IBKR - Interactive Brokers

[oddballstocks]

I am probably the company's target user.  But after using their demo for a few days I decided it wasn't worth the time to learn the UI.  I'm satisfied with Fidelity and have no desire to learn some warped system.  I want to switch and IB offers a lot of features I want.  But the UI holds me back.  It's like handing someone an iPhone with a rotary dial attached.  Why limit yourself like that?

I think that's irresponsible. You're leaving a lot of money on the table in the long run just because you are too lazy to spend half a day on their software? Because, frankly, it's not _THAT_ difficult to use.  Their software should appeal to value investors. It's ugly, unloved, but very cheap!

Is it that much? IB hits you with a $10 per month minimum trade fee plus a $10 per month real time quote fee as well as an IRA fee.  That's $240 year in minimum fees.  And that's real-time quotes for the US only.  At Fidelity I get real-time quotes worldwide.  If I were to pay for that at IB there's no comparison, but let's leave that out.  There's also a $30 per year fee for each IRA.  I have 4 IRA accounts, that's another $120.  I'd be looking at $360 a year in minimum costs with less information than I get now.  That's 45 trades at Fidelity to break even.  I just checked Fidelity, I've made 44 trades in the last year.  IB would be slightly more expensive.

If you add in all the real-time data from all the markets I get at Fidelity I'd have to trade a lot more to make it worthwhile.

[oddballstocks]

I am probably the company's target user.  But after using their demo for a few days I decided it wasn't worth the time to learn the UI.  I'm satisfied with Fidelity and have no desire to learn some warped system.  I want to switch and IB offers a lot of features I want.  But the UI holds me back.  It's like handing someone an iPhone with a rotary dial attached.  Why limit yourself like that?

I really don't understand why you, of all people, think this way. You're leaving a lot of money on the table in the long run just because you are too lazy to spend half a day on their software? Because, frankly, it's not _THAT_ difficult to use and if you get to know it actually works very good - I now prefer it above almost all alternatives.

Their software should appeal to deep value investors like you. It's ugly at first glance & unloved but very cheap! The Walmart comparison is way off the mark. IB is like a wholesale store compared to a retail store around the corner. Sure, it looks a little bit less cosy but if you are a professional you can't do without it.


Anyway, back ontopic: nobody likes my idea? Opinions would be appreciated.

Just a brainfart: I really like IB as a broker and I would love to own the stock but it just looks to expensive for my taste. Has anybody considered setting this up as a pair trade? E.g. long IBKR, short AMTD and/or ETFC. All brokers have relatively high valuations, if you can set this up with low margin requirements it might be a nice bet 'on the side' that IBKR will perform better than its competitors.

I buy value.  In real life (not my portfolio) I purchase high quality things that are well designed and last.  I learned long ago that buying cheap junk is more costly in the long run in most cases.

Sometimes I get the impression that my investing style translates into the perception that I'm some miser living in a mobile home driving a 1992 Tarus and wearing worn out clothes to save a few bucks.

[benhacker]

A few comments on IB, and to Nate's note:

"It seems IB took the advanced route and never implemented a simple route.  "

They do have a simple webtrader interface which is what you propose, I don't think you used it.  It's not great, but more SCHW like, no Java application involved.  I think in general folks that *need* a simpler UI (not saying that is folks here), demand more customer service, and I think it's a conscious trade off by IB to focus their business on high volume, but fewer accounts.  To that point Nate, I think your comment about 90%+ of *users* just wanting to buy MSFT, you are right... but 90% of IB's trade volume is done by the minority of clients, and I think those are the MM and automated trading funds, so again, I think you can use the webtrader interface if the TWS interface is too complex (by the way, I'm not throwing stones, I used webtrader interface for the first 4 years I had an IB account, it was fine... only starting using TWS when I moved my RIA to IB).

