# Interactive Brokers?



## Flash (Nov 25, 2014)

Anyone have any experience with them? I was looking at their fees and are very significantly lower vs the big banks (10$) or even other discount brokers like Questrade.

Looking at their commission table, they display as 1c per share (min. 1$, max 0.5%)
https://www.interactivebrokers.com/en/index.php?f=commission&p=stocks1

They seem a great option vs big banks brokerages of 10$ for every trade. So usually trading in ~100 shares increment, you basically maximize your savings to 1$ each time.

Any reason why I shouldn't be changing to them? 
What I do require is the ability to transfer money from my Canadian bank/credit union into the settlement account and vice versa, as I currently do with the investment account I have at one of the big banks. I assume they come with canadian settlements accounts, using institution and transit numbers (and not some routing numbers US uses, and thus not able to add it).

Thanks


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## james4beach (Nov 15, 2012)

I used IB for 8 years, but closed my account last year. You can do EFT (electronic fund transfers) in and out of the IB account, in CAD, from a standard Canadian bank account using transit #s etc off of your cheques.

There are two reasons I stopped using them. One is that I'm not a frequent trader, so I found their monthly minimum fee too high (creates $120 in minimum annual fees).

The second reason is a big shock I experienced when they suddenly changed their margin requirements resulting in margin calls. It's described in this thread
http://canadianmoneyforum.com/showthread.php/16216-Margin-Call-At-IB

Basically, they made huge changes in margin requirements and gave just a couple business days notice -- not even enough time to transfer in more cash to meet margin calls. For instance, I held TSX- listed XFR whose loan value went from 70% down to 0% within just a couple days. This is despite IB listing it on their page as available for reduced margin due to IIROC's list. So their policies were not internally consistent.

It could have just been a temporary system glitch while they overhauled their margin system, but it made me lose confidence in their treatment of margin.


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## Causalien (Apr 4, 2009)

james4beach said:


> I used IB for 8 years, but closed my account last year. You can do EFT (electronic fund transfers) in and out of the IB account, in CAD, from a standard Canadian bank account using transit #s etc off of your cheques.
> 
> There are two reasons I stopped using them. One is that I'm not a frequent trader, so I found their monthly minimum fee too high (creates $120 in minimum annual fees).
> 
> ...


Really depends on what type of investor you are. IB caters to a specific demographic of investors. i.e. day or weekly traders. If you trade less than that, I don't recommend it even if the fees are attractive.

The fees are waved for assets of 100k or more, so for some it is not really an issue to consider. IB is perfect for me since I never depended on Margin hence no margin call against me is possible.


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## james4beach (Nov 15, 2012)

The platform is second to none. I still miss those beautiful real-time charts; it puts the regular bank brokerages to shame.

Quotes and execution was spectacular. I traded the entire 2007-2008 crisis with IB (plus TD as backup broker*) through some crazy volatility. Their system never let me down. Access to real-time futures was pretty amazing too.

Sigh, memories.


(*) Day-traders: you _are_ remembering to maintain a secondary brokerage for emergency position offsetting, right?


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## Causalien (Apr 4, 2009)

james4beach said:


> The platform is second to none. I still miss those beautiful real-time charts; it puts the regular bank brokerages to shame.
> 
> Quotes and execution was spectacular. I traded the entire 2007-2008 crisis with IB (plus TD as backup broker*) through some crazy volatility. Their system never let me down. Access to real-time futures was pretty amazing too.
> 
> ...


Used to ne an engineer, so triple redundancy here.


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## dotnet_nerd (Jul 1, 2009)

I use IB and love it. Notwithstanding the margin issues mentioned above, but I'm very careful and don't use a whole lot of margin.

I do a lot of options, covered calls and selling puts. The ultra-low commissions are great.

The iphone/ipad apps are killer. And they're being improved constantly.

One area they're a bit weak is the annual tax reports. They're buggy and get revised with new "fixed" versions. Last year they revised some T5's without me realizing it. I got the dreaded Review Letter from CRA and had to re-submit a bunch of stuff. Nothing to pay but it was a bit of a pain.


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## Woz (Sep 5, 2013)

I use IB and am generally happy with them. 

The reason not to use them would be the monthly account fee and data fee (assuming you’re not a frequent trader). However, if you maintain a $100k balance you can avoid the $10 monthly account fee and you can use a second brokerage for quotes to avoid the data fee.

One of the best parts about IB is the cheap forex trading. Convert up to $100k from CAD to USD for $2.


