P123 ---and--- Interactive Brokers

Manage
1

Today’s communique from Interactive Brokers announced that Portfolio 123 has been added to the IB list of “third-party integrated software solutions to our Commercial Tools program”.

Does anyone know if this adds some functionality to P123 for IB customers? Or is it just a promotional relationship?

Oh, IB users can vote and/or add comments to the P123 listing on the IB site. I’ve added my recommendation for P123 and I see a couple others have as well. Comments are limited to 150 characters so you have to be concise.

2

I’d like to know what Commercial Tools are being developed that will link Portfolio123 to Interactive Brokers.

There is a lot of potential for adding a whole world of fundamentals to the platform.

Here are some of my simple ideas that I’ve just quickly thought of that I would like to see:

Show the top 50 or 100 stocks of a chosen ranking system in a watch list.

Display the rank in a column in the watch list based on a chosen ranking system. Maybe allow showing the ranks of multiple ranking systems (in multiple columns). The ranks should automatically update as the days pass.

Show individual factor ranks.

Fundamental factor based alerts. At the moment the Trader Workstation only has price and volume based alerts. Even though the fundamental data is not updated in real-time, it would still be useful to see the alerts the next morning after an overnight update of the fundamental data in Portfolio123.

I haven’t thought much about whether these are feasible. I just thought I’d throw in a few quick initial ideas to possibly develop from.

3

Hi Guys,

I’d like to caution you guys about the use of Interactive Brokers (IB). When I used to use them, my experience was uniformly bad. FYI, IB goes after small-small traders with little or no money and little or no experience. However, guys, this is about your money and your life, therefore feel free to use any broker you wish.

Robert

4

I’m very happy with IB so far (about 6 mos or so).

What problems did you have Robt. ?

Lindsay

5

Hi Lindsay,

Thanks for asking. There have been too many issues with IB. In the last couple of years I have made a big effort to forget the bad and remember the good about everything, including IB. But, if you really want to know, one big-big issue that sticks out in my mind is IB’s no service customer service, by minimum wage people.

Robert

6

At the moment IB’s relationship is simply promotional. If you’d like to see some of P123 features more integrated with IB’s platform (or any platform) ask your account manager to look into it. We are exploring providing some functionality to brokers, which will increase our exposure to a very targeted audience: the do-it yourself investors. I believe this would be a win-win situation for everybody. Thank you.

7

IB has disappointed me a lot with pretty bad customer service. In many cases they will not try to resolve a problem at all but just say “this is how we work”.

It is even funny to me that they had the optimism to go public.

Really the only reason I still have accounts with them is the low commissions. Such commissions will let someone manage even a small amount in to a pretty deversified and dynamic portfolio. So agree with a previous opnion that they are geared towards serving small investors. (This has its positive slant).

Any of my portfolios that will not be hurt by a bit higher commissions have been moved with other brokers.

IB have some rediculous rules and ways of doing business nobody else has.

BTW talking about low commissions I hope all of you have already noticed zecco.com - $0 commissions (up to 10 trades a day, 40 per month) $0 minimum deposit requirements

Other low commission brokers I like: thinkorswim.com, izone.com of TDAmeritrade

I started realizing that it has become valuable to me to work with borkers that have a solid clearing house behind them like Penson, Ridge (fomerly ADP) that do not play mickey mouse in the banking department.

8

Hi Vlad,

hope you’re doing well. Sorry to hear that you’re disappointed with IB.

I’m working with them for years now and never had any serious trouble with their service.

I would not say IB is for the “Small Trader”. The minimum for new accounts is at 5K now. Most of the tools they offer with their TWS are for institutional trading.

Also, when you look at the international presence of IB and the wealth of products you can trade with them from a single account, I don’t think they do all this for a couple of small wannabe traders who generate 30 or 50 bucks in commissions a month.