Also note for those that thinks IB charges a $10 / month minimum... they have eliminated this for $100k+ accounts, they did it last year.  Agree that IRAs have $7.5 / quarter fee, and real time quotes are extra, so those obviously should be factored in.  I think the big things for IB over Fido are real easy to quantify:
1) If you trade internationally (online, not by phone)
2) If you short
3) If you borrow on margin
4) If you trade options
5) If you trade futures
6) If you trade foreign exchange
7) If you are an RIA / HF

If you meet any of the seven, I think IB is clearly better.  If you don't, then I think IB is probably on par for most folks, and more complex than Fido.

Again, I don't think it's the best for everyone, but it's pretty good.  I think the characterization of the UI as super complex is pretty amusing.  Yeah, it has a two hour learning curve and it's made by Java programmers and option traders, not by Steve Jobs, but it's functional and easy to use... it's not like some black box.

Ben

[frommi]

If you want a simpler interface you can always use the IB phone or ipad app. Nate what you pay at fidelity sounds like a good deal, but i don`t know one european broker that comes even close to the low commissions at IB that has the same stability/trustworthy background. At Cortalconsors/BNP Paribas for example i pay nearly 1% in commisions for every US/canadian stock transaction. And then they split each big transaction into smaller ones to get even more commissions, regardless if necessary or not. And most other brokers earn even more on your transaction when they frontrun your trade without you not even taking notice.

[writser]

I am probably the company's target user.  But after using their demo for a few days I decided it wasn't worth the time to learn the UI.  I'm satisfied with Fidelity and have no desire to learn some warped system.  I want to switch and IB offers a lot of features I want.  But the UI holds me back.  It's like handing someone an iPhone with a rotary dial attached.  Why limit yourself like that?

I think that's irresponsible. You're leaving a lot of money on the table in the long run just because you are too lazy to spend half a day on their software? Because, frankly, it's not _THAT_ difficult to use.  Their software should appeal to value investors. It's ugly, unloved, but very cheap!

Is it that much? IB hits you with a $10 per month minimum trade fee plus a $10 per month real time quote fee as well as an IRA fee.  That's $240 year in minimum fees.  And that's real-time quotes for the US only.  At Fidelity I get real-time quotes worldwide.  If I were to pay for that at IB there's no comparison, but let's leave that out.  There's also a $30 per year fee for each IRA.  I have 4 IRA accounts, that's another $120.  I'd be looking at $360 a year in minimum costs with less information than I get now.  That's 45 trades at Fidelity to break even.  I just checked Fidelity, I've made 44 trades in the last year.  IB would be slightly more expensive.

If you add in all the real-time data from all the markets I get at Fidelity I'd have to trade a lot more to make it worthwhile.

I rephrased my reply while you replied, it was maybe a bit over the top. You are correct in the sense that IB isn't very well suited for small accounts. Still your comparison isn't really fair. The IB minimum trade fee is waivered if you have > $100k equity. Also, any commission you pay during a month cancels out the monthly minimum fee. The same thing happens with US quote fees. In other words, with a small account all your trading is effectively free: the $360 package is all-in.

Foreign dividends cost 1% through Fidelity (IB 0%). Margin interest is higher (IB is 1% - 2% cheaper.) Corporate actions through Fidelity: $38 (IB: free). Also you are potentially leaving more money on the table because Fidelity is selling your order flow to HFT firms instead of routing it to exchanges directly. But the most egregious are the FX fees. If you trade international stocks through Fidelity you pay 1% FX fees for every trade assuming you have a small account (IB 0.0001%). That means that if you buy and sell a ~$20k European stock position during a year you are already paying $400 in hidden forex fees - you can trade a whole year for free with that if you had an IB account!

All these things add up quickly and as soon as you pass the $400 / year hurdle (which I am pretty sure you are currently paying with Fidelity, _EVERYTHING_ considered) you would be better off with IB. And the more you trade / the bigger your account gets the better proposition IB becomes. With $10k it's probably not the best choice (but why would you be investing anyway), with $100k it probably is and with $1m+ you are a fool if you park the majority of your assets at a different broker.

Sometimes I get the impression that my investing style translates into the perception that I'm some miser living in a mobile home driving a 1992 Tarus and wearing worn out clothes to save a few bucks.

Yes. You definitely give off that impression  .

