IBKR from the UK, detail

[cara2]

Maybe this should be somewhere ellse, mods please move if so.

Trying to get detailed but full info can be like blood/stone, sheesh. It can take days for an email reply, if you get one at all.

I'm looking at IBKR because they
1) aren't bunch of monkeys
2) have decent spreads
3) link to TradingView which I bought for a year (on offer).
Assuming I want a margin account I need to deposit $25k to avoid PDT rules, ok.
(I don't need it for the leverage but I do need to be able to go short. on common stocks.)

HOW does their currency exchange work?
If I use their variable-commission model those fees look fine.
I have to have a GBP account, they say. Can't have a USD account
Question is, where do they apply a currency conversion fee if I go long/short on US stocks.

Person on the phone didn't appreciate difference from Cash... Hard to communicate with foreign call centre.

1) Is there a currency conversion with fee for each direction, or only once on a "round rip", or only on the profit/loss. or what??

2) Is their free US data ok to use for day trading, or so I need to pay for more accurate real-time data?
I mostly use large-cap or actively taded stocks.
I assume if I want Level2 data I need to pay for the stock prices real-time data first. Is that right?
Does that come with the Imbalances?

If anyone could do a paragraph on their experience of using IBKR from the UK, and/or with TradingView, it would be much appreciated.

 

[BlackPhoenix]

I don't know if this differs in UK, but at least in Finland (EU/EUR) you can have your base currently in USD. You can also hold multiple currencies in the account, but AFAIK only the USD one is used for trading US stock. The free Level1 real-time data feed updates few times per second (thought there's some latency because internet + IBKR servers aggregate ~250ms worth of data before passing on), so I supposed it's ok. Also you can monitor max 100 stock simultaneously and need to buy quote boosters ($30/mo for additional 100 stock) if you need more. For Level2 (NASDAQ & NYSE) you need to subscribe to data feeds that are total ~$20/mo. Not sure if you got PDT rule in UK (I thought it was just US thing) but at least in EU you need to hold only like 2500Eur on the margin account.

 

[cara2]

Thanks @BlackPhoenix . That's useful. The Pattern Trader rule thing IS odd, IBKR do apply it to the UK, but not other EU countries.
The person in the call centre, who didn't sound very convincing, said that as long as I have $25k in the account then I'd be clear of it.
That sounds odd as well, but - hey ho.. At least they pay 4.83% interest on it, so it can just sit there.

I believe there's a minimum $1 fee per trade - not sure if that's $2 round trip. This sounds pathetic but at the moment while I'm very much learning, $1 or $2 would be a big hit on a lot of my trades. I did 70 trades today - free.
The other off-putting thing with IBKR is their lack of a good, quick "Help" service. If what you need doesn't come up in the files, other companies beat them by 20x for an online chat response.

I found the same with TradingView. You can raise a "ticket" to ask a question but after a week I have no answer. And they don't have a Manual.
It's exasperating! I'm paying - the undiscounted rate is $600 p.a.. and you can't communicate with them!

I will have to try some other UK brokers to get truly free trades, for small ones. Many of them only have a very small number of Stocks.

 

[BlackPhoenix]

It might be a good idea to check with someone else in the IBKR support I have had similar experiences talking to someone who sounded incompetent and made me suspicious, only to find out the info was wrong after talking with someone else in the support. Maybe IBKR hasn't gotten their ducks in a row regarding regulations since Brexit ¯\_(ツ)_/¯ I usually get someone to jump on the help chat after couple of minutes of waiting.
Note that the 4.83% interest is for $100k+ cash balance on the account. If you have less, the interest rate is also less.
IBKR has fixed and tiered commissions as shown here. The minimum trade fee for tiered is $0.35 while it's $1 for fixed, so if you trade small volume and constantly hit this minimum fee, it might be good to switch to tiered. Here's a comparison someone did for IBKR tiered vs fixed pricing. Note that when some brokerages advertise zero-commissions, the cost is hidden somewhere, e.g. you may end up unknowingly paying more per share (there is no free lunch).

 

[Trader333]

PDT rules exist for anyone in the world who wants to day-trade US stocks using DMA. The reason is that you are buying and selling (or shorting) directly in the US exchanges which is why their rule has to be adhered to. The $25K requirement is a US exchanges requirement when day-trading US stocks and has remained at that figure for years. This is not the same as using SB or other forms of trading where you are not taking an "actual" position in the market as you are when using brokers such as IBKR. The rules are straight forward and only apply to US stock trading for PDT and the $25K funds in your account. It does not apply to US futures, forex, bonds etc. However, be aware that if your funds drop below the $25K needed from either currency fluctuations or losses then you will lose your ability to day-trade US stocks.

