,000 to settle charges | Reuters

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 muscleman 
Seattle, WA
 
Experience: Beginner
Platform: Fidelity active trader, Sierra Chart
Broker: Fidelity, Infinity futures
Trading: futures, stocks
 
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Jaffels View Post
IB may not be a bad broker, but they where definitely naughty

UPDATE 2-Interactive Brokers to pay $700,000 to settle charges | Reuters

Wow that is a very bad sign........
Futures account does not have SPIC insurance and it is entirely relied on aggregation to protect customers. If IB fails to do so for the past four years, but in their website kept saying how safe they are, it is a big red flag.

Anyway, I have decided to choose a broker that specialize in futures. Thanks for your guys's information!

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 Jaffels 
Wroclaw, Poland
 
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muscleman View Post
Wow that is a very bad sign........
Futures account does not have SPIC insurance and it is entirely relied on aggregation to protect customers. If IB fails to do so for the past four years, but in their website kept saying how safe they are, it is a big red flag.

Anyway, I have decided to choose a broker that specialize in futures. Thanks for your guys's information!

My understanding from the article is that they didn't report large trader positions correctly, which is used by the CFTC in their commitment of traders report. Meaning their report is not as accurate as it should be.

The whole MF Global and PFG saga's was due to the brokers not segregating their clients accounts. Which is like a bank stealing all the money out of your account.

So the article is not implying your money is not safe at IB. All I think you should take from this is that there seems to be irregularities at the brokers you might least expect it to be and only to keep enough money in your account to cover your margin.


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 muscleman 
Seattle, WA
 
Experience: Beginner
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Broker: Fidelity, Infinity futures
Trading: futures, stocks
 
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Jaffels View Post
My understanding from the article is that they didn't report large trader positions correctly, which is used by the CFTC in their commitment of traders report. Meaning their report is not as accurate as it should be.

The whole MF Global and PFG saga's was due to the brokers not segregating their clients accounts. Which is like a bank stealing all the money out of your account.

So the article is not implying your money is not safe at IB. All I think you should take from this is that there seems to be irregularities at the brokers you might least expect it to be and only to keep enough money in your account to cover your margin.


Sent from my iPad using Tapatalk HD

Got it thank you.

I tried their demo account before and decided that it is over complicated to understand what is going on.
Also I don't want to take the risk of my all funds being frozen for a few months if it goes to bankruptcy.

So I decided to have futures account in a seperate broker than the stock account. The only cost is the wire transfer fee between the two accounts, but I don't need to do it more than 1-2 times a year, but this gives me the flexibility to choose the best stock broker and best futures broker.

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  #54 (permalink)
 bnichols 
Dartmouth NS
 
Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker: IB / IQFeed / Kids
Trading: Forex, stocks
 
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Used IB for years, haven't screwed me yet, plenty of complaints (including TWS, their tax reporting--but no real issue untill Revenue Canada has an issue, charts, their data and the NT interface as others have said, and their support--stopped using it a long time ago) but until I solve the issues I have trading short time frame spot currency it's the least of my worries. That and the fact I have only a small fraction of my cash with them.

ETA: BTW & FWIW managed to get NT to accept the latest upgrade of the IB API by changing the IP of the host in the NT account definition from the default (127.0.0.1) to the actual LAN IP (192.168.0.100 in my case), no clue why.

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infoanalysis
White Salmon Washington
 
 
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If you trade many options (and also my experience day trading stocks) this platform may lull youinto a false sense of sabvings it has a lot of slippage and passes all fees to the customer including cancellation fees, market subscription fees-- you can not see indexes unless you subscribe to the service and a sttandard data fee if trades fall lower than 30 per month.

I entered several option combo trades simultaneously along side Ameritrade and once Fidelity. IB will consistently fill much slower and will almost always display a disadvantageous spread vs the natural. They will often fail to fill positions. I have contacted them several times and they swear that they simply pass the orders through Smart routing which hunts for the best price at that moment for all exchanges. Once at the exchange however the combo remains at that exchange until filled. If you cancel you may be charged between .10 and .75 per contract. They appear to scalp pennies from unsuspecting subscribers over many trades. They motivate people to trade often because of the deep discount but clearly this is made up by the very sloppy spreads and egregious slippage.