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## GOB (Feb 15, 2011)

I spent several thousand dollars in commission last year with IB - I'd have a heart attack if I saw how much that would equate to with other brokers. Great platform for heavy options traders.


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## dotnet_nerd (Jul 1, 2009)

GOB said:


> I spent several thousand dollars in commission last year with IB - I'd have a heart attack if I saw how much that would equate to with other brokers. Great platform for heavy options traders.


LOL. I'm nowhere near that level of trading. 20 trades a week maybe.

The iPhone app is killer like I mentioned. I'm able to take advantage of opportunities, like yesterday for instance, while away from the desk.


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## GOB (Feb 15, 2011)

Yep, for those of us who have day jobs a good, reliable mobile app is essential.


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## Flash (Nov 25, 2014)

Thank you for the feedback guys. Really thinking of using this. 

Just to clarify, the account fee is just the (10$/mth - commissions) correct? So 120$/year if commissions (which are 1c/share) don't go above 10$/moth. Basically saving moneys if I would do more than 12 trades a year with a big bank brokerage (since most have 9.95/trade)

Regarding the data fee, are they similar to Questrade, where you don't have real-time stock prices? For example I currently use one of the big bank brokerage and I can get a real-time price quote on the stock I plan to buy or sell. Would this not be possible with IB without this data fee? If the quotes are delayed (15-20 min), how exactly do you know the ask and bid price to set my limits?

I'l mostly use it to trade equities with normal buy and sells (with limits) and trailing stop. No options, covered calls, etc.

Regarding settlements account, is it similar to big bank brokerages? Can I have 2 settlements accounts, 1 in USD and 1 in CAD? And can I transfer from my credit union via linking the accounts?


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## Woz (Sep 5, 2013)

Yes, your understanding of the account fee is correct.

I haven’t used Questrade so I can't say if it's similar, but at IB if you don’t subscribe to the data then you don’t get real-time quotes like you would with most brokerages. The US Value Bundle is $10/month and the Toronto Stk Exch is $6/month. The data fee is waived if you trade $30/month. Delayed data is free. 

I think the data fees are expensive so I don’t subscribe to them. I use my secondary brokerage account to get the real-time quotes. It’s a bit of a pain since I need to be logged into two accounts, but to me it’s better than paying the data fee.

With regards to settlement accounts, it’s a bit different. You have a single account which can hold both CAD and USD. The trade is settled in the currency of the stock and currency conversions are not done automatically. So, if you have $5kCAD and $0USD and bought $5k of a US stock XYZ your account balance would be $5kCAD, -$5kUSD, $5k XYZ. You would then need to do a forex trade to convert CAD to USD (or before you did the trade if you wanted). If you didn’t do the forex trade then you would be charged interest on your -$5k USD balance.


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## Flash (Nov 25, 2014)

Thanks, and transfer in-out of the account from credit unions, is the same as with the big banks? (link account online via transit, institution and account number from my credit union?)


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## m3s (Apr 3, 2010)

GOB said:


> Yep, for those of us who have day jobs a good, reliable mobile app is essential.


I've been saying this since the iPhone came out

I assumed then IB and Questrade would lead the way and I've stuck with them for it. As a lightweight trader I prefer Questrade's mobile and tablet platforms now but IB is a much more professional setup (comes from the US..) The big banks can't hold a candle to them as far as I can tell

If only IB would link registered accounts now for "margin power" like Questrade and combine the total to waive the $10 monthly fee. Those do add up..


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## m3s (Apr 3, 2010)

Flash said:


> Thanks, and transfer in-out of the account from credit unions, is the same as with the big banks? (link account online via transit, institution and account number from my credit union?)


IB links to your account and you can pull or withdraw money by logging into IB. Works with freebie Tangerine just fine so I'm sure it works with any mainstream paid account.


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## xyztrade (Dec 14, 2014)

Woz said:


> I use IB and am generally happy with them.
> 
> The reason not to use them would be the monthly account fee and data fee (assuming you’re not a frequent trader). However, if you maintain a $100k balance you can avoid the $10 monthly account fee and you can use a second brokerage for quotes to avoid the data fee.
> 
> One of the best parts about IB is the cheap forex trading. Convert up to $100k from CAD to USD for $2.


whats the second the brokerage for data do you recommend?


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## xyztrade (Dec 14, 2014)

one downside i have experienced with IB is with their tfsa USD component. I dont know about other brokers but IB requires funding for TFSA in CAD only which is a bit of weird (maybe they have perfect reasons for it). For example, if you already have some USD in you bank account you cant transfer them into TFSA directly. You would need to transfer some CAD first, and then convert them into USD if you need to use USD in your TFSA.

