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fatmcb1
Re: What brokerage do you use?

Schwab, Fidelity, TD Ameritrade, etc. will all negotiate margin rates. Call them and let them know the average debit that you carry and the amount of trading that you do. Then they'll give you a competitive offer if it's decent sized margin balance. You'll have to send a statement or 2 over for validation.

Jun 13, 2021 9:12:58 AM       
simondul
smile Re: What brokerage do you use?

Jim,

"IBKR receives rebate payments for routing and executing marketable client orders…"


For tiered Pro accounts the payment received by IB is passed through the clients (i.e. me) and is not to IB's bottom line. This is a major difference between the "free" brokerages and IB's Pro account structure. That said, if you have an IB Lite account, it goes to IB...

BTW, I used to track window trade fills at Folio Investing. Some of the fills were terrible. Sometimes my fills were quick (just a few minutes) and other times, it took 90 minute or so. This was especially true when working with low volume micro caps. Folio Investing never exposed how "window trades" were executed, or how they made money (outside of the annual fees). GS also never disclosed how much they paid for Folio Investing either; I guess I could go hunting through their 10-Qs, but my curiosity is not that high!

"Paying" for trades is a touchy subject now especially with most brokers offering commission-free trades. However I think an analogy can be drawn with financial advisors: the rule is to never use "free" advisors; if you want investment advice, pay for it up front. I know a lot of advisors use this site, so please excuse my analogy if inappropriate :)

Transparency with transaction costs should be a net positive, but it does makes it more difficult for the typical retail trader. That's not a pitch for IB; but the lack of transparency especially when associated with something that is "free" should result in a lot more questions...

Simon

Jun 14, 2021 8:44:14 AM       
Jrinne
Re: What brokerage do you use?

Jim,

"IBKR receives rebate payments for routing and executing marketable client orders…"


Simon,

It would not hurt to have a little more information about IB's tiered model.

I would love to be proven wrong and therefore learn something new and potentially important to my trading.

But these disclosures are not meant to be clear and what is left out of the disclosure is the most important. They do include this (leaving out some details):

"Under IBKR’s Tiered commission model IBKR passes some or all of certain rebate payments……"

That makes clear that they may not be passing all of the rebates to you.

Not only do they not make clear what "some" means but NONE OF THIS CAN BE COPIED FROM THEIR WEB SITE. They do not want me to copy the full details here. I retyped the quotes (without errors I hope)

However, it goes on to say that: " IBKR may receive enhanced payments for exceeding volume thresholds on particular markets but will not directly pass these enhancements on to clients."

I take this to mean that they receive payment for order flow that they do not pass on to clients—if IB gives them enough business ("exceed volume thresholds"). This would land a physician in jail, and I think, is not allowed in many countries’ stock exchanges. Elizabeth Warren wants to change this. That much is clear.

Furthermore, it seems to be that IB and whomever they are contracting with have a large amount of leeway as to how they structure those payments and rebates. There is no way for us to know the magnitude of this.

So, we really do not have much information on this—as intended. I understand this is far from the final word on this.

Link or disclaimer that IB is required to make by law: https://gdcdyn.interactivebrokers.com/Univers...ormSampleView?formdb=3074

I have just 3 questions (true questions that I do not know the full answers to}:

1) How does this compare to Fidelity with regard to order price improvement or rebates of IB’s payments for order flow?

2) If IB is better than Fidelity because they rebate some payments for order flow does this adequately compensate for the commissions at IB?

3) And which tier do you have to be in to break-even or do better at IB? And for which type of orders? And is it possible to get reliable numbers for comparison?

One final note. It is getting harder and harder to get hard numbers on order-price-improvement. But when I checked, IB did not compare well to Fidelity or to Schwab. THIS WAS FOR MARKETABLE ORDERS WHICH YOU MAY NOT EVEN USE. I would appreciate it if anyone could post any recent numbers on this. Maybe I was wrong at the time or maybe this has changed.

I do have the belief that the order-price-improvement for market orders at IB is not as good as Fidelity’s price-improvement and that is before you figure-in the cost of the commissions. Market orders may not be important to you. But your analysis of VWAP orders at IB suggests that IB may not be the best place for every market order (or for VWAP orders). Something I agree with.

