Commissions of Interactive Brokers | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Brokers that only charge commissions? 2 replies

Any brokers that pay you for liquidity/reverse commissions? 5 replies

Any brokers bigger than Interactive Brokers? 5 replies

Interactive Broker commissions 35 replies

Interactive Brokers and Metatrader 0 replies

Commissions of Interactive Brokers

  • #1
  • First Post: May 2, 2010 2:13am May 2, 2010 2:13am
Does anyone know how the commissions of Interactive broker work for Forex Trading.

http://www.interactivebrokers.com/en/p.php?f=commission

I just looked at their Forex Commissions and I'm not sure if I understand it clearly.

For Trade orders of less than $1,000,000, it says the commisions is minimum of $2.50 per order. However, it also says under the commissions column that

commission = 0.2 basis point(1) *Trade Value(2)

Just so we are clear, does it mean that their

commission per trade = min($2.50 USD , 0.2 basis point*Trade Value)

How is their commission charged for trading 50,000 GBP of EUR/GBP?

Any traders using IB (or IB workers here), your input is greatly appreciated here.

Thanks
  • #2
  • May 2, 2010 11:37am May 2, 2010 11:37am
Easiest way to calculate their commissions is to think of it as '20 xzy per million xyz traded". So if you bought 1M EUR/GBP, you'd pay 20 EUR commissions (converted to the base currency of the account, for me that would be USD).

Per your example, 50,000.00 GBP *0.00002 = 1 GBP commissions = $1.52 USD so you'd be charged the minimum $2.50.
  • #3
  • May 2, 2010 8:11pm May 2, 2010 8:11pm
Quoting Trader KGB
Easiest way to calculate their commissions is to think of it as '20 xzy per million xyz traded". So if you bought 1M EUR/GBP, you'd pay 20 EUR commissions (converted to the base currency of the account, for me that would be USD).

Per your example, 50,000.00 GBP *0.00002 = 1 GBP commissions = $1.52 USD so you'd be charged the minimum $2.50.
Thanks trader KGB,

I'm just glad its not $2.50 + 0.2 basis points x the currency.

Also, it is charged in terms of Base currency always, isn't it? Continuing from my example, if my account's currency is USD, and I'm buying or selling 50,000.00 EUR/GBP, then the commission should be 0.2*50,000 EUR? OR is it 0.2 basis point x 50,000 (of the currency I'm selling)?


I remember you mentioned in another thread that you trade with IB. One last question for you. Have you ever experienced any slippage with them? How fast is their execution?

Since I'm planning on trading through API, I'm not sure what else can I do other than getting a much much faster internet connection. (maybe T1 if needed )
  • #4
  • May 2, 2010 8:21pm May 2, 2010 8:21pm
Quoting Svm
Have you ever experienced any slippage with them? How fast is their execution?
Of course there's occasional slippage, but it's reasonable and execution is good.
  • #5
  • May 2, 2010 8:35pm May 2, 2010 8:35pm
Quoting Mr J
Of course there's occasional slippage, but it's reasonable and execution is good.
Yikes,

Occasional slippage? Define occasional? I hope its not more than 1 out every 10 trades. I guess its not the best broker/system for scalpers then?


Why would a slippage incur in the first place if it s automated trading? I'm just trying to understand why slippage happens and then I'll see how to deal with it in my system.

Thanks for your input Mr. J
  • #6
  • May 2, 2010 9:07pm May 2, 2010 9:07pm
Quoting Svm
Yikes,

Why would a slippage incur in the first place if it s automated trading? I'm just trying to understand why slippage happens and then I'll see how to deal with it in my system.
You see a price on your screen. This price is - depending on your internet connection - somewhere between 0.1 and 0.3 seconds old. Then you click on that price (thats not instant either), and another 0.1 to 0.3 seconds until your order gets to the broker. By then, there might be a new price(better or worse) already. That's one reason why slippage occurs.
  • #7
  • May 2, 2010 9:18pm May 2, 2010 9:18pm
Quoting Svm
Also, it is charged in terms of Base currency always, isn't it?
Correct.

Quote
Continuing from my example, if my account's currency is USD, and I'm buying or selling 50,000.00 EUR/GBP, then the commission should be 0.2*50,000 EUR? OR is it 0.2 basis point x 50,000 (of the currency I'm selling)?
Correct, EUR. You originally mentioned EUR/GBP and then said 50k GBP. I assumed you meant EUR, but just in case you really did want the value of 50k GBP, I didn't bother correcting you.

Quote
I remember you mentioned in another thread that you trade with IB. One last question for you. Have you ever experienced any slippage with them? How fast is their execution?
Slippage is rare, depends on size, the book is always good for what's displayed. Sometimes I've been slipped in my favor too (ex. limit buy 93.50, filled at 93.49). Execution is roughly instantaneous.
  • #8
  • May 3, 2010 6:47pm May 3, 2010 6:47pm
Quoting shrike
You see a price on your screen. This price is - depending on your internet connection - somewhere between 0.1 and 0.3 seconds old. Then you click on that price (thats not instant either), and another 0.1 to 0.3 seconds until your order gets to the broker. By then, there might be a new price(better or worse) already. That's one reason why slippage occurs.

If I was to get a T1 internet connection, do you think that would help avoid the price slippage?

What if I get a T3 internet connection? I doubt Interactive brokers allow co-location services?
  • #9
  • May 3, 2010 7:42pm May 3, 2010 7:42pm
Quoting Svm
If I was to get a T1 internet connection, do you think that would help avoid the price slippage?

