I am thinking about switch my broker to IB. Any risks there?

[west]

Mostly just venting here, but I signed up for an IBKR account last December and haven't used it too actively.  I generally try to buy undervalued securities and then hold them until they reach fair value.  Sometimes this happens quickly.  Most the time, however, it takes at least a few months.  I'm sure you're all familiar with this dynamic.

 

So unbeknownst to me, since June I've been getting charged "Activity Fees" (or perhaps "Inactivity Fees" would be a better description).

 

I talked to customer support about these fees to see if I could get a refund for these fees-from-nowhere (from my perspective) or if I could get around them some how.  Nope.  IBKR is for traders.  If you're not a trader, tough cookies.  Use IBKR the way it's supposed to be used.

 

Needless to say, I'm closing my account.

 

Like I said above, I'm mostly just venting here.  However, in case it hasn't been mentioned in this thread yet (and I'm sure it has), IBKR is for traders and will charge you a monthly fee if you haven't had any activity, regardless of your account balance.

 

So if you're not a trader, you might want to look elsewhere.

[Hielko]

Perhaps you should have checked what you exactly signed up for... I agree that the inactivity fees are a slight negative, but given the low fees per transaction most people would still come out ahead with IB, even if they trade infrequently.

[Vish_ram]

this link would be useful

 

https://www.interactivebrokers.com/en/index.php?f=minimumDeposits&p=act

 

[nodnub]

Mostly just venting here, but I signed up for an IBKR account last December and haven't used it too actively.  I generally try to buy undervalued securities and then hold them until they reach fair value.  Sometimes this happens quickly.  Most the time, however, it takes at least a few months.  I'm sure you're all familiar with this dynamic.

 

So unbeknownst to me, since June I've been getting charged "Activity Fees" (or perhaps "Inactivity Fees" would be a better description).

 

I talked to customer support about these fees to see if I could get a refund for these fees-from-nowhere (from my perspective) or if I could get around them some how.  Nope.  IBKR is for traders.  If you're not a trader, tough cookies.  Use IBKR the way it's supposed to be used.

 

Needless to say, I'm closing my account.

 

Like I said above, I'm mostly just venting here.  However, in case it hasn't been mentioned in this thread yet (and I'm sure it has), IBKR is for traders and will charge you a monthly fee if you haven't had any activity, regardless of your account balance.

 

So if you're not a trader, you might want to look elsewhere.

 

Are you talking about the $10/month fee? 

 

If you look closely at other discount brokers you will usually find that you are paying more fees in other areas.

 

For instance a lot of discount brokers bake in 1.5% to 2% spread in their currency exchange rates on a one-direction exchange. If you change $10,000 USD to CAD just once during the year, then you will pay about $150-$200 in spread at just about every other discount broker (here in Canada at least).  And you have to dig deep to find any reference to this (or observe it yourself by comparing with the spot market) they don't put out a big warning telling you that you are getting screwed on your occasional forex conversions.

 

 

[muscleman]

Mostly just venting here, but I signed up for an IBKR account last December and haven't used it too actively.  I generally try to buy undervalued securities and then hold them until they reach fair value.  Sometimes this happens quickly.  Most the time, however, it takes at least a few months.  I'm sure you're all familiar with this dynamic.

 

So unbeknownst to me, since June I've been getting charged "Activity Fees" (or perhaps "Inactivity Fees" would be a better description).

 

I talked to customer support about these fees to see if I could get a refund for these fees-from-nowhere (from my perspective) or if I could get around them some how.  Nope.  IBKR is for traders.  If you're not a trader, tough cookies.  Use IBKR the way it's supposed to be used.

 

Needless to say, I'm closing my account.

 

Like I said above, I'm mostly just venting here.  However, in case it hasn't been mentioned in this thread yet (and I'm sure it has), IBKR is for traders and will charge you a monthly fee if you haven't had any activity, regardless of your account balance.

 

So if you're not a trader, you might want to look elsewhere.

 

Are you talking about the $10/month fee? 

 

If you look closely at other discount brokers you will usually find that you are paying more fees in other areas.

