Brokers are killing me

caladhanbrood

Newbie
2 0
I'm a relatively new trader and started trading October 2013. I had good beginners luck where I made 10% in one month and 10% in the next to end with a portfolio up approx 21% in just two months. Both of these stocks were uk stocks.*

However the investment strategy I use is the CANSLIM model founded by William J O'neill and as a result it was difficult to use the system for uk stocks and the easiest method seemed to be to subscribe to their daily newsletter and use their website and newsletter to screen for stocks which meet the CANSLIM criteria.*

Enter all the problems :(

(Here I started to diversify my portfolio to reduce the level of risk)

Around the beginning-mid December, I invested in 2 stocks. I bought YNDX at $43.22, a little higher than the proper $41.90 entry, and ALXN at $128.73 from a buy point of just below $127. Upon buying both of these stocks I was met with a nasty surprise. I noticed that the exchange rate I was being quoted didn't reflect what I found online and it is here that I learned of the hidden FX charges. In this case I was with Hargreaves Lansdown who charge a ridiculous 1.7% FX commission. They also insist on settling everything in GBP. It meant when I bought a stock I was already 1.7% down. If I wanted to sell the stock straight away I'd lose another 1.7%.
Commission is a flat fee but due to diversifying my portfolio and using smaller chunks of money it ended up being 0.5% and 1% (the money wasn't split equally) of my investment in the stocks. In others words I was already down 4.4%-5.4% as soon as I'd bought the stocks. Given I have a sell strategy where I sell if the stock falls 5-8% from my buy price (of which I stick to the lower end) it leaves me with very little wiggle room. Fast forward the market got hit hard and I ended up losing just under 10% on YNDX. With ALXN, the stock fell from 10% profit to 8.5% at which point I sold, but since I lost 1.7% due to FX charges when buying, and another 1.7% when selling, plus the fact that the exchange rate fell 1.4%, that killed over half my gains leaving me with just approx 3.8% profit.*

Once I discovered the hidden FX fees I moved over to another broker, Stocktrade, who allowed multiple currencies to be held in the same account. Hence I could convert the money into dollars and lose 1% in FX commission. But that was fine as that money was going to be used for investing for the long term, investing in multiple stocks. I then bought QIHU at $93. But I ended up paying an overseas settlement charge of £50 which was 0.7% of my investment. Commission is charged at 0.5% so in this case I was down almost 2.5% as soon as I started. I ended up losing another 8-10%. Ironically I ended up losing more money as the 2.5% automatic loss (and the higher 4.4-5.4% with HL) forced me to close my positions earlier than I'd like. As a result, I made an 8-10% loss on QIHU after which the stock ended up rising the next day to reach my buy point and surpass it.*(It went on to rise almost 10% in profit a day/two ago).

The point of this post is I'm sick of getting screwed over by fees. All of these stocks I should have made a profit on, or lost very little on. I have no problem with a stock rising 5%, coming down to 1% and selling to make 1% profit. That's fine with me. If I did that a few times then I can take a bigger risk and let a stock have a natural dip down from my buy point and wait for it to come back up and surpass my buy price (as was the case with QIHU, of course my max loss of 8% on a stock still would apply).*

So I'm now looking at Interactive Brokers who are famous for their cheap fees and bad customer service ^_~

I thought it a good idea to be absolutely sure what the fees are so I can decide whether to continue investing or not. I tried ringing IB but as you might guess they weren't helpful and kept saying I should look at their fees on the website which isn't very helpful given I have no idea what some are referring to.*

I'm only interested in buying and selling shares so I'm not concerned with fees regarding futures etc just all the fees regarding buying and selling US shares from the UK. If anyone could help me I'd really appreciate it. Given IB CS is much worse and much less helpful I don't have many other options in understanding which fees apply to me.*

Thanks in advance and sorry for the long rant :(
It's just frustrating to make these losses due to this instead of bad investment choices. Especially when the stocks went on to do well right before my eyes after I'd recently sold for a quite a large loss.

Thankfully I wasn't fully invested and the portfolio is only down 3%, but since all the money belongs to a silent partner I'm not willing to continue using money not mine unless I find cheaper fees to give me more flexibility and reduce the already high risk with regards to foreign investments, or even general investments form that matter >:-(

Finally sorry if this isn't the right place, wasn't sure where to place this thread but came here and saw threads regarding brokers.
 
M

member275544

0 0
So I'm now looking at Interactive Brokers who are famous for their cheap fees and bad customer service

they are not so cheap anymore when it comes to UK stocks, their fees went up considerably a little while ago. On top of that, If im not mistaken they recently introduced a non-activity fee. So if you are investing, likely you would not be making that many trades

Iweb is one of the cheapest you will find for shares

that said, why don't you try spreadbetting, either using future contracts or alternatively one that allows you to adjust the margin size such that you are effectively using zero margin, therefore eliminating fees altogether
Gecko markets allow you to do this. Others do, but try gecko or iweb
Personally, I wouldn't bother with IB having tried them already and then withdrew as soon as they changed their terms not so long ago
 

caladhanbrood

Newbie
2 0
they are not so cheap anymore when it comes to UK stocks, their fees went up considerably a little while ago. On top of that, If im not mistaken they recently introduced a non-activity fee. So if you are investing, likely you would not be making that many trades

Iweb is one of the cheapest you will find for shares

that said, why don't you try spreadbetting, either using future contracts or alternatively one that allows you to adjust the margin size such that you are effectively using zero margin, therefore eliminating fees altogether
Gecko markets allow you to do this. Others do, but try gecko or iweb
Personally, I wouldn't bother with IB having tried them already and then withdrew as soon as they changed their terms not so long ago

I won't be buying UK stocks, just US stocks from the UK. That's where I'm having a lot of trouble with brokers. One broker will have high FX fees, others will have low FX fees but charge something else like an overseas settlement fee.

I remember they have a $5 monthly fee which is offset by commission. That's not a problem. The $60 (less since it is offset by commission) is still way cheaper then other brokers I've seen. For example, the oversea settlement fee my current broker charges is £50, roughly $75. That ends up being $150 gone up in smoke in just one buy and sell trade.

I'll look into iWeb. I'm still holding out hope on IB. They do seem cheap, but it's still a bit confusing exactly what all their fees are.

With regards to spread betting an futures, many have recommended them. However, due to being Muslim there are certain financial transactions we are not allowed to enter. I don't entirely understand the concepts involved in these two but they sounded like they would cross into that territory. For example betting on the price going up or down in spread betting is betting which is something prohibited to us as it's considered gambling. Although I may have misunderstood how spread betting works, that's possible.
 

Trader333

Moderator
8,601 931
In my view IB is good for US stock trading and you can trade with a GBP and it all gets converted back after closing the trade. If you are day-trading then you will need to have Pattern Day Trading Margin in your account which was $25K when I was using them.
 

lloydbee

Well-known member
275 17
As much as I don't like them did you look into OptionsXpress ?
 
 
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