Investing

Is interactive Brokers the Best Platform Considering Trade Fee's / Account Annual Charges?

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  • May 14th, 2020 1:07 am
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes

Is interactive Brokers the Best Platform Considering Trade Fee's / Account Annual Charges?

Hello RFD,

I presently have a questrade account that I set up over 4 years ago. While the platform was fine back then I feel that there fee structure is no longer as competitive as it used to be so I am looking around for the best platform right now. (I really felt that when it cost me over 100 dollars just to sell off my positions at the start of the crash. )

Edit - removed allot of the original post to make this more readable. What I have learned:

IB is good for someone who 1. Has large holdings and 2. Only purchases large value stocks. They charge 10 USD a month which is waived if your holding 100,000USD minimum per account you have. So if you have a TFSA and and or RRSP, Margin etc. Its 100 K per account, USD. (OOF on that now). So now you have to have a total holdings have 100,200,300 K USD across all accounts to get the monthly fee waved. AND that monthly fee multiplies the more accounts you have open. So 2 accounts is 20 USD a month etc. The monthly fee used as a credit against trading fees for any given month. So if you say bought and sold 2 positions in a month you would likely break even if you had IB vs another Canadian brokerage. If you traded more you would start getting ahead if you traded less you would fall behind. If your account has over 100,000 USD you are likely ahead compared to any other Canadian brokerage UNLESS your buying / selling penny stocks in moderate volumes (if you sold in large volumes they have different offerings which would reduce your fees)

So looking at the above interactive brokers will be a better account for certain kinds of people but not broadly a better deal depending on your holdings and what you are investing in. In general, if your holdings is over 100,000 USD per account they would be broadly better. If you are under that threshold and only change positions 2-3 times a year they are probably worst.

No other firms from as far as I can tell are largely different from what is in TD, CIBC etc offer. The brokerages are competing with sign up bonuses but are largely not competing in terms of fees. Similar to what cell phone companies looked like a decade ago. There are multiple articles with Industry representatives actually acknowledging they are aware Canada has worst fees then other countries but there is no market pressure for them to move so they are keeping their structures as is. So probably no one is going to change how they operate in the near future.
Last edited by OmgDrake on Apr 28th, 2020 10:57 pm, edited 2 times in total.
40 replies
Newbie
Sep 12, 2019
41 posts
43 upvotes
Same question as OP, but I will add this one. Suppose I have:

RRSP < 100,000$ USD
TFSA < 100,000$ USD
Non-registered > 300,000$ USD

Will the account minimum fees be waived for all three accounts or only the taxable non-registered account?
Banned
Mar 24, 2020
99 posts
72 upvotes
if your account size is this big you're worried about a $10 fee?

also why wouldn't you have your stuff at Scotia, TD, CIBC?

Unless your active traders why would you want to be at a small brokerage arm.? sounds like you are the buy and hold type. I'd stick to the big 5 for safety.
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
AdonisP91 wrote: Same question as OP, but I will add this one. Suppose I have:

RRSP < 100,000$ USD
TFSA < 100,000$ USD
Non-registered > 300,000$ USD

Will the account minimum fees be waived for all three accounts or only the taxable non-registered account?
From what I can tell over 100 K holdings interactive brokers is the best brokerage available to Canadians. There web portal is sorta shit but its not the end of the world. Its sub 100 K that you start having debates on who to use.

I was hoping too see if anyone would mention any other firms that was in their league for price point. I started this investigation after I found that in the U.S apparently 0 fee/ sub dollar trading fee is the standard and realized Canadians are sorta being screwed. (There is a few articles where like the Canadians firms are on record stating that they are aware of low fee U.S firms and are expecting to have to move to lower fees in the future but as for now they are staying with fees as is because the feel no market pressure). If you dont vote with your dollars and move things will never change.
Last edited by OmgDrake on Apr 26th, 2020 11:33 pm, edited 3 times in total.
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
david107 wrote: if your account size is this big you're worried about a $10 fee?

also why wouldn't you have your stuff at Scotia, TD, CIBC?