Anyway, it is just arithmetic and I am alway happy to have better numbers with which to update my assessments. Simon, for now your excellent assessment on VWAP at IB tells me most of what I need to know for my trading. But everyone trades differently and I am willing to learn new ways.

Best,

Jim

Great theory, "and yet it moves."
-Quote attributed to Galileo Galilei (1564-1642) gets my personal award for the best real-world use of an indirect proof or reductio ad absurdum.
`

Jun 14, 2021 9:54:13 AM       
Edit 42 times, last edit by Jrinne at Jun 14, 2021 5:05:25 PM
yuvaltaylor
Re: What brokerage do you use?

Just one note: Fidelity does not accept payment for order flow. They pass on all the price improvements to their customers. See https://www.fidelity.com/trading/execution-quality/overview: Fidelity "Does not take payment for order flow from market makers for stock and ETF trades."

IBKR-LITE does accept payment for order flow. IBKR-PRO accepts it very rarely. All the details are here: https://gdcdyn.interactivebrokers.com/Univers...ormSampleView?formdb=3074

For me the trade-offs between Fidelity and IBKR-PRO are a) commissions; b) margin interest rates; c) customer service; d) ease of placing trades; e) algorithmic execution; f) access to foreign stocks. Execution is not an issue for me. Both are excellent, and superior to other brokers.

Yuval Taylor
Product Manager, Portfolio123
invest(igations)
Any opinions or recommendations in this message are not opinions or recommendations of Portfolio123 Securities LLC.

Jun 15, 2021 4:59:29 PM       
vettemoose93
Re: What brokerage do you use?

Apologies for joining this thread late. I also was migrated from Folio to IBKR; for all the reasons mentioned here, I am still working on recreating the straightforward and low cost method for implementing my P123 driven portfolio rebalancing/refactoring.

This move to IBKR caused me to implement Live Strategies and now Books in the P123 system. I did so because the P123 Trade interface looked straightforward and integrated with the portfolio tools I already use and trust. Via P123 dashboard, I can now execute rebalancing/refactoring trades using my Live strategies. Note: only IBKR and Tradier support API integration with P123.

A few thoughts on the P123 dashboard implementation for brokerage trading:
- The P123 interface does not support fractional shares. Note: IBKR does and Tradier does not support fractional shares
-- This can hurt you with smaller portfolios (e.g., my wife's IRA) where equal weighting benefits from fractional shares when buying high price stocks (e.g., GOOGL)
-- If you import your portfolio into P123, whole shares are sold leaving fractional shares that must be sold directly from IBKR and than manually reconciled in your P123 account
- The integration with your screens is excellent but the trading interface is more complex than Folio
-- The progression from Screen to Simulated Strategies to Live Strategies to Live Books involves learning the nuances of each tool (and their are many). Previously with Folio, I developed and backtested my P123 Screen. Then at the rebalance period (e.g., 4-weeks), I would run my screen, upload the selected stocks to Folio, create a Watch folio, select Trade Entire Folio w/ Update and Exchange, and then submit. All the buy/sells and rebalancing/refactoring were calculated and then submitted by Folio. 10-mins start to finish.
-- Another brokerage option to consider is M1 Finance and their Pies (although they are not integrated with P123)
- You still need to use your broker's interface for more complex trades and reconciliation
-- Folio had their dashboard and brokerage service integrated. This integration was straightforward although they did not support many brokerage functions including margin accounts
-- Some of the IBKR trading types (e.g., TWAP and VWAP) are not surfaced to the P123 trading dashboard

When I asked IBKR about their implementation of Folio features (as promised for 1Q), they said they will be rolled out in 2Q.; time will tell how they interpret and implement the Folio features.

Here are links to related threads on Folio and recreating their simple trading approach w/ P123:
- Folio Investing RIP https://www.portfolio123.com/mvnforum/viewthread_thread,12697#!#77706
- IBKR and Folio https://www.portfolio123.com/mvnforum/viewthread_thread,12553#!#77705
- Tradier Brokerage https://www.portfolio123.com/mvnforum/viewthread_thread,11896_offset,60
- Rebalancing Live Screens similar to Screen backtesting https://www.portfolio123.com/mvnforum/viewthread_thread,12866

Thanks, Gregg

Jun 22, 2021 10:42:45 AM       
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