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Is Interactive Brokers bad?
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Is Interactive Brokers bad?

  #61 (permalink)
Elite Member
East Coast
 
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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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  #62 (permalink)
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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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  #63 (permalink)
Trading Apprentice
hong kong
 
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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.

- IBís 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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  #64 (permalink)
Identify Evaluate Execute
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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


Last edited by djkiwi; December 19th, 2012 at 12:49 AM.
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  #65 (permalink)
Elite Member
bellingham, wa
 
Futures Experience: Advanced
Platform: Ninja trader, Multicharts
Broker/Data: Interactive Brokers
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IB data feed

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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  #66 (permalink)
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Futures Experience: Advanced
Platform: Ninja Trader
Broker/Data: IB
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Yes..

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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  #67 (permalink)
Elite Member
bellingham, wa
 
Futures Experience: Advanced
Platform: Ninja trader, Multicharts
Broker/Data: Interactive Brokers
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Kinetic data feed

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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  #68 (permalink)
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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

Successful people will do what unsuccessful people won't or can't do!
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  #69 (permalink)
Elite Member
bellingham, wa
 
Futures Experience: Advanced
Platform: Ninja trader, Multicharts
Broker/Data: Interactive Brokers
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Hi Fadi,

Thank you for your kind reply.


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  #70 (permalink)
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Statement Errors with Interactive Brokers


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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