IB in Germany ( Timber Hill ) for example stands for a large part of the daily trading volume at the Options and Futures exchange EUWAX - the most liquid Options and futures exchange in Europe. Certainly not due to all the “small german traders”. I think, a large portion of the options and futures trading at many other exchanges in the world is executed through IB as well.

They (IB) have been in insti-business far longer then they are now offering their service for retail customers.

Well , I don’t want to sound like a rep of IB - which I’m definitely not !

I just want to let others know that there are also satisfied IB clients who enjoy their low commissions along with many other advantages.

And yes, I do have also accounts with 2 other brokers - because IB does not yet offer trading in certain products - such as mutual funds or so called “certificates” - which are very popular here in Germany

regards
Stefan

9

Vlad is right about the terrible customer “service.”

Also, site navigation is incredibly difficult, and they are not at all interested in making anything more user-friendly. Example: If you have 2 accounts (say regular & IRA), you must sign in to each individually. Another pair of sign-ins is required if you need to access customer service. And to top it off, they require you to enter a separate password generated at each sign-in by a security dongle. Finally, their statements and reports are hideously complex.

Their rep explained to me that all of this is because they are geared tyo the institutional client. We retail clients are just tolerated, it would seem.

I do like the commissions. I’d also be interested in zecco but for the adage: No free lunch. They are making their money somehow, and I’d rather pay straight-up commissions than through hidden charges.

10

Privateer wrote: “I’m working with them for years now and never had any serious trouble with their service.”

Privateer,

My experience matches yours. I am a happy IB customer perhaps because I understand (and accept) their rule of thumb: if a user can do it him/herself online then don’t bother contacting them by phone.

Since I live in Canada I do not have access to some of the other deep discount brokers operating in the US. I am very glad to have an account at IB which lets me trade US, Canadian and European stocks. I also have accounts with TDWaterhouse and CIBC World Markets, but I much prefer IB.

I have had occasion to contact them twice for trade related measures that could not be done online and I spent very little time waiting on the phone. And both times the rep fixed the problem within a couple minutes.

Another time I emailed them about a problem that turned out to be my mistake (I mixed up two similar tickers when reading my accounts statement). The reply was polite.

The only time I did not get full satisfaction was a question about MS Windows XP Tablet edition complains at the end of TWS updates. Apparently the Tablet version of XP thinks that one of its system files has been replaced with an undated version. Although TWS works on my Tablet and my tablet works fine too, I would rather not have Windows give me a warning after TWS updates which come every month or so. I don’t think their tech support is fully up on the Tablet software – but that is likely true of many other brokers. On the other hand, the problem might be that my Tablet manufacturer has added a none standard file to the Windows directory. My experience with Tech support from my Tablet manufacturer has been very poor. IB’s support is much better.

if it is a pressing trade issue, I phone, other wise I email customer support.

11

I agree customer service at IB is mediocre but you have to consider the low commissions scheme and the number of functionalities you get. In summary:

Positives[]Low commissions
[]Direct market access to a large number of exchanges and products.
[]Conditional orders. Bracket orders. Time in force options.
[]Advisor accounts. Automatic shares allocation to client accounts.
Negatives[]Customer Service
[]No mutual funds
[*]TWS GUI
I am not sure the other brokers mentioned on this thread offer direct market access to the same number of exchanges and products. That for me is a big plus: I’d rather have my order routed directly to the exchange than handled by a broker internally: http://www.interactivebrokers.com/en/general/about/mediaRelations/08-22-2007.php?ib_entity=llc

12

Hi Jerrodmason,

actually, I have no idea what you mean with " incredibly difficult site navigation". I use either their TWS - which has been expanded a lot over the last years primarily because of user requests, or their simple webtrader application. The first is installed on my PC and I don’t even have to navigate to the website, the second is simply called up by using the scroll list on their website. - Not much to navigate either, actually.