 

[BlackPhoenix]

The PDT rule seems to be different for UK residents with accounts at IBUK and EU residents with accounts at IBIE (Ireland): https://ibkr.info/node/3550

11. Will I be subject to the U.S. Pattern Day Trading Rule if my account is transferred?

Accounts maintained with IBUK are subject to the U.S. Pattern Day Trading (PDT) rule as the accounts are introduced to and carried by IBLLC, a U.S. broker. The PDT rules restricts accounts with equity below USD 25,000 to no more than 3 Day Trades within any 5-business day period.

As accounts transferred to IBIE will not be introduced to IBLLC, they will not be subject to the PDT rule.

 

[cara2]

Exact;y. I could ask Ireland, or anywhere else in Europe.
I blame Brexit. Oh I said that. But it bears repeating!

Yes I figured I'd have to deposit more than $25k. Seems odd that they care more about the little man, you "get away with it" if you have more, though $25k hardly means a commercial broker.

What is "SB"? Can't find it.

 

[timsk]

. . .What is "SB"? Can't find it.

SB = Spread Betting.
There are any number of SB brokers to choose from who provide access to U.S. equities. Maybe it was another member on another thread - so forgive me if I'm getting muddled up cara2 - but if you want to trade via the TradingView platform (Which I think you've said?) - then there aren't many brokers who allow you to do that linked to a SB account. Almost all are linked to a CFD account. Pepperstone is one of the few who offer this facility.
Tim.

 

[BlackPhoenix]

Seems odd that they care more about the little man, you "get away with it" if you have more, though $25k hardly means a commercial broker.

I believe the $25k PDT requirement was introduced by FINRA especially for inexperienced traders, who without good understanding of the risks involved with day trading on margin would otherwise end up in financial trouble after blowing up their accounts.

 

[cara2]

Thanks folks. Spread Betting is intriguing, I suppose it "feels" something like cfd trading. Pepperstone looked quite attractive until it came to buying stocks, iirc. There are free choices for that, though.

@BlackPhoenix perhaps the 25k limit was imposed to protect the brokers?

I bought TradinView for year, 70% off, because I think it has a few useful features.
I gather Robinhood is coming to the UK. Perhaps competition will produce a better range.

I intend to spend tis weekend examining the possibilities. Some of them seem to not want to tell you how they work.

 

[timsk]

Thanks folks. Spread Betting is intriguing, I suppose it "feels" something like cfd trading. Pepperstone looked quite attractive until it came to buying stocks, iirc. There are free choices for that, though.

Hi cara2,
I'm not clear from your comment what the issue is with stocks on Pepperstone - but I don't use them to trade U.S. equities - so perhaps you've seen something that's not immediately apparent to me.

Spread betting and Contracts for Difference (CFD's) are similar in many respects - but the key thing that separates them is that trading profits on the former are tax free (in the U.K.) while profits on the the latter are taxable. Ditto if you trade via a direct market access (DMA) broker like IB. If you're happy to trade CFDs, then there are any number of brokers to choose from who enable you to trade via the TradingView platform. And you don't have to worry about the PDT rule as it doesn't apply to CFDs (or spread betting).

When I day traded U.S. equities back in 2008 I had an account with IB, because in those days spread betting was (relatively speaking) in its infancy which meant that fills were slow, slippage was awful, the spreads even worse and the range of available stocks to trade was quite small. All that's changed now, so I'd recommend at least considering one of the derivatives unless you have clear and specific reasons for wanting to trade 'real' shares with a DMA broker. Just my £0.02p worth! ;-)
Tim.

 

[cara2]

HI Tim
I don't care about DMA. (afaik !)
I do want a trading arrangement / broker which is:

• covered by FSCS - or FINRA would do, I believe.
• I'm using and am happy with cfd, which makes Shorting stocks a non-issue
• has low spreads - I noticed IBKR's are small and wonder if that's due to their DMA access
• has reasonable swap fees, not credit-card rates which some have (my current one is very high)
• provides a decent (mine isn't) reliable platform with on-chart operations
  - where a good range of complications are possible - such as ATR averaging on Trailing stop losses
• has low enough charges, or a charging structure setup, that small amounts can be traded without being overwhelmed
• allows me to hold a dollar account. Multi-currency would be better.
• access to a wide range of stocks, including for example quite small cap US ones
• Level2 as an option (paid).