And the other thing is the market data fee. they can add up a lot if you are trading in multiple exchanges.


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## Flash (Nov 25, 2014)

xyztrade said:


> whats the second the brokerage for data do you recommend?


I assume all other big bank brokerages, as I think they all come with live quotes (the one I currently use does). I think you just have to look which have the lowest minimum in order to avoid the 25$/quarter admin fee. I know RBC is 15k, not sure about others, but I think somewhere in the range of 15-25k.



xyztrade said:


> And the other thing is the market data fee. they can add up a lot if you are trading in multiple exchanges.


I was actually looking into that. Apparently you have to sign for the ProTrack if you want to trade on TSE/CVE and NYSE/NASDAQ?


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## xyztrade (Dec 14, 2014)

> I was actually looking into that. Apparently you have to sign for the ProTrack if you want to trade on TSE/CVE and NYSE/NASDAQ?


with fasttrack you are able to trade on those exchanges mentioned. protrack just let you trade different instruments from the get go, but may take a longer time to get approved. i applied for fasttrack first and then add margin accordingly for other margin required instruments such as futures and options.


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## Flash (Nov 25, 2014)

Thanks, good to know
Do they have any promos to switch to them? Any transfer fees coverage?


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## rbc (Feb 7, 2015)

I have used IB as well. It's great for active trading, not quite as good for buy and hold. It has the BEST in terms of what you can trade, basically any market in the world. Especially nice for example you can trade futures (bought oil futures below $50 for the bounceback) and you can control contango (which erodes a lot of your profits even if you're right if you invest in something like USO etf etc). 
Another huge plus for IB is IF you trade on margin, their margin rates are the lowest in the industry. Saves me $1000s a year easily just from that. 
I work for RBC (in buy side research) but I would honestly not use RBC as a brokerage even for buy and hold...discount is the way to go unless you need a lot of hand/holding management and IB is pretty good. There's another one I used to use called OptionsHouse (was a little more difficult to transfer CAD in) but they merged with Trademonster and now they are not very good anymore


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## namelessone (Sep 28, 2012)

I like IB. Initially, the low commission fee and low margin rate are the advantages at IB. Over the long term, as asset grows, the flat per transaction commission fee at big bank is more attractive. However, the margin rate advantage will still exist in the long term. I'll stick with both IB and big banks. I do more adventurous trading with IB(using margin) and do equal weight buy and hold(with cash) with big banks. 

Right now, IB charges 1.6% margin. RBC charges 4.75%. Huge saving with IB. 
As for IB margin call risk, buy high quality shares, avoid too much overweight in one security. Have back up funding of around 50% of net liquidation value. I also use a spreadsheet to calculate how many % drop in my IB margin account will cause margin call. (Right now at -50%).


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## dime (Jun 20, 2013)

What turned me off from looking at IB a few years ago was that they had a clause in the terms that said as an investor I'd be at risk if my account was hacked. I was attracted at first to the cheaper commissions. 
TD on the other hand offered protection guarantees against that. It's a very real concern these days and when I found my computer full of viruses one year it convinced me of how it's always a risk. You read about it in the news all the time that people wake up to find their accounts have been hacked and emptied.


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## m3s (Apr 3, 2010)

Unlike Canadian banks, IB has 2 step verification.. (physical key) So as long as I can protect my physical key.. or call them if it's stolen.. much cheaper rates.

It's extremely easy to hack anything that doesn't use 2 step verification. Canadian banks just chose to charge you higher fees to cover that risk instead.


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## Flash (Nov 25, 2014)

Coming with another question. Does IB have ECN fees like questrade? Or just the flat 1c/share?


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## Woz (Sep 5, 2013)

It depends. When you open your account you can pick between Fixed or Tiered commissions.

Fixed is easier to understand. You pay a flat $0.01 per share for Canadian stocks and $0.005 per share for US stocks. Minimum commission is $1.

Tiered is a bit more convoluted with ECN fees, clearing fees, and more. However, for a typical trade you'd pay $0.018 per share for Canadian stocks and $0.0064 per share for US stocks when removing liquidity. $0.00518 per share for Canadian stocks and $0.002218 per share for US stocks when adding liquidity. Minimum commission is $0.35 for US stocks and $1 for Canadian stocks.

Personally, I went with the tiered commission.


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