Of course, for security reasons, you need to be logged into your account administration site if you want to contact Customer service. I have not yet experienced the “Password dongle” you talk about. What they do is, to send a number code ( token) each time you execute something material in your account - such as withdrawals, changes in user data and so forth - just another security step. Don’t see that as a problem since I don’t change account information every day and I also do not execute withdrawals or fundings every day.

I work with IB for more than 5 years now . I do around 300 roundturns a year but I’m not a daytrader with 300 roundturns a day. Think that’s a fair amount of trading. I save more than 70% in comissions to the next best broker who offers a similar package. This means several thousand dollars a year. For this amount, I can live with a few tokens to be entered.

Most of the time I use their Smart Routing and I make use of their advanced order options as well as of the basket trading. Neither of them is overly complicated.

Statements :
Well when you have a multi-purpose margin account from which you can trade futures, stocks, options, FX etc. on various exchanges in the world and in different currencies, you need a slightly more complicated reporting format then a simple brokerage statement from a regular online broker who offers trading on US exchanges only. The report format evolved along with custom er requirements over the years - just as the TWS.

At least, it contains all the info I need for my tax report.

The reports from ym german online brokers, let alone from my bank, are not a single bit less complicated today compared to what I get from IB.

Best regards
Stefan

13

As I said earlier, I am very happy with IB. On Monday I made about 10 trades, got great fills and the total commission was less than $30. (its 0.5c / share). I think all of the above comments are correct but their “validity” depends on your expectations. IB seems to be more of a “wholesale” broker - I gather many financial advisors manage their client accounts on IB. I doubt you’ll get much handholding - go to Schwab for that. It’s true that the interface is a bit overwhelming at first (mainly because of the richness of their offerings). And it is true that the “security dongle” is a bit cumbersome (I’d prefer a USB plug type I can carry on my key ring). There is great flexibility and that can be overwhelming to some.

But for very fast executions at a great price, in my experience it is the best.

Cheers

Lindsay

PS Earlier in another thread we discussed the possibility of having our rebalance recommendations in a format compatible with IB Basket trades for those wishing to submit their rebalance trades in one foul swoop

14

(1) For P123 rebalance, you can use Excel to do all the calculation and allocation and submit to IB TWS in Excel directly. Of course, no hand holding from IB. Read IB Excel API manual.

(2) In addition to schedule D, IB provides daily/monthly/yearly MTM (marked to market) statements for US IRS form 4797. Very convenient for traders in securities and money managers, and I have not seen it from any other brokers.

(3) For IB security dongles, I believe you can opt out. I read it somewhere in its web site, but I have not tried and probably won’t try after reading the story about an ETrade account holder found nothing left in his retirement account after a long trip back to India, obviously due to password thief.

Just my 2c.
Hengfu

15

Yes it’s true, their commission rates appear to be low (for accounts with little or no money). Example: In Canada if you trade 100 Shares @ CAD 50.- per share, all you pay is (1% of 100 shares =) CAD 1.00, which is low-low.

However, IB’s commissions are high-high (and shouldn’t be this high for a discount broker with no service customer service). If you have got more money in your account, and if, for example, you trade 5,000 Shares @ CAD 50.- per share, you have to pay them (1% of 5,000 shares =) CAD 50.00 per trade, which is way too much for a discount broker with no service customer service.

This HIGH commission does not even include slippages of up to 1,000 CAD. I suppose IB has to make money, too.

Robert

16

I’ve been using IB for a few months, and I really love it. The best thing about commissions is that it is all per share–this is especially nice if I get a partial fill on an order. Also, options commissions are nice and low.

I do find that I get much better fills with IB than I got with anyone else (Izone, SogoInvest, Etrade).

The best thing about IB for me is that they offer a few neat features no one else offers: indications of how many shares of a stock can be sold short, short selling of OTC stocks, and portfolio margin (which allows me to use much more margin with my hedged portfolio than I could with a standard Reg T margin account). I actually like the TWS user interface, and it is very customizable.