It doesn't absolutely have to have a means to buy shares as investments (ie swap-free for long positions), though that would be nice. My current platform allows that though there's a 30 second delay swapping from that part of the platform to/from CFD.

I can't remember the snag with Pepperstone. It was to do with buying stocks, which I've since realised may have to be through a separate patform.

I'm working through the brokers which TradingView can integrate with. I was anticipating to use IBKR though that may not be OK.
Some of the others have very few stocks on offer, or spreads are annoyingly wide.

I appreciate the point about tax and SB. So far, that ain't gonna be a problem, unfortunately!

 

[Trader333]

The key difference between a DMA broker and others is that the spreads are not determined by a DMA broker. What you see is the actual bid and offer direct from the exchange market makers (MM). That means that the highest bid price is likely to be from a different MM to the lowest offer. All non DMA brokers set their own spreads which is why you are at the mercy of what they decide that spread is going be. In times of volatility, you can get hammered by this as they can widen it to such a level that it forces your stop to be actioned or cost you a huge amount to exit a trade and especially so if you are day-trading.

 

[timsk]

. . . I do want a trading arrangement / broker which is:

• covered by FSCS - or FINRA would do, I believe.
• I'm using and am happy with cfd, which makes Shorting stocks a non-issue
• has low spreads - I noticed IBKR's are small and wonder if that's due to their DMA access
• has reasonable swap fees, not credit-card rates which some have (my current one is very high)
• provides a decent (mine isn't) reliable platform with on-chart operations
  - where a good range of complications are possible - such as ATR averaging on Trailing stop losses
• has low enough charges, or a charging structure setup, that small amounts can be traded without being overwhelmed
• allows me to hold a dollar account. Multi-currency would be better.
• access to a wide range of stocks, including for example quite small cap US ones
• Level2 as an option (paid).

Hi cara2,
It's horses for courses, by which I mean you have to decide what's most important to you when choosing a broker. They all have their pros and cons and only you can decide which is best for you. In the order that your bullet points appear, here are my comments:

• Most U.K. brokers will be regulated to within an inch of their lives. E.g. Pepperstone are regulated by FCA, BaFin, CySec, ASIC, DFSA, SCB and CMA. To be honest, I've no idea who half of them are: the key one for me (you may feel differently of course) is the first one: The Financial Conduct Authority (FCA).
• You'll be able to short any market with any DMA, SB or CFD broker - this needn't be a factor in your decision making process.
• Yes, IB's spreads will be among the best available and, certainly better than any SB broker. However, you'll be charged commission on your trades. SB firms don't usually (ever?) charge commission, as it's built into the spread - which is why it's wider.
• SWAP fees don't apply to day traders who open and close trades within a single session. These will only be an issue if you're trading either large size (or lots of smaller positions) and holding long positions for long periods of time - i.e. many days or weeks.
• 'Decent' is very subjective! Given you've subscribed to TradingView, then presumably they fall into this category in your opinion? That said, a trailing stop isn't a standard feature of the platform, although I believe it's possible with a certain type of account (V20 - whatever that is!)
• I'm afraid I don't know what you mean by: ". . . that small amounts can be traded without being overwhelmed"? If you mean you only want to deposit a small amount of capital to start with and trade very small size - lots of brokers cator for this - but their T&Cs vary so you'll need to check with whoever you're considering using.
• Most (but not all) SB and CFD brokers allow you to have an account in your own currency (£GBP) and trade markets in other currencies, e.g. U.S. shares traded in $USD.
• If this is an essential feature for you - as opposed to just desirable - then a DMA broker like IB will probably be your only route. That said, I suggest you steer clear of small cap stocks until you've got a good amount of experience under your belt, as they can be illiquid and the spreads can be wide.
• As above, if this is an essential feature for you - as opposed to just desirable - then you'll need a DMA broker like IB. However, unless you're experienced in it's use (which is very time consuming and very difficult, IMO), I'd question why you want this?

Tim.

 

[timsk]

PS . . . I second what Trader333 says in his post. There is a work-around by using a broker who offers fixed spreads. The issue here is that those who do (offer fixed spreads) tend to offer wider spreads than the narrowest spread offered by a variable spread broker - if that makes sense! One good one (just my opinion) is TD365. However, they currently don't have a tie up with TradingView, which is the only reason I don't use them.

 

[cara2]

Thanks guys, that's the sort of detail and knowledge you don't get by reading the blurbs.