Unless your active traders why would you want to be at a small brokerage arm.? sounds like you are the buy and hold type. I'd stick to the big 5 for safety.
Unless you are trading in only the free ETF's normal activities like re-balancing your account adds up. From what I can see? If you never or only once a year update your portfolio and have few holdings (maybe 2-3 broad etfs) a standard TD or CIBC is best. If you re-balance 3-4 times a year and want to hold blue chips like..microsoft or apple along with ETFs interactive brokers is a better overall fee structure. Before I bother ditching questrade, which, as far as I can tell is the worst platform as they are not lowering there fees at all over time (so my baseline is the worst company) I wanted to see what the best brokerages are.
Last edited by OmgDrake on Apr 26th, 2020 11:38 pm, edited 1 time in total.
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Aug 4, 2014
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Sorry, but why do you need to rebalance 3-4 times per year??
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
freilona wrote: Sorry, but why do you need to rebalance 3-4 times per year??
I was counting setting stop losses for something in your account unexpectedly going low to limit losses...like what would have saved you if you had broad indexes/blue chips during the crash. Its a free service you should use them. But sure so the argument is that you never change your holdings therefore fees dont matter? Same statement as above. "IF" your holding free broad ETF's I believe CIBC or TD are the best platforms. If you want to hold any blue chips / etfs not on free lists from what I can see interactive brokers has the best fee structure. Asking if I am interpreting the fee structures wrong. On my end I am between CIBC or interactive brokers as I already have a CIBC bank account. If I went CIBC I would just stop holding blue chips.

Edit: Also if your account is above 100 K USD as far as I can tell Interactive brokers is broadly a better deal.
Jr. Member
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Feb 26, 2015
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Yikes... Apparently I am bad at this.
I spent hours looking through reviews of brokerages and ended up with Questrade since it looked like their ETFs were free to purchase (I guess the sell fee is where they are less competitive?), and the referral bonus of $250 on $100000+ in your account helped offset charges.
If I wanted to do any day trading, I could set up an account with Interactive Broker, I failed to see a downside, beyond the juggling act, of branching out to several brokerages.
It all did feel rather nickle and dimey, but that is a hard habit to break when its helped you up to a semi-successful position.
Member
Jan 26, 2020
374 posts
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Canada
Say you've got a buy order of $500,000. The stock price is say $100. So you are going to buy 5000 shares. At Interactive's lowest rate of half a cent/share that is $25. Currently I pay about 1/3 of that because my broker charges a flat rate of less then $10. For stock prices that are lower, and many stable stocks are, it gets much worse. I'm curious: Who would use this broker? Just people using it to buy really expensive stocks because then it gets really cheap, down to just a dollar? Or just people taking much smaller positions?

I'm looking at other brokers besides ThinkorSwim/TD thanks to some bad experiences there. Any recommendations? I don't care about their charts. I'll maintain a ToS account just to use their chart probably or get another service or just not even bother and use the free tradingview.com charts which are pretty good, except for alerts. I'm still looking for after hours alerts. Can't seem to find anything anywhere. How can this be so? You'd think alerts for after hours would be far more needed than during normal hours!
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Jan 26, 2020
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Of course they are. And its often the reason why they accumulated the money, by watching the little things.
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So, in a nutshell, you’re looking for another broker to pay less commissions when “selling lower and repurchasing higher” a few times a year, while calling your bad decisions rebalancing? Good luck with that: interactive-brokers-their-fees-seem-ins ... s-2371351/ :)

Disclosure: all our DIY accounts are with Questrade (2 RRSPs, 2 TFSAs, my LRSP and Joint Margin. High triple digits. ETFs, GICs, individual stocks and bonds)
Member
Jan 26, 2020
374 posts
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Canada
I think the fees at IB are either $.01 or $.005 per share. So if you buy a cheap stock you're screwed. And if you put in a significantly sized order you're screwed. The only way you come out well with IB is if you are buying either really expensive stocks. Otherwise a flat fee structure is going to be much cheaper. Take a $100,000 order. Most share prices are from $10-200.

$100,000 / $10 = 10,000 shares x .01 = $100 commission.
$100,000 / $100 = 1000 shares x .01 = $10 commission
$100,000 / $200 = 500 shares x .01 = $5 commission (now its good).

This type of pricing is very good very occasionally for most of us.
Unless you're trading smaller amounts of course.
Not sure what the average trading amount is on the TSX and NYSE. Say its $10,000:

$10,000 / $10 = 1000 shares x .01 = $10
$10,000 / $100 = 100 shares x .01 = $1.00 minimum I think (please correct if wrong).
$10,000/$1000 = 10 shares x .01 = $1.00 minimum

Its too bad they have that $100,000 minimum. Otherwise you could just move the money over when needed. Just takes a day. Or can I maintain an account there another way? Some brokers waive quarterly fees if you move some money in every month. I don't think IB offers this but maybe there is some other way?
Member
Jan 26, 2020
374 posts
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Add to these fees the SEC selling fee. Will only become noticeable on larger orders.
$100,000 x .000022 (I think) is $2.20.
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
MichaelZZZ wrote: Say you've got a buy order of $500,000. The stock price is say $100. So you are going to buy 5000 shares. At Interactive's lowest rate of half a cent/share that is $25. Currently I pay about 1/3 of that because my broker charges a flat rate of less then $10. For stock prices that are lower, and many stable stocks are, it gets much worse. I'm curious: Who would use this broker? Just people using it to buy really expensive stocks because then it gets really cheap, down to just a dollar? Or just people taking much smaller positions?

