Can I trade in an IBKR Lite account from Portfolio123?
(Apologies if this has been answered elsewhere)
-Carl
In February 2021, I attempted to do this. IBKR did not allow this Link saying I would need an IBKR PRO account for their API support.
“Free” trading is a mirage. That goes for all brokers–including Robinhood. That’s because “free” trading costs more on executions.
With at least one exception: Fidelity. IB and Fidelity have the best executions in the business, and that didn’t change when Fidelity eliminated its commissions. Over the last 12 months I’ve gotten over $5,000 in price improvements on my orders.
Gregg,
I was not going to comment because order price improvement was not on your list.
But now that it has been mentioned I have to agree with Yuval. What Fidelity says about order price improvement on their web site is completely legit.
I too was at Folio Investing and loved the Folios. I did not move to Fidelity all at once. For a while I placed the same orders with Folio Investing and with Fidelity (at as close to the same time as possible and alternating which broker went first).
My comparison was with market orders. Folio investing did make market orders in addition to its window trades. Fidelity clearly had a HUGE advantage in order price improvement for market orders over Folio Intesting. No question on this. Window orders were not any better as near as I could tell although window trades happened over a period of time (as you know).
Folio Investing did take payment for order flow: it said so on their own web site. Disclosure is required by law (but not always on the home page). Folio Investing basically never beat what they are required to do: trade at the NBBO (National Best BID and Offer) or AT the bid/ask spread.
I cannot say with 100% certainty how Fidelity makes its money and why they are better. But they still claim to not take payment for order flow. Fidelity had disclosures too (when I looked). I am hesitant to summarize as it was long and not really meant to be clear. And what I read may have changed.
But they have offered “Block Trading” to me. That is where—usually institutions— pay Fidelity for better execution in their Dark Pool. I think they use retail investor’s trades in their dark pools giving the retail investor a break too (when the trade is used in the Dark Pool). But charging the institutions for the Block Trades for revenue. The price they quoted to me was not cheap.I went with VWAP or percent-of-volume orders thinking the commissions (at the time) were a bargain.
A different business model for Fidelity, I believe. But for sure I saw enough evidence that there is a difference for some reason—whatever the facts may be.
But even leaving Folio Investing out of the discussion, I have data to show that what Yuval (and Fidelity) say about order price improvement at Fidelity is absolutely true and other brokers may not do as well with market orders.
I miss Folios too.
Jim
Thanks for clarifying about Fidelity. That’s amazing. I wonder how they make money.
Does anyone have experience with order execution (fills) on Interactive Brokers PRO vs. Fidelity (or other brokers)?
I don’t have anywhere near the trading volume exposure that Yuval mentions above, but I feel like IB and Fidelity have consistently given me good executions. I also use Schwab and feel like their executions are good also. There’s a report I recall (sorry can’t remember source) that ranked Schwab a bit lower than IB and Fidelity, but at least in the things I trade I haven’t noticed much difference in the 3. Again, this is on low volume of trades, and I set my min daily liquidity somewhere around 250k-300k except on a model that I trade with reduced $ amoutns, so I don’t get into the highly illiquid names very often. On the illiquid stuff, one concern with IB is you can get annoying bots hitting your orders for 1 or 5 shares triggering the minimum $1 commission - so I’m a bit more hesitant to trade illiquid stuff with wide spread there.
Neither Fidelity nor IB Pro accept payment for order flow. This gives you the absolute best price execution possible. All other brokers accept some PFOF, though in the case of Schwab, it may not be very high. From everything I’ve read and experienced, Fidelity and IB Pro have exactly the same quality of order execution. The primary differences are commissions (0 from Fidelity, per share from IB Pro), margin rates (very high for Fidelity, incredibly low for IB Pro), the availability of a wide range of order fulfillment algorithms from IB Pro (including dark pools), more availability of international stocks from IB Pro (available from Fidelity too but only for cash accounts), the actual trading platforms (Fidelity’s is antiquated and a bit clunky), and customer service.