While I'm practising, I'm using small size, say $100 worth to a few $100. If I make 50 trades but don't clear a $50 profit overall, then a $1-$2 minimum per-trade cost would be.... unfortunate.
Similar applies to the foreign share dealing cost. When I started with my current broker, buying $1000 of Apple, seeing the price rise to $1100 and selling later in the day incurred exchange fees on $2100. Even with low fees that hurts. Many operate that way.
The fixed fee plus the 1% or so in fx fees is the overwhelming bit.

My current broker is not, I would say, decent. They're dishonest, not respectable, and use underhand tactics. I've seen several complaints on their forum about certain features but they don't change them. They remove the complaints rapidly. If they make a mistake, you only have 24hours to raise it, and they say you should have checked somewhere else before relying on what you saw on the screen, which is only a guide anyway..
I lost $800 in one click and one second, which was $795 their fault.
Their spreads for investments - direct buying shares, they claim have nothing added. If you ask why they're miles off the LSE quotes, but they blame Bloomberg
I could go on, quite a lot.

I heard good things about Webull, who have opened in the UK. Not sure about DMA, but whatever, you can't short anything.

Swap fees at 0.1%-0.2% per day are only OK for a very few days, I would say. Many charge base rate plus a few percent per annum, which is more like one hundredth of that.

Small cap - I don't mean very small. The top 2000, or even 500, would be fine. Some only have 20 or fewer of the Nasdaq. AVAtrade was one of those - otherwise they looked very Ok. (You can use MT5 which I haven't used but am told it's ok). I asked about Shell - nope.

Level2 - I haven't used it but have seen it in a trial of TradeIdeas (excellent but $$$$) I had, and live on TraderTV's youtube stream. I'd say it's very desirable in Day Trading. You can see what's the other side of a key level, and if you get them, the imbalances which can shift the whole market in a jolt. The "tape" gives a glimpse of the future. It's all some traders use.

I believe it can be added at the TradingView stage, but I imagine their chart data would have to be paid for first.


Pepperstone - "Still, the lack of assets outside forex/CFD will likely deter some traders, and if you go with the MetaTrader platform, you may be underwhelmed by its basic design and UX."

City Index - minimum £10/$10 fee on CFD stocks. Doesn't suit.

The lists of brokers you'll see are mostly hopeless ones. Even some of those reported as recommended for Tradingview in the UK, such as Capital8, which isn't available to UK traders.

Horses and courses, well yeah. Four legs and can run straight in the UK, would be a start! I'd forgo UK stocks...


I have yet to process TV's list.

 

[cara2]

Skilling seem to have some pro's. Cons yet to be discovered
Most want you to open an account before they give you any information

Activetrades - Too many missing instruments C3.ai. Affirm. Palentir. Out
Blackbull - Spreads several times mine **
City Index - minimum $10 trading commission. Out.

Capital.com Spread 4-5 x my current? Good swap fee ~10%pa. (Quarter of mine) **Check when market open
Eightcap - good spreads but too few stocks. Out
Oanda - no Stocks . Out.
Minimum fee 3-10 USD
Tradestation Mn $2.5 + extras.
tbc
...

 

[cara2]

Skilling don't interface with TradingView unfortunately.
iBroker few US stocks, Out
Easymarkets. Restricted range, wide to very wide spreads. Out
Ironbeam. Meant for futures. $60 withdrawal fee Out.
Saxo - HIgh fees minima, , restricted stocks range. Out
StoneX . - A Market Maker. Not what I need.
Tickmill. - Very few stocks. No fees info without signing up. Out
Tradovate - Futures only. Out.
Velocity - forex only. Out
WH Selfinvest - not enough info on their site. ???

BLIMMIN ECK this is difficult.

 

[timsk]

cara2,
Some people remain single all their lives because they can't find the 'perfect' partner who, needless to say, doesn't exist.


Choosing a broker is a bit like buying a house, which involves having a short list of 'essentials' about which one is not prepared to compromise and a longer list of 'desirables' about which one is prepared to compromise. My advice to you would be to shorten the former and lengthen the latter and to then open demo accounts with two or three and try them out. Otherwise, you'll end up going round in circles, finding fault with all of them and never trading anything, ever.
Tim.

 

[cara2]

Well I want one which isn't out to get me, will speak to me, and will put up with me. I managed that with a wife, anyway.

Another "feature" reported of some of the TV-compatible brokers, is that the spreads are much wider when usng the TV front end, which would be silly.
Our American cousins are at a distinct advantage.
I have to have access t most of the right stocks, and I can't use one which costs much too much in comparisaon with what I'm likely to make on a trade.

I'll look again at SB as an option.