I'm looking at other brokers besides ThinkorSwim/TD thanks to some bad experiences there. Any recommendations? I don't care about their charts. I'll maintain a ToS account just to use their chart probably or get another service or just not even bother and use the free tradingview.com charts which are pretty good, except for alerts. I'm still looking for after hours alerts. Can't seem to find anything anywhere. How can this be so? You'd think alerts for after hours would be far more needed than during normal hours!
Interactive has a capped rate on their fixed and variable rate plans. The cost per share starts at 0.01 It caps of 0.5% the total order fee. So if you buy volumes of stocks that are very large you would end up eating a 5 dollar fee but for a normal purchase if your not a millionaire you would be paying 1-2 dollars a trade? Though I just realized how they stack monthly fees so they are not a good choice unless you have a large account I will explain in the next post.

As for other brokers, as far as I can tell TD, CIBC and interactive are the best companies available in Canada? What happened with TD?
Last edited by OmgDrake on Apr 28th, 2020 10:05 pm, edited 1 time in total.
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
MichaelZZZ wrote: I think the fees at IB are either $.01 or $.005 per share. So if you buy a cheap stock you're screwed. And if you put in a significantly sized order you're screwed. The only way you come out well with IB is if you are buying either really expensive stocks. Otherwise a flat fee structure is going to be much cheaper. Take a $100,000 order. Most share prices are from $10-200.

$100,000 / $10 = 10,000 shares x .01 = $100 commission.
$100,000 / $100 = 1000 shares x .01 = $10 commission
$100,000 / $200 = 500 shares x .01 = $5 commission (now its good).

This type of pricing is very good very occasionally for most of us.
Unless you're trading smaller amounts of course.
Not sure what the average trading amount is on the TSX and NYSE. Say its $10,000:

$10,000 / $10 = 1000 shares x .01 = $10
$10,000 / $100 = 100 shares x .01 = $1.00 minimum I think (please correct if wrong).
$10,000/$1000 = 10 shares x .01 = $1.00 minimum

Its too bad they have that $100,000 minimum. Otherwise you could just move the money over when needed. Just takes a day. Or can I maintain an account there another way? Some brokers waive quarterly fees if you move some money in every month. I don't think IB offers this but maybe there is some other way?
Yea with more research IB is good for someone who 1. Has large holdings and 2. Only purchases large value stocks. They charge 100,000 USD minimum per account you have. So if you have a TFSA and and or RRSP, Margin etc. Its 100 K per account, USD. (OOF on that now). So now you have to have a total holdings have 100,200,300 K USD across all accounts to get the monthly fee waved. AND that monthly fee multiplies the more accounts you have open. So 2 accounts is 20 USD a month etc. (I was surprised about that one.)

So looking at the above interactive brokers will be a better account for certain kinds of people but not broadly a better deal depending on your holdings and what you are investing in.

No other firms from as far as I can tell are largely different from what is in TD, CIBC etc offer. IB at first glance looked good but its only good for very specific kinds of profiles. Canadians don't have access to low brockerage fee companies without catches like they have in the U.S at this point :( (from what I can see). There was some articles on firms looking into moving into Canada that have better fee structures but nothing confirmed yet. Its like cell phone plans a decade ago all the companies have high fees and no incentive to lower them. Oh well it was useful to learn looking into the stuff.
Member
Jan 26, 2020
374 posts
85 upvotes
Canada
OmgDrake wrote: Interactive has a capped rate on their fixed and variable rate plans. The cost per share starts at 0.01 It caps of 0.5% the total order fee. So if you buy volumes of stocks that are very large you would end up eating a 5 dollar fee but for a normal purchase if your not a millionaire you would be paying 1-2 dollars a trade? Though I just realized how they stack monthly fees so they are not a good choice unless you have a large account I will explain in the next post.

