Brokerage Recommendation

[schin]

I recently tried Bank America's MerrilEdge, I was disappointed by its bad customer service and especially trade execution on illiquid securities like (options (LEAPS), warrants (e.g. GM+B), ADRs (e.g. FIATY), or low volume stocks (e.g. GNMCA, AIQ).

 

I used my wife's Fidelity account and I get better pricing or quicker execution (i.e. I can see limit trades at market price executed instantaneous. At MLEdge, I could be waiting for 1-2 minutes with no execution.)  I did the same experiment at Ameritrade and it'll go through without latency. I called them about the bad execution and they didn't see it. Whatever.

 

I am debating about moving back to Ameritrade, Scottrade, or Fidelity. All are roughly the same in pricing and offering. Fidelity has is slightly pricier in commisions, but has after hours trading and foreign market exposure (but, I don't really use either).

 

Using this forum, I really don't need the brokerages' research or recommendation, so I'm debating about doing deep discount with good execution.

 

Does anyone have any recommendations for someone focused options, warrants, ADRs, low volume stocks?

 

TradeKing/OptionsMonster? Interactive Brokers? OptionsExpress?

[DCG]

I'm happy with Scottrade, but usually only make a handful of trades a year. Marks"et orders usually fill instantly, but I find trying to time buys/sells down to the penny/second comical.

[writser]

IB and IB only. Check out the discussion in this thread:

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/5965-jp-fujimak-corp/50/

[yadayada]

Interactive brokers I like best. Very cheap in everyway. But I heard there are some brokers that specialize in thinly traded OTC stocks?  But IB has a very wide selection and you can buy small blocks without paying through the nose in commissions.

 

Honestly IB is so cheap I sometimes worry if they make money at all lol. I must be a losing proposition for them. Since I barely generate any commisions and I used their customer service quite often now.

[Mephistopheles]

I found IB's platform extremely confusing, and not user friendly. I also don't like the login process, involving the security code and matching it with your card.

[opihiman2]

Definitely IB.  But, I remember there was a tech start up trying to create a free brokerage.  I signed up with their beta accounts alerts, and now I haven't heard about them in awhile. 

[watsa_is_a_randian_hero]

IB and IB only. Check out the discussion in this thread:

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/5965-jp-fujimak-corp/50/

 

+1

[writser]

I found IB's platform extremely confusing, and not user friendly. I also don't like the login process, involving the security code and matching it with your card.

 

A security code should be mandatory for every large brokerage account as far as I am concerned. Much safer and also works as a deterrent to prevent yourself from logging in every time you're behind the pc.

 

And yes, the interface is not very user-friendly at first. However, there is lots of good documentation available on the IB site. You have to put some effort in it, IB is geared towards professionals. On the flipside their combination of low costs, high possibilities and good service cannot be beaten by any other broker afaik.

[constructive]

I find trying to time buys/sells down to the penny/second comical.

 

Well, if you can squeeze an extra 0.5% of costs per year out of your return, it can add up to ~30% over your lifetime, potentially millions of dollars.

[constructive]

And poor execution at many brokers, while not really quantified anywhere, is just as real as any other cost.

 

If you ever use margin/short positions, options, currencies, illiquid securities, or any foreign market where IB has direct access, I would strongly recommend them. Otherwise if you only trade large cap stocks, brokers like Fidelity or WellsTrade seem like reasonable choices.

[wachtwoord]

I found IB's platform extremely confusing, and not user friendly. I also don't like the login process, involving the security code and matching it with your card.

 

I have 100% the opposite experience. Best in town by far. Maybe it's a generation issue? (I'm under 30).

[meiroy]

I found IB's platform extremely confusing, and not user friendly. I also don't like the login process, involving the security code and matching it with your card.

 

The matching to the card is just a temporary measure, once you fund your account they will send a security device to replace the card.

 

+1 IB

 

[nkp007]

IB

[schin]

Thanks all for your thoughts.

 

I think I'll give it a try. Any thoughts on their margin liquidation process? I've read a lot of people complaint about them being liquidated after the margin requirements change. With examples going from 70% marginable to 0% on certain securities (more stringent than the SEC margin requirements).

 

I don't believe to fall in this case, but executing a strategy like ERICOLOPY's BAC strategy, will it kill your account? Or selling naked puts with a minor downturn?

 

I can understand the liquidations during the meltdown, but during a minor correction?

[ItsAValueTrap]

Thanks all for your thoughts.

 

I think I'll give it a try. Any thoughts on their margin liquidation process? I've read a lot of people complaint about them being liquidated after the margin requirements change. With examples going from 70% marginable to 0% on certain securities (more stringent than the SEC margin requirements).

 

I don't believe to fall in this case, but executing a strategy like ERICOLOPY's BAC strategy, will it kill your account? Or selling naked puts with a minor downturn?

 

I can understand the liquidations during the meltdown, but during a minor correction?

They usually give you a heads up when they change margin requirements.

 

Also, if you don't use more than 1X leverage and don't short, you can't get margin called.

 

2- They do liquidate illiquid positions with wide spreads first.  However, you can tell IB which positions not to liquidate.  You may be better off using less or no margin in the first place.

[ItsAValueTrap]

With examples going from 70% marginable to 0% on certain securities (more stringent than the SEC margin requirements).