As for how Fidelity makes its money, it’s not from trading but from margin interest and the reinvestment of customer cash.
There’s a great deal of information about this here: https://www.stockbrokers.com/guides/online-stock-brokers. Their guide to PFOF is invaluable: https://www.stockbrokers.com/guides/order-execution.
Not much of an impact at present interest rates, but the cash in my Fidelity account gets swept into a money market account automatically (and the interest goes to me). I also have the option to sweep the money into an FDIC account. Maybe I will use this when I get paranoid about the markets. Images: from my account where money has been swept (amount not included) and information from Fidelity.
People can look at other accounts but if Fidelity makes any money from me at all it is indirectly from my flow of orders to their dark pool—and perhaps from my use of limited margin. Although I have never seen a fee for my use of limited margin in this SEP-IRA account.
So for reasons unknown they still put me into their VIP trader system (recruit me there and go out of their way to keep me happy) despite no visible means of revenue from me (since I have not opted for their Block Trading offer). Honestly, not sure why. Some of the above about dark pools was speculation to be sure. But I do not discount it yet. Would they go out of their way to make a lot of orders for me with no revenue? Obviously not.
I can say, after discussing fees with Fidelity that it would not take a lot of Block Orders to make a tidy sum of money. And they have full control of my orders—to use as they wish— as long as it meets the national NBBO requirement. They have to get orders for their dark pool from somewhere. If I were to be surprised, it would be to find that they weren’t using my orders in their dark pool to keep the high-paying Block Traders happy. And they will not find me complaining about the price improvement if that turns out to be the case.
Jim,
When you used Folio Investing, did you have multiple Folios and use the ‘Trade Entire Folio/Update & Exchange’ feature? To use this feature, I built a Watch Folio with the stocks selected in the latest run of my P123 screen. Then using the ‘Trade Entire Folio’ feature on my existing live Folio, I selected the new Watch Folio, set the weighting to equal, let Folio calculate all the Buy/Sells from a $ perspective, and submitted the Trade (actually multiple trades submitted w/ one button push). Typically, the P123 Screen run through Folio trades submitted was less than 15-mins.
How does the Fidelity trading toolset handle multiple Folios and ‘Trade Entire Folio/Update & Exchange’ per the above? I think some of the above is achieved with the P123 and Tradier integration by using Live Strategies. Just unclear on the risk of using Tradier as a brokerage for larger account sizes.
Thanks, Gregg
Gregg,
Here are some partial answer to some really good questions.
I used multiple Folios but they mirrored P123 ports exactly. If one of my ports me had me buying 53 shares I would buy 53 shares in that Folio. Some days I would be buying XYZ in multiple Folios. I don’t think I ever used the "Trade Entire Folio/Update & Exchange’ feature. Certainly not regularly.
[quote]
How does the Fidelity trading toolset handle multiple Folios and ‘Trade Entire Folio/Update & Exchange’ per the above? I think some of the above is achieved with the P123 and Tradier integration by using Live Strategies.
[/quote].
Fidelity is not good for this to the best of my knowledge. I am not aware of any way to do this with Fidelity.
I am not sure what type of risk you are concerned about. Are you worried about possible failure of a Brokerage after the published concerns about Robinhood and their seeking (needing) more capital when they were stressed?
I have to admit I did not even yawn at the time with all of my money being at Fidelity (or FDIC bank deposits). Or think about your question much at the time. But now that you mention it….I know nothing about Tradier other than some of those guys were at TradeKing. TradeKing was successful and no longer exists because they were acquired, I believe. I am not aware of any problems with TradeKing (or Tradier). I have no other information.
This is the only other thing I could find that might possibly address your question:
“Congress decided to act to protect investors from failing brokerage firms and to bolster investor confidence in the securities markets. … SIPC protection is limited up to $500,000 for securities and cash or $250,000 for only cash.”
I think that last is an excellent question (if I understood it correctly). I think my answer is not even a beginning on this important subject.
Best,
Jim