Dartmouth NS
Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker: IB / IQFeed / Kids
Trading: Forex, stocks
Posts: 637 since Feb 2010
Thanks Given: 64
Thanks Received: 460
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If I understand the question correctly, with IB as far as I know there's no way to reduce the Forex commission by restructuring the trade since commission applies to what traders tend to consider execution quantity.
Whether you buy/sell 250,000 units all at once or in 5 installments of 50,000 units the commission is the same. In other words we pay at least minimum commission upon entering a trade and upon exit, no matter how we enter or exit.
Specifically, for monthly trade amounts < USD $1 billion, when IB states that commission is " (0.2 basis point) * (trade value) with a minimum of USD $2.50", the word "trade" in the phrase "trade value" refers to sale/purchase of the quote currency and purchase/sale of the base currency of a given currency pair and applies the commission to the transaction.
Therefore as far as I know there are only 2 ways to reduce the commission burden with IB; namely,
1. avoid entry / exit quantities less than 50,000 units (number of units corresponding to the $2.50 minimum commission)
2. trade more than $1 billion / month for the 25% discount, which depending on our circumstances may not be as much of a stretch as it might seem. In concrete terms this amounts more or less to moving an average 50 million units a day, or 25-50 executions involving 1 - 2 million units each. In terms of in/out currency day trades this means 13 trades of 2 million units each or 26 trades of 1 million units each, which even with IB's relatively low leverage ought to be accessible to an experienced, active retail trader with a $50,000 account.
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