The platform is cryptic also using a poorly written java platform that freezes occasionally. I find myslef jumping back and forth between screens to see postions and , P&L. You must build postions then drag them to each screen.

The one area where they are very professional is that they will bust trades if it falls too far below market. I have done this several times. Good luck with Schwab. etrade, scottrade and fidelity busting a trade. Ameritrade will not bust trades but they will comp free trades in exchange.



Single option orders are not as bad on fills. But I am strongly considering migrating my account to Ameritrade with its Think or Swim platform and wealth of data available no charge. TOS fills are better as they claim to be the largest broker of option trades and get advantages at exchanges due to their shear order flow volume. I am not paid to endorse Ameritrade but they charge the same price for one contract as a combo. They encourage you to negotiate their pricing structure and do not penalize you with hidden costs. I am wondering if the slippage alone will make up the small short fall in commissions. I invite all objective challenges to my claims.

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 djkiwi 
Mercer Island WA
 
Experience: Advanced
Platform: Ninjatrader/Strategy Desk
Broker: Various
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If you trade options, TOS is by the far the best platform in my opinion. It was built for options plain and simple. The functionality is excellent as well as the feel of the platform. IB is a relic by comparison.
Move away from IB as quick as you can for option plays.

Cheers
DJ

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Third Base
hong kong
 
 
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I've read through this thread and as a long time user of IB there I am well versed with the software and the firm. There are many misperceptions here that I'll try to discuss.

First, data: the naked eye can't click a mouse in < 200 or so milliseconds. The data complains I'm reading about are thus bogus. On their server side, the data is streaming so stops and algos run fine. On the TWS, the snap shot 100ms data keeps things running smoothly with no data lag in fast markets. That works perfect for me (although I do have a back up source of data and would recommend all to do the same).

Executions: options, stocks and FX - haven't found anything better. The smart routing often gets me price improvement and for the currency trading, there is nothing better than splitting a 1/2 pip market and getting a fill that often has price improvement. Love it.

Safety: Futures brokers capital is not guaranteed. IB combats this with a sweep of excess cash to the securities account but if you're solely a futures trader, that might not be acceptable if SIPC is needed. Nevertheless, look at their capital. They make money and have a deep layer of safety with the billions of excess capital in the group. There margin policy protects all and if you follow them, you'll know that they run a conservative ship.

They constantly innovate and while the front end might not be the prettiest in the world, once you learn the hotkeys and other bells and whistles, you'll find it quite powerful and fast.

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 djkiwi 
Mercer Island WA
 
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Third Base View Post
I've read through this thread and as a long time user of IB there I am well versed with the software and the firm. There are many misperceptions here that I'll try to discuss.

First, data: the naked eye can't click a mouse in < 200 or so milliseconds. The data complains I'm reading about are thus bogus. On their server side, the data is streaming so stops and algos run fine. On the TWS, the snap shot 100ms data keeps things running smoothly with no data lag in fast markets. That works perfect for me (although I do have a back up source of data and would recommend all to do the same).

Executions: options, stocks and FX - haven't found anything better. The smart routing often gets me price improvement and for the currency trading, there is nothing better than splitting a 1/2 pip market and getting a fill that often has price improvement. Love it.

Safety: Futures brokers capital is not guaranteed. IB combats this with a sweep of excess cash to the securities account but if you're solely a futures trader, that might not be acceptable if SIPC is needed. Nevertheless, look at their capital. They make money and have a deep layer of safety with the billions of excess capital in the group. There margin policy protects all and if you follow them, you'll know that they run a conservative ship.

They constantly innovate and while the front end might not be the prettiest in the world, once you learn the hotkeys and other bells and whistles, you'll find it quite powerful and fast.


@Third Base

A couple of points:

1. Data

IB should not be used for anything other than minute or daily data. Tick, range, renko, volume, or other tick-based chart types should not be used with IB data as it is heavily filtered. IB data is worthless for my purposes.

2. Risks

IB offers the trader exactly the same risks as MF Global. The real risk is hypothecation. Read here.