[Liberty]

If you want a simpler interface you can always use the IB phone or ipad app. Nate what you pay at fidelity sounds like a good deal, but i don`t know one european broker that comes even close to the low commissions at IB that has the same stability/trustworthy background. At Cortalconsors/BNP Paribas for example i pay nearly 1% in commisions for every US/canadian stock transaction. And then they split each big transaction into smaller ones to get even more commissions, regardless if necessary or not. And most other brokers earn even more on your transaction when they frontrun your trade without you not even taking notice.

I use IB, and most of the time I just use their simplified web interface because I don't need all the bells and whistles that are in the java application.

[oddballstocks]

I am probably the company's target user.  But after using their demo for a few days I decided it wasn't worth the time to learn the UI.  I'm satisfied with Fidelity and have no desire to learn some warped system.  I want to switch and IB offers a lot of features I want.  But the UI holds me back.  It's like handing someone an iPhone with a rotary dial attached.  Why limit yourself like that?

I think that's irresponsible. You're leaving a lot of money on the table in the long run just because you are too lazy to spend half a day on their software? Because, frankly, it's not _THAT_ difficult to use.  Their software should appeal to value investors. It's ugly, unloved, but very cheap!

Is it that much? IB hits you with a $10 per month minimum trade fee plus a $10 per month real time quote fee as well as an IRA fee.  That's $240 year in minimum fees.  And that's real-time quotes for the US only.  At Fidelity I get real-time quotes worldwide.  If I were to pay for that at IB there's no comparison, but let's leave that out.  There's also a $30 per year fee for each IRA.  I have 4 IRA accounts, that's another $120.  I'd be looking at $360 a year in minimum costs with less information than I get now.  That's 45 trades at Fidelity to break even.  I just checked Fidelity, I've made 44 trades in the last year.  IB would be slightly more expensive.

If you add in all the real-time data from all the markets I get at Fidelity I'd have to trade a lot more to make it worthwhile.

I rephrased my reply while you replied, it was maybe a bit over the top. You are correct in the sense that IB isn't very well suited for small accounts. Still your comparison isn't really fair. The IB minimum trade fee is waivered if you have > $100k equity. Also, any commission you pay during a month cancels out the monthly minimum fee. The same thing happens with US quote fees. In other words, with a small account all your trading is effectively free: the $360 package is all-in.

Foreign dividends cost 1% through Fidelity (IB 0%). Margin interest is higher (IB is 1% - 2% cheaper.) Corporate actions through Fidelity: $38 (IB: free). Also you are potentially leaving more money on the table because Fidelity is selling your order flow to HFT firms instead of routing it to exchanges directly. But the most egregious are the FX fees. If you trade international stocks through Fidelity you pay 1% FX fees for every trade assuming you have a small account (IB 0.0001%). That means that if you buy and sell a ~$20k European stock position during a year you are already paying $400 in hidden forex fees - you can trade a whole year for free with that if you had an IB account!

All these things add up quickly and as soon as you pass the $400 / year hurdle (which I am pretty sure you are currently paying with Fidelity, _EVERYTHING_ considered) you would be better off with IB. And the more you trade / the bigger your account gets the better proposition IB becomes. With $10k it's probably not the best choice (but why would you be investing anyway), with $100k it probably is and with $1m+ you are a fool if you park the majority of your assets at a different broker.

Sometimes I get the impression that my investing style translates into the perception that I'm some miser living in a mobile home driving a 1992 Tarus and wearing worn out clothes to save a few bucks.

Yes. You definitely give off that impression  .

Interesting, I guess I didn't know about the $100k account thing.  How do they manage accounts are they all combined for a household value?  I have some IRA's with $10k in them.  They're well worth investing as part of the larger portfolio, but getting slammed with the fees on those isn't fun.

Where is Fidelity charging 1% on foreign dividends?  I've never paid a cent on those.  I think there's a misconception.  You get hit with the FX fee if you convert back and forth.  I converted a chunk of cash to EUR years ago and have traded that.  I paid 1% once to get in, but once in there are no fees.  Now I've taken a bath on the USD/EUR and that bath makes FX look like nothing but that's another story.  I did this for JPY, GBP and CAD.  I held some CHF that I converted back, but otherwise I just leave my foreign currency.  It doesn't cost me to receive a dividend.  Making a new trade is just commission cost.