 

For instance a lot of discount brokers bake in 1.5% to 2% spread in their currency exchange rates on a one-direction exchange. If you change $10,000 USD to CAD just once during the year, then you will pay about $150-$200 in spread at just about every other discount broker (here in Canada at least).  And you have to dig deep to find any reference to this (or observe it yourself by comparing with the spot market) they don't put out a big warning telling you that you are getting screwed on your occasional forex conversions.

 

Correct. This is what makes me unhappy with Fidelity.

 

I moved away my individual account to IB, and still thinking about where to move my IRA to.

Does anyone use IB's IRA?

[hardcorevalue]

How are you guys buying in athens? I looked at opening an account with interactive brokers canada and Greece isn't one of the countries available to trade in.

 

https://www.interactivebrokers.com/en/index.php?f=exchanges&p=europe

 

I emailed and they confirmed greece isn't available.  Perhaps this is just a Canadian problem.

 

Any ideas?

[SI]

These Google backed brokerage guys seem interesting....have not been able to get on the site yet.

 

Some Stanford guys backed by Andreessen-Horowitz and Google Ventures are offering $0 commission equity trades. Will be an interesting experiment.

You can reserve your spot in line at https://www.robinhood.io/?ref=8hAJcs

 

FD: If you sign up, my spot in line moves up. 

[Hielko]

How are you guys buying in athens? I looked at opening an account with interactive brokers canada and Greece isn't one of the countries available to trade in.

 

https://www.interactivebrokers.com/en/index.php?f=exchanges&p=europe

 

I emailed and they confirmed greece isn't available.  Perhaps this is just a Canadian problem.

 

Any ideas?

You can often buy Greek stocks in Frankfurt/Germany. If it's not traded there you are out of luck with IB, but there are obviously plenty of other brokers that do offer direct access to Greece.

[hardcorevalue]

Thanks Hielko,

 

I really need a new suggestion on a broker. As a Canadian we have limited access. IB Canada doesn't even have access to South American markets either.

[TwoCitiesCapital]

These Google backed brokerage guys seem interesting....have not been able to get on the site yet.

 

Some Stanford guys backed by Andreessen-Horowitz and Google Ventures are offering $0 commission equity trades. Will be an interesting experiment.

You can reserve your spot in line at https://www.robinhood.io/?ref=8hAJcs

 

FD: If you sign up, my spot in line moves up.

 

Thanks for this! I just signed up and will hopefully get to check them out soon. Even if foreign market access is limited, this would be helpful for my investments in more liquid and domestic names.

 

For those of you who don't use Scottrade, they allow for commission free reinvestment through their FRIP service. It allows you to reinvest dividends from most any equity you hold into any equity you hold (excluding ADRs and OTC listed foreign shares) commission free.

[SI]

No problem. We have brokers offering us trading today at 50 mills so we know the cost of trading is low if someone can make a business at that rate but you wonder what Robinhood's business model will ultimately be and how the Schwab and its ilk respond.

 

Here is a bit of info from their FAQ portion of their site.

 

 

How is Robinhood able to offer commission-free trading while others charge $10/trade?

Over the last decade, technology has enabled building the most efficient businesses in history. Building an automated, electronic brokerage from the ground up allows Robinhood to eliminate the costly touchpoints where other brokerages require human intervention or paper receipts. Rather than relying on primetime advertisements and costly brick-and-mortar storefronts, Robinhood maintains a lean bottom-line, allowing it to attract and retain customers far more cheaply.

 

How does Robinhood make money?

Robinhood will offer margin trading as well as API access. We also plan to offer premium services for active investors in the future. Robinhood is venture-funded by Google, Andreessen Horowitz and many others, which affords us the freedom to focus on building a wonderful brokerage experience rather than short-term profits.

 

[Philip Morris IV]

I'm interested in Robinhood and will keep tabs on it, but I almost wish they would charge a modest trade fee.  Free trades make me skeptical on how they will be profitable.  If most people use margin for short-term trading, how are they supposed to collect meaningful interest income?  I don't know about the API-part of the business.  Is it possible they might skim off the bid/ask spreads?

[ItsAValueTrap]

Most retail brokers already indirectly skim off the bid/ask spreads.