Of course, customer service sucks. But it is no worse than what I got from Etrade. I found Izone to have pretty good service.

Michael

17

Well, live and learn. I’ve been using IB’s WebTrader, and only today began playing with TWS … which is awesome. It will take a while to learn it, but I can see already that the power and order fliexibility is worth the effort. I take back all the nasty things I said … except the observation that their customer service is nonexistent.

18

I am glad there are people who like IB. If they are a profitable enterprise they must be doing something right and making some of their clients happy.

There a many things that I do like about them. The TWS has some nice features that many other platforms do not have.

Still there are so many things that bother me with them I am actively seeking to move all my accounts from them elsewhere.

Some of the things that I dislike in particular:

  • extremely bad statements; I do have accounts with other brokers that do futures, options and stocks and all of the statements of the other brokers look, well, like statements, not like machine code that a programmer needs to decipher

  • extremely bad account management site navigation; (again I actually like most of what TWS has to offer); I have expertise in the IT area: I am not sure how IB actually survives and does not have other problems because of the bad infrastructure design of their website

  • because many position management and trading is done in the TWS (non html based) there is very limited functionality to let you copy-paste stuff from the trading platform to text or Excel; there is some functionality to export a few of the screens to Excel readable file but with great limitations – it will export what ever columns it decided not what you see on the screen

  • extremely bad customer service; in most cases they will not apologize or promise any remedy action for a problem but will simply say that this is how they work

  • the feeling that I am dealing with a software vendor (of an extremely buggy program) not with a securities firm

19

I can’t comment about options/futures since I havn’t traded those, but I now have about a years experience with IB for stocks and ETF’s. I have had no problem getting them to answer any of my questions and I have had no trade issues that needed to be fixed.

I like how IB takes security very seriously. They seem to be leading in this area with Dongle. Yes, dongle is annoying at times, but there is option to opt out by sending them a form requesting that. Just ask them to email you the form.

I also like how many of my trades get price improvement.

I have found that I get quite good and polite (albeit, they do want to help you quickly and then move on to next customer) customer service when I call in the morning before or after the market opens. This is what IB has advised me to do. They told me they have much more staff on hand during that time iat that time. They told me that after the market is closed and, the wait is long and most of the people who know how to fix things are already gone for the day. So, my typical wait time has been 1 or 2 minutes during that morning time of day. After market hours, wait time can be 10 minutes or more, so I just set phone on speaker, go on and do other things and wait for them to answer.

Also, you can enter questions throught their online interface and they reply usually within 24 hours. And if answer is not clear first time, they clarify any followup questions.

No doubt, IB is not like Schwab or Fidelity in terms of handholding and statement clarity and ease of interface and tremendous after hours customer service.

Regarding statemetnts, I do like the many options they give for statement download. Like into Excel mode, where it is easy to cut and paste whatever information you want. Also, their statements are busy because they seem to report a lot of information about the trades, including time of purchase and sale. Biggest thing I personally find missing is easy way to see P/L. I think Jerrod tried to address part of this issue with his Excel downoad some time ago.

But as has been commented on, price is just amazingly good.

Anyway, that is my experience.

Kurt

20

However, IB’s commissions are high-high (and shouldn’t be this high for a discount broker with no service customer service). If you have got more money in your account, and if, for example, you trade 5,000 Shares @ CAD 50.- per share, you have to pay them (1% of 5,000 shares =) CAD 50.00 per trade, which is way too much for a discount broker with no service customer service.

I don’t know where you get this from, according to the commision shedule at: http://www.interactivebrokers.com/en/accounts/fees/commission.php?ib_entity=uk

The commission is 0.01 CAD / Share, subject to a minimum of 1 CAD and a max of 0.5% of trade value.

Therefore 5,000 shares at 50 CAD should cost 50 CAD, and since the trade value is 250,000 CAD, thats a commision rate of 0.02%, or 2 basis points. I consider that to be “low low”!