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Interactive Brokers - am I worrying too much?


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Interactive Brokers - am I worrying too much?

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  #1 (permalink)
Munich, Germany
 
 
Posts: 2 since Aug 2012
Thanks: 0 given, 1 received

Hi all,
I was looking to open IB account for some time now.
I needed some time to collect $10k, their minimum for opening an account.
I thought this minimal figure is also fine to start with in order to be able to make meaningful trades using proper money management (for example, risking max 1% of total portfolio on any trade).

My pros for using IB were/are:
-shortable stocks
-low stock comissions
-reputable/listed firm

Cons:
-minimum activity fee ($10, waived if $30 is spent on commissions for the month)
-data feed fee (US stocks) ($10, waived if $30 is spent on commissions for the month)
-cancel/modify order fees
-not the best platform (java based, no historical data scans and analysis like on TOS)

I would probably combine IBDs Can Slim strategy and there and then (let's say 1-2x month) would probably short some stocks intraday or holding couple of days.
When the market would be in correction, obviously I wouldn't make any trades based on CanSlim strategy.
So there might be easily a period when I wouldn't make any trade for a month or two.
All over, let's say that I would make aprox. 20-30 round trades a year (avg trade $1.000-$1.500).

So, as you can see, I won't trade very actively and won't be spending $30 on commission for the month for sure.
I am worried that on my $10k capital, $240/year in commissions is too much. That's 2,4% cost of doing business.
If I am aiming or let's say would be satisfied with 10% yearly return, that would drag it to 7,6% before tax, which after 28% capital gain tax (Germany) is miserable 5,4% net return.

So basically, in order to make a 10% net return, I would need to make a yearly gain of 17% (comm. not incl., and modify/cancel fees not included), which is I believe very hard to achieve consistently.

What are your opinions, am I over-thinking this or worrying too much?

Thanks!

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  #3 (permalink)
Market Wizard
Berlin, Europe
 
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
 
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Posts: 9,840 since Mar 2010
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@lazarus: You are absolutely correct in your reasoning. There is no free lunch.

With an account of 10k is not worth spending the time to do the research on financial markets and stocks, unless you really enjoy doing that.

You should consider the commissions and your trading losses as a tuition fee. After all in absolute terms $ 240 is next to nothing. That is exactly the amount that buys me a meal for my family at the local steak house.

What is more entertaining

(1) go to enjoy some food with your family or

(2) have some fun trading stocks over a year?

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  #4 (permalink)
Karlsruhe, Germany
 
Experience: Advanced
Platform: NinjaTrader & Metatrader
Broker: IB , TaiPan
Trading: Shares & ETF at the US and EU , some MNQ & MES
 
LoboTrader's Avatar
 
Posts: 27 since Nov 2011
Thanks: 228 given, 13 received

@ Lazarus :
Why not have a look at Captrader.de, which also serves as Whitelabel for IB, do NOT select RT quotes which not appears to be necessary in your case.
Need less than 10 K cash to open account , no cost for ordermodify and other, same low commission for US stocks. Need to confirm all my statements. All I say is : Have a look.
Lobo
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  #5 (permalink)
Legendary Market Wizard
Switzerland
 
Experience: Intermediate
Platform: Investor/RT
Broker: IB / DTN
Trading: Futures
 
Posts: 5,103 since Feb 2012
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lazarus View Post
Hi all,
I was looking to open IB account for some time now.
I needed some time to collect $10k, their minimum for opening an account.

Hi @lazarus

In my experience you do not need min. 10K$ to open an IB account as long you are not trading futures.

@Fat Tails - The steak house example is very nice!
Another one: The OP does no longer need to practice english - and he gets a bonus by not
taking an online course to be educated in english - which is around $240 per year

Conclusion: Running with IB is not always smooth - but after all not costly!