Does IB force a FX back to the home currency?  Not sure I'd like this.

If your account is over $100k (I think, maybe $250k? Some number they don't publicize) at Fidelity corporate actions are free.  I've never paid for them and I've participated a number of times.

What it boils down to is the cost comparison isn't perfectly clear cut.  I agree with Ben's assessment.  The only item on his list I trade is foreign stocks.  For now the edge isn't clear enough.

I do want to dip my toe in the water.  My wife has a $30k IRA at Vanguard that I'll probably move to IB.  I almost never trade at Vanguard, their stock selection is limited and the UI is beyond terrible.  I recognize I will get taken to the cleaner in fees compared to Vanguard ($30/yr IRA plus $120 min), but will be able to invest overseas and in OTC stocks whereas I can't right now in that account.

I wish I were at the $1m level, unfortunately I'm not.

One thing that intrigues me is their API access.  I'd love to write something that connects and executes trades through this.  In browsing the documentation it appears I could integrate this with our desktop software.  But I don't know how many users have a Bloomberg but trade through IB, seems like a strange combo..

[benhacker]

"Interesting, I guess I didn't know about the $100k account thing.  How do they manage accounts are they all combined for a household value?  I have some IRA's with $10k in them.  They're well worth investing as part of the larger portfolio, but getting slammed with the fees on those isn't fun."

All accounts are independent (if you are an advisor, there is a more nuanced answer, and I think you can aggregate fees to kill the minimums if you do a friends and family setup)... so your IRAs would get hit baring the prior provisos.

"Does IB force a FX back to the home currency?  Not sure I'd like this."

No, I think there was an assumption in the original comment that you (as in Nate) would want to do this, I agree based on what you shared about your trading, that you pay 1% one time, and then you can keep your earnings/returns in the foreign currency with no penalty at Fido.

"One thing that intrigues me is their API access.  I'd love to write something that connects and executes trades through this.  In browsing the documentation it appears I could integrate this with our desktop software.  But I don't know how many users have a Bloomberg but trade through IB, seems like a strange combo.."

I think the combo is becoming less strange.  But selfishly, if you do ever decide to go down that path, please keep me posted on your experience(s)!

I always get too jacked up and post to much on IBKR when it comes up, but if I had to say one thing about them that I like most is that they essentially are very similar to Costco in the brokerage space.  They provide a somewhat premium service (not necessarily for everyone) and they provide it with a cost plus model.  They don't try to nickel and dime you unless it goes back to their cost structure (eg, IRAs have additional paperwork for the custodian, so they charge for this vs. taxable accounts).  IB's motto is to make sure that every account they have is at least a breakeven proposition... and beyond that, if they build it, people will trade.  The beauty is that in my almost 10 years with them, you see steady improvements, and continual (but lumpy) cost reductions.  It's not always pretty, but it's always getting better, and somewhat amazingly it gets better without you knowing it (which is frustrating as an investor...).

I can't speak badly of Fidelity as I think they do a good job, but I find companies like IB very rare in that they acknowledge what they are good at, and they try to keep doing it better, and they treat their customers fairly with very transparent pricing.  To me as both an investor and user, I just like it.  I know it's not everyone's cup of tea, but I think most on this board, if forced to start from scratch, would probably be happiest / wealthiest by choosing IB.

Fanboy out.

[writser]

Nate, sorry, I misunderstood the FX fees. As a non-US resident I can't open a Fidelity account (unfortunately, would've liked to try it out) so I had to figure things out from their fee schedule. This is also where I got the info about foreign dividends:

Foreign Dividends / Reorganizations 1% of principal; charged when a dividend is paid or a reorganization event occurs on a foreign asset held in an account in USD

I might also have misunderstood this. Nevertheless, an 1% FX charge is still ridiculous in 2015. If I understand correctly if you buy an Australian asset, then sell that to buy something in Singapore you would still have to pay FX fees inbetween, correct? I imagine this will add up over time if you have a global portfolio. Have you ever checked how much it did cost you over the years?