Cheers
DJ

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Third Base
hong kong
 
 
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@Third Base

A couple of points:

1. Data

IB should not be used for anything other than minute or daily data. Tick, range, renko, volume, or other tick-based chart types should not be used with IB data as it is heavily filtered. IB data is worthless for my purposes.

2. Risks

IB offers the trader exactly the same risks as MF Global. The real risk is hypothecation. Read here.


Cheers
DJ


The distinction on data is charting vs trading. IB data is great for trading. I'm not a tick by tick charting type of guy so I can't comment on that. But if you read the thread, most are not distinguishing a difference between trading or charting.

hypothecation: you need to read up on it more. A broker can't do stock loan business without putting stock or cash up as collateral - ie. hypothecation. However, I recall after MF this was big news on other forums and IB clarified how they do it. I don't have time to search for the dialog now but I did find the link below the IB site, after searching hypothecation, which states that they stick to the more restrictive rules of the SEC. All brokers have the ability to re-hypothecate - including all in that list from your link.

Here's the link: ibkb.interactivebrokers.com/node/1851 (you'll have t cut/paste as I've been a lurker and I don't have enough posts to link yet and sorry I had to remove your link as well)

one additional comment on risk after reading your link: dig into IB's financials and group structure. you'll see that the prop trading arm, Timber Hill, is a separate company. If it goes bust IB's brokerage assets and clients would not have any liability and are fenced off.

For me, I prefer stick to a larger well capitalized firm that doesn't sell order flow as execution and safety of funds are my greatest concerns. Of the firms that offer what I need, I believe only IB fits the bill.

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 djkiwi 
Mercer Island WA
 
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Third Base View Post
The distinction on data is charting vs trading. IB data is great for trading. I'm not a tick by tick charting type of guy so I can't comment on that. But if you read the thread, most are not distinguishing a difference between trading or charting.

hypothecation: you need to read up on it more. A broker can't do stock loan business without putting stock or cash up as collateral - ie. hypothecation. However, I recall after MF this was big news on other forums and IB clarified how they do it. I don't have time to search for the dialog now but I did find the link below the IB site, after searching hypothecation, which states that they stick to the more restrictive rules of the SEC. All brokers have the ability to re-hypothecate - including all in that list from your link.

Here's the link: ibkb.interactivebrokers.com/node/1851 (you'll have t cut/paste as I've been a lurker and I don't have enough posts to link yet and sorry I had to remove your link as well)

one additional comment on risk after reading your link: dig into IB's financials and group structure. you'll see that the prop trading arm, Timber Hill, is a separate company. If it goes bust IB's brokerage assets and clients would not have any liability and are fenced off.

For me, I prefer stick to a larger well capitalized firm that doesn't sell order flow as execution and safety of funds are my greatest concerns. Of the firms that offer what I need, I believe only IB fits the bill.

@Third Base, if you believe IB is the safest bet for you then that's all that counts. Same as you, my personal preference is the larger the better hence I am moderately invested with IB although "big" isn't always better, look at MF Global.

At least with IB, I can look and analyze IB's audited financial statements and at least get a feel of what is going on. Secondly, if my equities and futures accounts are with one firm it's easier to move funds back and forth. Thirdly, the other options are even more risky. The only idea of financial condition from another broker I use is $800k in net assets on a disclosure statement. $800k doesn't provide much comfort plus we know from PFG broker disclosure statements are pretty much worthless.

Having said the above, the glaring risks and lack of transparency with IB cannot be ignored. As a result, I've steadily reduced my exposure to IB and spread around the risk. Anybody who has all of their capital with one broker is acting foolishly in my opinion. Refco, MF Global, PFG who is next?

Here are a couple of other points:

The reality is IB can take exactly the same sovereign debt bet that sunk MF Global and use customer funds in their UK subsidiary to collateralize the bet. I've seen no evidence to suggest otherwise. Brokers without UK subs are less risky in my view as that is where the loophole exists.

Just because IB states they do not collateralize does not negate the fact that tomorrow they can change the policy and do something completely different. I do no trust anything brokers tell me orally or in writing. If they go bust and then you remind them "But your website said that......" won't help you recover your funds.