As for other brokers, as far as I can tell TD, CIBC and interactive are the best companies available in Canada? What happened with TD?
I cannot imagine paying 0.5% in commission....many of my swing trades only made that! And its twice that for a buy/sell. Unbelievable what some people pay. The problem I found is very few stocks are expensive enough to make this work. I'm far better off with a flat rate at TD. I didn't like the software of IB but I didn't spend much time with it. Not sure how it compares to ThinkorSwim which, though rife with problems and design idiocy, has a lot to offer. I find it much better than TD's Advanced Dashboard. Not sure why they even bothered to bring out Advanced Dashboard.

My issues with TD are mainly their accounting which is atrociously disorganized. Different areas update at different times which is utterly ludicrous. They even have different terminology for the same thing in different areas. And when you look at your trades they don't summarize them in most areas. So if I have a trade of a few hundred thousand it can be split up into half a page of fills. Who wants that? CRA surely doesn't. I surely don't. Their customer service before COVID-19 was really excellent. Very patient and fairly knowledgeable and I rarely waited long. After the virus hit of course its a disaster like almost every company so I can't blame them for that. There are many aspects of a broker. You just can't expect anyone to really be excellent in everything. For me the best thing about TD is ThinkorSwim charts. They are very complex - took me many hours of fiddling to get comfortable and I'm still learning stuff all the time. But it still needs a massive rebuild with a lot more user control and real time account history. ToS also offers some after hours trading that many brokers don't seem to bother with (8-8 instead of 4am - 8pm) so hopefully one day they'll make that right.

Maybe the answer to the accounting problem is not to expect much and download everything into a stock market account program. Any suggestions?
[OP]
Jr. Member
Dec 24, 2008
153 posts
10 upvotes
MichaelZZZ wrote: I didn't like the software of IB but I didn't spend much time with it. Not sure how it compares to ThinkorSwim which, though rife with problems and design idiocy, has a lot to offer. I find it much better than TD's Advanced Dashboard. Not sure why they even bothered to bring out Advanced Dashboard.
I also felt that going through the IB front end it was allot harder to use then Questrade. (and in general reviews said that was the main downside of their brokerage. ) Though, the average down market buy option they had was a nice feature which as far as I can tell questrade has no equivalent. Questrade also has none of those problems your describing with accounting. You can download clean excel tables. I have some issues with how they actually set the downloads up (sometimes you will download and the entire tables are not in number values? So you have to copy them to do math or correct them in other ways) But it also sounds like my purposes for what I would want to see in a download are far less advanced then yours.
Member
Jan 26, 2020
374 posts
85 upvotes
Canada
Probably not more advanced....I just complain more....:)
The problem with charts is it does take quite a while to get familiar with their features and nobody wants to do that with delayed data which is usually what you get with a trial account. As I see it when you choose a broker you are really looking at filling time and accounting clarity. Charts should be totally separate. I must say it is nice to be able to just click the chart itself and put in an order. Guess that's a luxury few will enjoy.

The next quest is finding alerts for after hours US trading. I don't even know if this is available to Americans.
Member
Jan 26, 2020
374 posts
85 upvotes
Canada
> IB is by far the best brokerage but will not deal with small potatoes.

It looks to me that's exactly who they are aiming for. The vast majority of stock prices are between $10 and $200 would you not agree?
Say I'm doing a $100,000 order, very common in the US.
$100,000 / $10 share price = 10,000 shares x $.01 = $100 commission vs $7-$10 at most flat fee brokers.
$100,000 / $50 = 2000 shares x $.01 = $20 commission
$100,000 / $75 = 1333 shares x $.01 = $13.33 commission
$100,000 / $143 = 699 shares x $.01 = $6.99 commission -- now its better.

$250,000 / $10 = 2500 shares x $.01 = $25 commission
$250,000 / $358 = 698 shares x $.01 = $6.98 commission -- now its better.

$500,000 / $10 = 50,000 shares x .01 = $500 commission!!!
$500,000 / $715 = 699 shares x .01 = $6.99 -- now its better.

I would say for the vast majority of stock purchases a $7 flat fee is going to be way better simply because there are very few stocks that people commonly buy with share pricees high enough to make the commission price lower than $7. Unless you're buying smaller amounts of course....or small potatoes.

If I've made any errors with the numbers please correct them.

I'd love to use IB for the occasional purchase of high priced shares. But their $120/year or $10/month account fee seems petty. I wish there was a way of doing this without leaving $100,000 there and without those fees. Suggestions? What I can't understand is why they don't just cap their fees so they're competitive with other brokers. Maybe that's a key to their profit.

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