In my opinion, it's a good thing that IB has smart risk management and won't let you margin certain things (e.g. Chinese reverse mergers) to a high degree.  You don't want your broker to blow up.

[NoCalledStrikes]

I always thought it would be best to consolidate my brokerage accounts, but I buy a lot of illiquid and oddball stocks and I never cease to be amazed by the differences between brokers.  IB is probably best overall for me because if you have to place several orders to fill your order, you don't get hit by $8 for each 100 shares. (The market makers seem to only want to sell 100 shares at a time when I place an order for 500 shares and then they move the price down a penny or two to see if I will follow them, if I change my order to chase them, other brokers charge me another $8 if I change the order price, but IB only charges no worse than a $1 minimum if I change the price.)  If you trade large caps this isn't an issue.  While IB is cheaper, I don't like paying a half penny a share commission on a $2 stock.  If you need to buy 10000 shares to buy a meaningful position in a low dollar stock this starts to add up.

 

Fidelity has better fills, I can place a market order for 500 shares always get a good fill in between the bid/ask. However, if its illiquid and I place a limit order at the ask, invariable the mm will sell me 100 share and then move the ask up a penny, then I either have to hope I get filled by the end of the day or pay a new commission if I change the order.  IB let's you iceberg the order size or do other tricks to hide your intentions, but Fidelity doesn't. 

 

I have a Coverdale at TD Ameritrade which the other brokerages don't allow. Often with illiquid stocks I have to call them to place an order. Its a real pain in the butt, but then the other guys don't offer Coverdales. I presume they do this to prevent hackers from taking over accounts and running up stock prices in the hacked accounts for the benefit of their pal on the other side of the trade.  I wish they would just put in two factor authentication and let me trade illiquid stocks on line in return.

 

[wachtwoord]

I found IB's platform extremely confusing, and not user friendly. I also don't like the login process, involving the security code and matching it with your card.

 

The matching to the card is just a temporary measure, once you fund your account they will send a security device to replace the card.

 

+1 IB

 

I don't think they will if you have under $100k in your account.

[Ham Hockers]

Definitely IB.  But, I remember there was a tech start up trying to create a free brokerage.  I signed up with their beta accounts alerts, and now I haven't heard about them in awhile.

 

Was it this one:

 

https://www.robinhood.com/

 

[rukawa]

I remember looking at IB and being very impressed by their FX fees which I think are non-existent. If you are a Canadian converting a lot of money to USD then IB makes sense for FX fees alone. This is one reason I was thinking of them instead of Questrade.

[Range]

IB

 

The only issue is if you're in Canada, they can't handle registered accounts (RRSP, LIRA, TFSA, etc).

 

As to the complexity of the platform argument: The learning curve is little steeper than a regular browser platform but you always have the option of using WebTrader to input your trades.

[benchmark]

Seems like IB is preferred by most board members.

 

I use TdAmeritrade, and am considering moving to IB. My TdAmeritrade guy told me that IB is on the sell side, while TD is on the buy side, which would get better fill. Is that true?

 

The other concern I have is if I were to move my account to IB, can they help moving my past trade/records? which is very important coming tax time

[cobafdek]

My TdAmeritrade guy told me that IB is on the sell side, while TD is on the buy side, which would get better fill. Is that true?

 

I'm not sure what this means.  To my non-professional ears, it sounds like equivocating noise, since my understanding is that the buy-side needs the sell-side to make trades.

 

The other concern I have is if I were to move my account to IB, can they help moving my past trade/records? which is very important coming tax time

 

I just moved one of my IRAs to IB, to give them a trial.  The transfer of funds form was very lengthy, much longer than Fidelity's.  However, once that was completed, the transfer of funds took only 2(!) days, whereas transfers to Fidelity takes about a week.

 

I've been with IB for about a week now.  I've made one international trade involving a currency exchange prior to the actual stock buy.  It was a little strange and cumbersome, but it went fine. 

 

My first impression of IB is that it is geared for the professional, which I am not, so there are lots of things that are extraneous to me, and seemingly very complicated.  If you're used to TD Ameritrade (or E-trade, or Fidelity), you'll find IB's interface is very clunky and very confusing (quite awful, to be truthful).  However, I think it's just a matter of getting used to it, and after a week, I'm getting the hang of it.  Customer support is iffy, depending on who you get by phone or e-mail, and ranges from superb to just plain wrong (one guy told me something completely off, which I discovered on my own.)

 

Regarding tax basis on transferred funds, under the Reports section of their Accounts Maintenance tab, I was pleased to find an accurate tax and cost basis report (which is irrelevant in my case since my account  is an IRA).  But it took forever for me to find it.

 

I'm planning to keep my funds divided up among several discount brokerages, since none of them fulfills all my needs completely.

[yadayada]

if you want to buy CAD with USD, you do USD.CAD in the white order entry thing. And you put sell (sell USD for CAD).

 

Or you can do CAD.USD and buy. I would just do market orders for currency. And enter the number you want to sell or buy in QTY. so if you sell, then enter number you are selling, and if you do buy, the amount of currency your buying.

 

If you wanna place a limit order for a stock, DAY will mean it will only last one day. And GTC will mean indefinitely.

 

That is really all i use.

[boilermaker75]

I love IB. However there is one thing that you cannot do with IB, which is a real pain for me because I do a lot of option trading. You cannot download from IB, like you can from Schwab, your transactions into Turbo tax.