Furthermore you or I do not know how IB is structured "behind the scenes". Just because IB states the trading business and prop businesses are ringfenced doesn't mean there aren't inter-company agreements between IB and the trading arm allowing collateralization.

The other point is only 11.5% of IB is publicly listed. As a result the founder could be influencing significant control over the business. This, in my view makes IB a more dangerous animal than MF Global in some ways. I've seen first hand where oversight boards are pretty much worthless where there is a controlling shareholder or an influential founder with a significant stake.

I'm also fairly sure IB is taking a fair amount of risk just by looking at their huge profit per employee.

On data feeds, if IB's data feed is sufficient for your purposes then good for you. The point is their datafeed is deemed worthless by a large group of traders which is why traders subscribe to 3rd party data feeds. Order flow traders in particular require clean and unfiltered bid/ask data. IB does not provide this.

Cheers
DJ

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 Tarkus11 
East Coast
 
Experience: Beginner
Platform: Ninja
Trading: ES, NQ
 
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djkiwi View Post
@Third Base


IB should not be used for anything other than minute or daily data. Tick, range, renko, volume, or other tick-based chart types should not be used with IB data as it is heavily filtered. IB data is worthless for my purposes.

If using NinjaTrader as your front-end to IB, you should also be aware that even minute data on your charts can be suspect. IB bundles ticks, and sometimes this results in an incorrect/missed High and/or Low of the bar being displayed in NinjaTrader. IB has provided a "seconds" update call in their API to "fix" their problem of losing the H/L tick on a bar, but AFAIK it is not implemented in NT7. If you run 2 identical minute charts during the day, then refresh one of them at the end of day (which would draw data from their historical database with it's corrected bars), you will see differences in some of the bar highs and lows. This obviously only matters as much as you think it does in your strategies.

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 heywally 
Pismo Beach CA
 
Experience: Intermediate
Platform: TOS, IB, Fidelity for 'swing' trades
Trading: ES, NQ, IBB, IWM, NG
 
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djkiwi View Post
@Third Base, if you believe IB is the safest bet for you then that's all that counts. Same as you, my personal preference is the larger the better hence I am moderately invested with IB although "big" isn't always better, look at MF Global.

At least with IB, I can look and analyze IB's audited financial statements and at least get a feel of what is going on. Secondly, if my equities and futures accounts are with one firm it's easier to move funds back and forth. Thirdly, the other options are even more risky. The only idea of financial condition from another broker I use is $800k in net assets on a disclosure statement. $800k doesn't provide much comfort plus we know from PFG broker disclosure statements are pretty much worthless.

Having said the above, the glaring risks and lack of transparency with IB cannot be ignored. As a result, I've steadily reduced my exposure to IB and spread around the risk. Anybody who has all of their capital with one broker is acting foolishly in my opinion. Refco, MF Global, PFG who is next?

Here are a couple of other points:

The reality is IB can take exactly the same sovereign debt bet that sunk MF Global and use customer funds in their UK subsidiary to collateralize the bet. I've seen no evidence to suggest otherwise. Brokers without UK subs are less risky in my view as that is where the loophole exists.

Just because IB states they do not collateralize does not negate the fact that tomorrow they can change the policy and do something completely different. I do no trust anything brokers tell me orally or in writing. If they go bust and then you remind them "But your website said that......" won't help you recover your funds.

Furthermore you or I do not know how IB is structured "behind the scenes". Just because IB states the trading business and prop businesses are ringfenced doesn't mean there aren't inter-company agreements between IB and the trading arm allowing collateralization.

The other point is only 11.5% of IB is publicly listed. As a result the founder could be influencing significant control over the business. This, in my view makes IB a more dangerous animal than MF Global in some ways. I've seen first hand where oversight boards are pretty much worthless where there is a controlling shareholder or an influential founder with a significant stake.

I'm also fairly sure IB is taking a fair amount of risk just by looking at their huge profit per employee.

On data feeds, if IB's data feed is sufficient for your purposes then good for you. The point is their datafeed is deemed worthless by a large group of traders which is why traders subscribe to 3rd party data feeds. Order flow traders in particular require clean and unfiltered bid/ask data. IB does not provide this.