 

I'm not at all a fan of the "free" model.  They will have to make their profits somewhere and they may do it in not-so-transparent ways.

 

I'm a fan of how Interactive Brokers is run.

[constructive]

Thanks Hielko,

 

I really need a new suggestion on a broker. As a Canadian we have limited access. IB Canada doesn't even have access to South American markets either.

 

Neither does IB US.

 

In fact I don't know any discount brokers that offer access to South America.

[Drokos]

Anyone using IB know the process for a US account holder to buy a Canadian stock? Do I need to first do a forex transaction swapping the necessary amount of USD for CAD and then purchase the stock? Is is a simple process, or do I need to sign up for something special to get forex trading?

 

Thanks in advance.

[DoddDisciple]

Since it looks like this thread came back alive, a few questions :)

 

() IRA vs Taxable

 

I understand that you can get a foreign tax credit on taxable accounts, and that if you have a choice between getting IRA or Roth IRA taxed, you want IRA since at least you invested more money at the start. What I don't get is if the foreign tax credit is really worth it. It looks like you have to have sizable dividend income before you want to claim it above the $600 per person amount.

 

I'm also not sure if the same foreign tax withholding can occur on special dividend payments and liquidation/buyout payments. I'm guessing no for the latter, but possibly yes for the former.

 

Additionally, between IB and Fidelity, which one is better at handling the paperwork to make sure the lower amount of withholding/paperwork occurs?

 

() Excluded Exchanges and Lot Sizing

 

I know Fidelity says they can pretty much get any stock, but of course you have to pay. Additionally, I've noticed that through say IB and online trades at Fidelity, you can't access JASDAQ or Osaka stocks. Are there any other excluded, notable exchanges that aren't accessible among the countries these guys service?

 

Aside from some weird minimum lot sizing with Japan, what other countries/exchanges impose things like this? I see it in Singapore as well.

 

() OTC (Foreign Ordinary)

 

These don't have tax withholding and can be held within IRAs, or at least I thought. Watsa had a post on here about FFH and it looked like taxes were inappropriately being held or something at IB.

 

() Level 2 Data, Other Data

 

By my understanding, Level 2 data is the to the minute orderbook, and Level 1 shows lowest sell and highest buy. I've read about people doing a market order and some guys put painful prices out there waiting for a sucker to fill them. Where can I get free Level 2 data to see if my limit order is too generous based on the order book for international stocks?

 

Is any of the IB stuff worth subscribing to? I see Reuters Worldwide Fundamentals for $7 a month, but I'm guessing that's just data and can't be screened. May be worth it though for a quick look at in addition to Financial Times before investing.

 

Thanks :D

[bz1516]

Anyone using IB know the process for a US account holder to buy a Canadian stock? Do I need to first do a forex transaction swapping the necessary amount of USD for CAD and then purchase the stock? Is is a simple process, or do I need to sign up for something special to get forex trading?

 

Thanks in advance.

 

If you have a cash a/c you first have to purchase the foreign currency in this case CAD's, with say USD's if that is your base currency. 

 

However if you have a margin account you buy the Canadian stock in CADs and IB automatically creats an offsetting debit balance in CAD's.  You then have to decide if you want to have the full currency risk, in which case you will have to purchase CADs, or stay in the mostly hedged position.

 

A problem for me is I more often than not want the currency risk, but when I sell I forget to reduce the CADs that are now sitting in cash in CADs.  that has been costly the last several weeks.

[DoddDisciple]

Any feedback on IBIS or any of their optional services/data?

[JayGatsby]

Is there any difference that allows IB to charge ~6.5% lower margin interest than the retail brokers, or are they just not making an absolute killing on the spread trade?

[benhacker]

They have lower overhead, and they do not treat margin loans as a profit center.  They also do not extend margin calls in the traditional sense to lower their exposure -  if you violate margin, they will close you out automatically that day I believe.

 

If you step back and just look at the risk of lending against a diversified pool of liquid securities (making reasonable adjustments to not lend against certain classes of securities - high vol, rapid price incliners, low market cap, etc etc), the risk of lending against this with reasonable collateral coverage is pretty minimal.

 

But yea, it's a brave new world out there.