The IB API is actually quite easy to work with - I fiddled around a little bit with it. You should be able to integrate it with pretty much everything - it opens a socket to your local version of TWS.

Again, I would be quite interested in hearing anyone's opinion on a IBKR / ETFC pair trade. Seems like a decent idea at first glance.

[oddballstocks]

"Interesting, I guess I didn't know about the $100k account thing.  How do they manage accounts are they all combined for a household value?  I have some IRA's with $10k in them.  They're well worth investing as part of the larger portfolio, but getting slammed with the fees on those isn't fun."

All accounts are independent (if you are an advisor, there is a more nuanced answer, and I think you can aggregate fees to kill the minimums if you do a friends and family setup)... so your IRAs would get hit baring the prior provisos.

"Does IB force a FX back to the home currency?  Not sure I'd like this."

No, I think there was an assumption in the original comment that you (as in Nate) would want to do this, I agree based on what you shared about your trading, that you pay 1% one time, and then you can keep your earnings/returns in the foreign currency with no penalty at Fido.

"One thing that intrigues me is their API access.  I'd love to write something that connects and executes trades through this.  In browsing the documentation it appears I could integrate this with our desktop software.  But I don't know how many users have a Bloomberg but trade through IB, seems like a strange combo.."

I think the combo is becoming less strange.  But selfishly, if you do ever decide to go down that path, please keep me posted on your experience(s)!

I always get too jacked up and post to much on IBKR when it comes up, but if I had to say one thing about them that I like most is that they essentially are very similar to Costco in the brokerage space.  They provide a somewhat premium service (not necessarily for everyone) and they provide it with a cost plus model.  They don't try to nickel and dime you unless it goes back to their cost structure (eg, IRAs have additional paperwork for the custodian, so they charge for this vs. taxable accounts).  IB's motto is to make sure that every account they have is at least a breakeven proposition... and beyond that, if they build it, people will trade.  The beauty is that in my almost 10 years with them, you see steady improvements, and continual (but lumpy) cost reductions.  It's not always pretty, but it's always getting better, and somewhat amazingly it gets better without you knowing it (which is frustrating as an investor...).

I can't speak badly of Fidelity as I think they do a good job, but I find companies like IB very rare in that they acknowledge what they are good at, and they try to keep doing it better, and they treat their customers fairly with very transparent pricing.  To me as both an investor and user, I just like it.  I know it's not everyone's cup of tea, but I think most on this board, if forced to start from scratch, would probably be happiest / wealthiest by choosing IB.

Fanboy out.

Ben,

Appreciate the response.  The minimum is a killer for a retail investor with a lot of accounts.  I have a larger taxable account and then various IRA's.  For a husband/wife I don't think it'd be unusual to have 4 IRA's (2 Roth's each, 2 Traditionals from 401k rollovers).  That's killer, $480 a year in minimum trades plus the $120 in IRA management fees for a total of $600 a year without realtime feeds etc. 

I bring up IRAs for a reason.  For many investors the IRA is where a significant portion of their assets reside from 401ks in the past. 

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On the API.  I dug into this further and read a lot of their docs.  Their API is a lot simpler than what Bloomberg provides.

It looks like if we wanted, and users wanted this I could create a version of CompleteBankData that runs entirely from an Interactive Brokers account.  We'd pull some fundamental data (pricing) from IB and combine it with our bank data.  You'd be able to trade out of the application.  If there is real demand for this please email me.  If I find some users who'd commit to saying they want this and they will pay for it upfront we will build it.  We'd take our Bloomberg app and just change the datasource and add in trading (if desired).  If there's a market demand for this (read: people will commit to paying) I'd love to create this.  Looks like users would need to pay for realtime data ($10 a month plus Reuters fundamentals $39 a month so $49/mo).  Really interesting...


---------------------

One thing that blows me away by IB is the fanatical attitude of users.  This is very appealing.  There are few brands where users are fanatical about how great a product is even if it isn't.  To me that says a lot.