Saturday, October 31, 2009

Lightspeed vs Interactive Brokers

Hey Guys,

This weekend I am taking a look at both the Lightspeed trading platform and the Interactive Brokers platform. Currently I am using Lightspeed for my day trading with Ocean View Capital, which is all I can do in that account. I use trademonster.com for my options and longer term trades.

At trademonster I am paying $0.50/contract or $12.50 minimum for options trades, and$0.50/Contract for or $7.50 minimum for multi leg trades. It is a flat fee for of $7.50 for stock trades. I do not trade enough size to take advantage of the per contract rate so I always end up paying the minimum, which becomes very expensive in commissions. I love the platform as it is very intuitive and easy to navigate but would like to save some money on commissions. For example, This week I put on three positions that cost me about $45 in commissions that would had only cost me $3-$4 on Lightspeed or IB.

At Lightspeed they charge $0.50/contract with no minimum commission and $0.40 per 100 shares traded. But I think they may have a monthly platform fee as I pay $29/month for my day trading account for data access fees. Which I don't mind as I will save much more by making at least 3 trades per month.

But I am also checking out Interactive Brokers, as I like all the extra tools that they have. I see that they charge $0.70/contract for options and looked like $0.34 per 100 shares traded. From what I can tell it looks like there is a $10 charge per month for their platform.

To help me with the comparison, can you please provide your insight and experiences with the interactive broker platform? Also can you confirm commission rates and monthly fees? And anything else that you want to trade about the platform.

Thanks

Dominic

7 comments:

  1. IB has a pretty extensive interface and tools. They seem to be constantly upgrading their tools and software and responsive to feedback. I especially like their family & freinds advisor account umbrella setup. I can manage up to I think 15 accounts without any formal license or business. Right now I mainly use it for swing and long trading.

    As for the fee structure I'm not sure but I don't pay for any subscription fees currently but that definitely means that I do not receive level II quotes and certain other data. You can individually select the different types of service fees you want. All I know is I pay really low prices for trades ($1 for all stocks and options are reasonable too but I don't trade a lot and haven't compared).

    I'm thinking about setting up the level II but it will cost about $20. I just found out (duh) that they have a day trading tool called the Integrated Stock Window that allows you to see the level II just like Lightspeed and you can customize shortcuts which when I get the change will backtest this feature and see if I can't create a decent facisimile to Lightspeed.

    It took me a while to learn how to use the interface and different features but they have a great on-going series of trainings and webinars both live and recorded.

    Also they provide you with a free paper trading account so you can play before you decide or trade.

    I'd request a demo account.

    Hope that helps.

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  2. I haven't spent any time on other brokerages so I can't really do a comparison. I can just tell you that IB has the lowest advertised fees that I've see, and they have more tools than I have time to learn them. Mark is right, they are constantly upgrading and adding features, and there is a pretty extensive webinar archive on everything they offer.

    You are correct on the fees you mentioned for IB. I think the way it works is you pay $10 for quotes, but that fees is waived as long as you rack up $10 in fees per month, something like that. There is no minimum per trade. You can trade one option contract for .70 and that's all you pay.

    Also, and I've experienced this a lot so it's important, I often have my orders filled at prices better than my limit price, and often I have not paid any commission fee. I have no idea why this is, but getting filled for free or .02 better than you were willing to accept really adds up over time. You must make sure to sign up for the SMART routing when doing options trades. This is how you end up with better than limit prices.

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  3. So I set up my Interactive brokers account over the weekend. I am going to go and wire money into it this afternoon. I decided that I would go with IB vs Lightspeed as the monthly data feeds for lightspeed were going to cost me $60 a month. Plus I like the vast amounts of tools that IB provides you. Looking foward to being able to scale into positions as commissions will not really be an issue anymore. I don't have to put my max position on all at one time anymore.

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  4. Wow! is OVC going to allow you trade with their capital with IB and not Lightspeed? What additional commissions are you talking about concerning scaling into positions? Isn't it $1 for a 100 share lot?

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  5. No, my day trading will remain with OVC at lightspeed. I am opening the IB account for my other trading that I normally have done in my trademonster account.

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  6. Oh okay in your post you said that you'd be going with "IB v. Lightspeed". So the total data fees for Lightspeed are $60/month. At least you can write those off...

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  7. Hello Dude,

    Substantially, the article is really the greatest on this deserving topic. I fit in with your conclusions and will thirstily look forward to your upcoming updates regarding trading. Just saying thanks will not just be sufficient, for the wonderful lucidity in your writing.

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