Cheers
DJ

Though I disagree that IB's data feed isn't 'good enough' to trade on, factoring in my belief that the short term data precision that some traders try and assign to the market over the long term is an illusion, I really appreciate the research you've done with IB as it relates to all of the financials.

For myself, IB is mysterious enough (and filled with high frequency players who would be more impacted during a market meltdown, thus affecting the overall pool) to me where I've pulled a lot of funds out of there over the last year or so, to the point where I have just enough there to play around with with a few futures contracts. I love the executions, commissions, products available (though not some of the extra data fees) with IB but that has to take a back seat. I miss my $1 commissions for 200 shares.

Bigger brokers providing FDIC cash sweeps and more 'buy and hold' investors as clients, that I am fairly comfortable with, are TD/TOS and Fidelity.

"The Future Ain't what it used to be"
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Third Base
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djkiwi View Post
@Third Base, if you believe IB is the safest bet for you then that's all that counts. Same as you, my personal preference is the larger the better hence I am moderately invested with IB although "big" isn't always better, look at MF Global.

At least with IB, I can look and analyze IB's audited financial statements and at least get a feel of what is going on. Secondly, if my equities and futures accounts are with one firm it's easier to move funds back and forth. Thirdly, the other options are even more risky. The only idea of financial condition from another broker I use is $800k in net assets on a disclosure statement. $800k doesn't provide much comfort plus we know from PFG broker disclosure statements are pretty much worthless.

Having said the above, the glaring risks and lack of transparency with IB cannot be ignored. As a result, I've steadily reduced my exposure to IB and spread around the risk. Anybody who has all of their capital with one broker is acting foolishly in my opinion. Refco, MF Global, PFG who is next?

Here are a couple of other points:

The reality is IB can take exactly the same sovereign debt bet that sunk MF Global and use customer funds in their UK subsidiary to collateralize the bet. I've seen no evidence to suggest otherwise. Brokers without UK subs are less risky in my view as that is where the loophole exists.

Just because IB states they do not collateralize does not negate the fact that tomorrow they can change the policy and do something completely different. I do no trust anything brokers tell me orally or in writing. If they go bust and then you remind them "But your website said that......" won't help you recover your funds.

Furthermore you or I do not know how IB is structured "behind the scenes". Just because IB states the trading business and prop businesses are ringfenced doesn't mean there aren't inter-company agreements between IB and the trading arm allowing collateralization.

The other point is only 11.5% of IB is publicly listed. As a result the founder could be influencing significant control over the business. This, in my view makes IB a more dangerous animal than MF Global in some ways. I've seen first hand where oversight boards are pretty much worthless where there is a controlling shareholder or an influential founder with a significant stake.

I'm also fairly sure IB is taking a fair amount of risk just by looking at their huge profit per employee.

On data feeds, if IB's data feed is sufficient for your purposes then good for you. The point is their datafeed is deemed worthless by a large group of traders which is why traders subscribe to 3rd party data feeds. Order flow traders in particular require clean and unfiltered bid/ask data. IB does not provide this.

Cheers
DJ

All good points. A couple of items to mention though. You shouldn't compare MF to IB. MF's prop trading was in the entity as the brokerage. IB brokerage has stated they don't trade prop and list the investments they make on their site so while that is not fool proof, it is certainly more than other firms have stated. I think I've done the best homework I could on IB and believe they are amongst the safest brokers in the US.

As an aside, I'm glad you've made these points as it gives me a good excuse to re-read or search the IB site to confirm my previous research. From what I understand, MF lost track of funds (for lack of a better phrase) during the week and when then when they ran their segregation report at weeks end, things didn't add up.

As an example, this is what you'll find if do a search on segregation on their site:

"
ADDITIONAL CONSIDERATIONS
In addition to the safeguards afforded through segregation, IB employs a number of policies and practices which serve to enhance the safety and security of accounts beyond that outlined above. These include the following:

- IB computes its securities segregation or reserve requirement on a daily rather than weekly basis as allowed by regulation, thereby ensuring timely determination as to the amount required to be reserved and the deposit of funds necessary to satisfy the requirement.

- IB’s does not avail itself of the generally more permissive rules with respect to the investment of commodity customer cash balances. These balances are instead invested in a manner similar to that of securities cash balances (i.e., U.S. government securities) with the exception of an occasional investment in money market funds."


