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IB has one huge flaw (in my opinion):
The way they handle stop orders is a disaster. For some horror stories,
check out the threads on www.elitetrader.com
Stops are not sent to the exchange servers. Instead they are held on IBs
servers and only triggered (sent to Globex as a marketable limit order)
when IBs datafeed either trades at that price or has enough bids/asks
through that price (I forget which). Your stop order is totally reliant on
their datafeed working OK. So if IB has a problem with it's datafeed, your
stop order might never get executed as the actual price moves through
it. Scary! Then there is the inherent delay between a system that only
submits the stop order to Globex AFTER the price is hit, versus one that
has the order already resting on exchange servers ahead of time. Orders
that are sitting on exchange servers are queued and prioritised as to when
they were received (the great equalizer for the retail trader!). IBs stop
orders are not. So what you say? ...what is 2-3 seconds delay between
friends? After all, maybe it could result in positive slippage?!
(true). Then again, maybe it could result in an extra 1 or 2 ticks
negative slippage that's what! At $12.50 in a tick in the ES ...how much
money are you really saving with your $5.90 commission rate if you are
paying an average of one extra tick slippage with IB vs another
broker?! Not to mention the added risk that you stop might simply never
get activated, or get activated five minutes after the fact, if their
datafeed is slow.
You could actually save money using a broker who charges twice what IB does
in commissions, if that broker sends stop orders to be held directly on
exchange servers. A stop to enter, a stop to exit, using an average of an
extra tick on both sides compared to other brokers executions, and your
total IB cost of $30.90 in the ES looks a lot more expensive than a broker
charging $12.00 with better stop order execution. $5.90 certainly can be
beat when you look closely at these details!! I heard that many IB clients
have given up using stop orders with all their inherent uncertainties and
prefer to use mental stops i.e. hitting the market order button, when their
price is hit. But they still face the same 2-3 second delay (over a order
timestamped on the exchange servers); and still face the potential for
unnecessary slippage compared to timestamped stop orders. Who needs that?!
If IB fixed this stop order problem, they would be extremely
competitive. But for now, is it a case of you get what you pay for?
My $0.02.
S.
At 06:38 28/08/2001 -0700, you wrote:
>Josh,
>
>Though I've seen a lot of e-mails related to service problems with
>Interactive Brokers, I haven't had any problems to date (only trading
>e-minis). Their trading platform is built for quick executions, and is
>rarely down during RTH. I've never had to send an order
>telephonically, but the "Live Help" they offer through their website is
>very helpful related to account issues. Hey, for $5.90RT it can't be
>beat.
>
>--- josh@xxxxxxxxxx wrote:
> > I've tried several in the past including Zap, PMB, Chicago
> > Futures.com,
> > and a few others that I'm trying to forget.
> >
> > Which of the online brokers are providing good service to active
> > daytraders ?
> >
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