Cheers
GFIs1

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  #6 (permalink)
Karlsruhe, Germany
 
Experience: Advanced
Platform: NinjaTrader & Metatrader
Broker: IB , TaiPan
Trading: Shares & ETF at the US and EU , some MNQ & MES
 
LoboTrader's Avatar
 
Posts: 27 since Nov 2011
Thanks: 228 given, 13 received

upfront ... I have Zero benefit from this posts other than supporting the same way I was supported in the past here at futures.io (formerly BMT) (i.e. by Fat Tails to name just one :-) )

Please review following links :
1.) Brokervergleich | Brokervergleich, Lynx, Lynxbroker, Flatex, Cortal Consors | Captrader

2.) Preise und Konditionen | Aktien, Futures, Optionen, Online Trading, Broker | Captrader

a.) 5 K Min starting Cash , b.) again I question the need of any realtime quotes , I DO use one (ARCA) which I rarely need as I trade just like Lazarus , low frequent (SLV and some Stocks at NA)

Lobo

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  #7 (permalink)
Market Wizard
Ilsede, Germany
 
Experience: Advanced
Platform: NinjaTrader 8
Broker: Rithmic / CQG / Ninja Trader Brokerage
Trading: NQ, YM, ES
 
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Posts: 1,197 since Sep 2011
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GFIs1 View Post
Another one: The OP does no longer need to practice english - and he gets a bonus by not
taking an online course to be educated in english - which is around $240 per year

Well, since the participants in this thread are all German-speaking, we could easily continue this thread in the German section of futures.io (formerly BMT)...

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  #8 (permalink)
New York, NY
 
Experience: Advanced
Platform: TOS
Broker: TD Ameritrade
Trading: Equities and options
 
Bookworm's Avatar
 
Posts: 168 since Apr 2010
Thanks: 65 given, 155 received


lazarus View Post
Hi all,
I was looking to open IB account for some time now.

Are you sure there are two different fees each month?

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  #9 (permalink)
Munich, Germany
 
 
Posts: 2 since Aug 2012
Thanks: 0 given, 1 received

@Fat Tails
Well, 10k is the beginning amount which I plan to invest now. The plan is to add each year additional capital of about 20k.
Of course, for the second year, with the 30k in capital, these costs would be percentage wise 3x lower.
But my question was focused more on how to do the best I can for this first year, minimizing the expenses.

Regarding the stake dinner, I don't know if you meant it as a joke, but my starting capital doesn't mean that I don't enjoy nice dinner with my wife and friends every now and then (probably more than usual), for what it matters.
It just means that this is the capital that I'm willing to put aside and invest in the market for the time being, which again doesn't mean that I'm willing to lose it or to consider it just a learning tuition. I can do fair amount of that just by paper trading.
I'm reading and studying about the markets for the last one year. I've also already had some minor experience investing in the markets.
I also don't agree that it's not worth to spend time to do research on capital markets. I believe that prior to investing hard earned money into the markets, everyone should read and do the research as much as possible about the topic, other way you're just a breakfast for the sharks, waiting to be eaten alive...

@LoboTrader
Do you work for Captrader, or what? Thanks, but no thanks! Moderators?

@GFIs1
You do need 10k minimum. It's very easy to check it on IB site, no need to make an assumptions at all for the assumptions sakes.
Didn't get the thing with the bonus for not taking english classes? Care to explain? Thanks.

@Bookworm
interactivebrokers.com. Easily verifiable... What's up with all the replies for the posting sake?

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  #10 (permalink)
Milwaukee, Wisconsin, U.S.
 
 
Posts: 14 since Jun 2012
Thanks: 0 given, 3 received


yes - most of the replies had no valid information

to lazarus: perhaps you should consider day trading stock index futures instead of individual stocks, using a chart-based methodology. Then you could choose from a wider selection of brokers, some with lower fees than IB. You would have a better chance of achieving your percentage goals with the German DAX or Eurostoxx contracts.

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December 31, 2012


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