I'm not going to go over each of your points but one more stands out that I disagree heartedly with. I love the fact that the majority owner has around 90% of this company is locked up with management (and 90% of that is with the founder). Take a guy like Corzine, outside of reputation, he didn't take a huge financial hit swinging for the fences. However, at IB, if they took silly risks, they stand to lose all the wealth accumulated over the past 30 years. I figure, that they will take better care of their money than mine and as long as their money is within the firm, then I expect conservative risk. Listen in to the earnings calls and you'll see what I mean in regards to risk.

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 djkiwi 
Mercer Island WA
 
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heywally View Post
Though I disagree that IB's data feed isn't 'good enough' to trade on, factoring in my belief that the short term data precision that some traders try and assign to the market over the long term is an illusion, I really appreciate the research you've done with IB as it relates to all of the financials.

For myself, IB is mysterious enough (and filled with high frequency players who would be more impacted during a market meltdown, thus affecting the overall pool) to me where I've pulled a lot of funds out of there over the last year or so, to the point where I have just enough there to play around with with a few futures contracts. I love the executions, commissions, products available (though not some of the extra data fees) with IB but that has to take a back seat. I miss my $1 commissions for 200 shares.

Bigger brokers providing FDIC cash sweeps and more 'buy and hold' investors as clients, that I am fairly comfortable with, are TD/TOS and Fidelity.

@heywally

"Mysterious" is the word. The problem with any organization is you never really know what goes on behind the scenes until it's often too late.

I did some CFO contracting for a few large publicly listed organizations and was surprised at how poorly run some of them were and their lax financial controls. Their annual reports looked nice and glossy though and their websites were full of warm and fuzzy statements which in some cases were totally false.

My conclusions are the same as yours in respect of Fidelity and TD.

What continues to surprise me is how some people still don't take this issue seriously. You have traders who exercise prudent risk management only risking so much % per trade etc but then have their entire account at a single broker. I heard there were people who had 100% of their funds with MF Global and lost that. Then they opened an account with PFG and put 100% of their funds into that. Who cares about saving a $1 in commissions when you have your entire account exposed.

Cheers
DJ

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 FHTrader 
bellingham, wa
 
Experience: Advanced
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Hi to All,

Does anyone have new update on IB's data feed being upgraded to meet the futures trading needs or it's still the same.
Also, any 3rd party data feed recommendation? I was thinking of Kinetic using Ninjatrader.

Thank you!

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 wldman 
Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
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Kinetick, Ninja and IB...IMO that is the best. I would not use IB data over Kinetick...and there is no broker imo that is as good as IB.

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 FHTrader 
bellingham, wa
 
Experience: Advanced
Platform: Ninja trader, Multicharts
Broker: Interactive Brokers
Trading: nq, cl, ym, 6e
 
Posts: 12 since May 2010
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Hi Wldman,

May I ask how much you are paying now for Kinetic?
I understand it's $55 per month but from their web site it shows exchange fee to be extra such as $46 for CME-mini.
So does that mean it's $101 per month for data fee and exchange fee?

Thank you!

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 Fadi 
Luxembourg
 
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Hi There
If you trade through IB, you will be eligible to participate in the CME waiver program.
If you do so, then you will not pay the extra $46 that you mentioned

Otherwise, you are right, it will be 101$

Cheers
Fadi

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 FHTrader 
bellingham, wa
 
Experience: Advanced
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Broker: Interactive Brokers
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Hi Fadi,

Thank you for your kind reply.


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 Minds 
PERU/CALLAO
 
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Hello I have been using IB for over 2 years and I have found Statements Errors.

I did over 20 trades last year and I have found errors on the statements. IB confirmed those errors which they fix. But both of the times I was the one pointing out the errors. I have imagine the difficulty of finding errors in the official monthly statements with some many trades.

Have any of you experienced Statements errors?

1. Charged me hundreds of follar for inactivity fee which was not true.
2. Performance fee calculation for an Advisor Account.

I am thinking so change because of those errors. I cant understand how they made those errors.

Thanks,

Any recomendation for another broker?

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