What if I get a T3 internet connection? I doubt Interactive brokers allow co-location services?
Bandwidth != latency
  • #10
  • May 3, 2010 8:39pm May 3, 2010 8:39pm
Quoting Trader KGB
Bandwidth != latency
Agreed,

But how do people trading through API deal with it? Or is it just market reaction to prices and after a certain point, its not in your hands?
  • #11
  • May 3, 2010 10:09pm May 3, 2010 10:09pm
Quoting Svm
Agreed,

But how do people trading through API deal with it? Or is it just market reaction to prices and after a certain point, its not in your hands?
Guess it depends largely on trading style. If you're a high frequency, fully-automated system trader, then latency will be one of your biggest factors, and you're going to want to look at co-location. If your trade holding period is anything over a few minutes, then the factor of latency measured in milliseconds isn't going to matter as much.
  • #12
  • May 3, 2010 10:38pm May 3, 2010 10:38pm
Quoting Svm
Yikes,

Occasional slippage? Define occasional? I hope its not more than 1 out every 10 trades. I guess its not the best broker/system for scalpers then?


Why would a slippage incur in the first place if it s automated trading? I'm just trying to understand why slippage happens and then I'll see how to deal with it in my system.
Slippage is a fact of trading. Prices are dynamic, and orders are not executed instantaneously. There is always a delay with any broker, and in that time price may have changed. Slippage isn't only negative, we can also have position slippage (filled at a better price). I regularly experience this. Note that both limit and market orders can experience slippage, though with limit orders it is only positive slippage.

Quote
If I was to get a T1 internet connection, do you think that would help avoid the price slippage?

It may help if you are sending the orders at the moment you want them executed, but if you have orders set up in advance they'll be stored with IB or the exchange (and since you're not sending them, they'll be executed more quickly).
  • #13
  • May 4, 2010 5:32am May 4, 2010 5:32am
IB executes great, not a problem up to the moment. S/L orders are executed at market after the price is reached. Might be in your favour or not, it is just the market price. So far a great broker.


Regards,
Stream
  • #14
  • Edited 8:09pm May 4, 2010 8:04pm | Edited 8:09pm
That $2.50 is PER SIDE, Minimum size on Euro/$ is 20,000 and comm is $5.00 round-turn, and comm stays that until you get up over 100,000 (not sure the exact amount), then that formula kicks in and the comm goes up a bit. I haven't traded cash fx thru them, but the CME futures are instant fills, usually no slippage (and you could have positive as well as negative slippage). Spread on E/U is 0.5 - 1.0.
I am in Houston, TX (Central Time zone same as CME) and have a cable modem - plenty fast.
ps: There is a yahoo discussion group on the api, with very experienced programmers.
http://finance.groups.yahoo.com/group/TWSAPI/
  • #15
  • May 5, 2010 7:49am May 5, 2010 7:49am
Quoting Kenz987
That $2.50 is PER SIDE, Minimum size on Euro/$ is 20,000 and comm is $5.00 round-turn, and comm stays that until you get up over 100,000 (not sure the exact amount), then that formula kicks in and the comm goes up a bit. I haven't traded cash fx thru them, but the CME futures are instant fills, usually no slippage (and you could have positive as well as negative slippage). Spread on E/U is 0.5 - 1.0.
I am in Houston, TX (Central Time zone same as CME) and have a cable modem - plenty fast.
ps: There is a yahoo discussion group on the api, with very...

I understand that the $2.50 is per side commission. Thus, a round trip would be $5.00. I still think that's much cheaper than most of the other brokers.

Thanks for the link. Though its for ACtiveX and Excel and I'm using C++. I'm just concerned about slippage with forex execution because my system is based a little on High frequency data. I'm not scalping as I'm not looking for a pip gain every 10 seconds. But, if needed (rarely according to my backtest), I want to be able to execute more than one trade within a minute and don't want to experience any sort of slippage there.
  • #16
  • Last Post: Apr 20, 2023 10:40pm Apr 20, 2023 10:40pm
Quoting Svm
{quote} If I was to get a T1 internet connection, do you think that would help avoid the price slippage? What if I get a T3 internet connection? I doubt Interactive brokers allow co-location services?
I know this post is very old, but I am sure other people read old threads.

The best way to combat slippage is by using limit orders and not market orders.

Market orders are instant orders and are executed at the price at the broker, whether it is the same as your screen or not.

In a limit order, you specify the price you want to buy/sell at and it executes at that price, no nasty surprises.

If your strategy has a condition where a price must be below or higher than a certain level, limit orders can be very useful instead of using an EA that does the same with market orders which is vulnerable to dishonest slippage (front running) or honest slippage.

At a higher level of experience, you will eventually be using limit orders almost completely, even if that is with an EA placing limit orders.

Market order entries are extremely risky and if your broker realizes you use market orders frequently, you may become a victim of front running, especially if you trade large position sizes.

The way dishonest slippage works is:

1. You enter a market order.
2: The broker buys the position first at the price you see, then sells it back to you at a higher price (if you're long) and calls it slippage. The difference between the prices (pips), they pocket as profit.

This dishonest practice could go almost unnoticed, because many traders that place market orders rarely look at the actual price of what they're buying. They execute when they see their signals or strategy line up, paying very little attention to price. If they looked carefully, they would see the price they enter with in a market order at is often different than what actually gets filled.

Scalpers will almost always get destroyed by this dishonest practice.
0 traders viewing now