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IB spreads are tighter than Mbtrading

  • #1
  • First Post: Jul 29, 2010 8:32pm Jul 29, 2010 8:32pm
i find IB spreads are tighter than Mbtrading. how do i figure out if IB is better than MBx as the commissions are different.
  • #2
  • Jul 30, 2010 2:54am Jul 30, 2010 2:54am
Quoting junkone
i find IB spreads are tighter than Mbtrading. how do i figure out if IB is better than MBx as the commissions are different.
.... How about... Ask their sales rep?
  • #3
  • Jul 30, 2010 4:05am Jul 30, 2010 4:05am
Hi,

Dukascopy too have better spread on some pairs. My big concern is not only spread in ACN but also volume.

I tried once to compare volume from MBT/ Ducascopy / FXCM Raw feed. The winner is: Dukascopy !

Volume is very important in ECN to get fills. Try & open demo and compare you too, you will see.

Hope it helps
13
Brokers are angels
  • #4
  • Jul 30, 2010 2:40pm Jul 30, 2010 2:40pm
its really odd. i thought if i am dealing with ECN, the spreads should be competitive.
  • #5
  • Aug 1, 2010 10:38am Aug 1, 2010 10:38am
Quoting junkone
its really odd. i thought if i am dealing with ECN, the spreads should be competitive.
Hahahaha
  • #6
  • Edited 1:49pm Aug 1, 2010 1:31pm | Edited 1:49pm
IB requires a higher initial deposit, and larger minimum position size. The spreads may on some pairs at some times be little higher on MB, but that is because the liquidity providers are accepting much smaller position sizes. Like everything else, you save money buying in bulk.

To be able to open an account for $400 and trade in 1000 size lots MB is very competitive.

Not a thing wrong with Dukascopy though for $5000 or less account size and 1000 sized lots, the commission is 48 cents, vs. 29.5 cents at MB. Dukascopy gets really good if you are trading with an account size of greater than $25,000, 25 cents commission per 1000 lot size.

It's been a long time since I looked at IB, but I remember figuring out once that you have to do some signifigant volume to get the commission down to a competitive level w/ MB, a level at which you would qualify for discounts off the retail MB commission schedule.

It should be remembered also that if you can't beat a 1 pip or less spread, 1 1/2 pips w/ commission, on the EUR/USD perhaps horse racing would be a better place for you to consider investing.
  • #7
  • Aug 2, 2010 9:17pm Aug 2, 2010 9:17pm
Quoting Crassius
It's been a long time since I looked at IB, but I remember figuring out once that you have to do some signifigant volume to get the commission down to a competitive level w/ MB, a level at which you would qualify for discounts off the retail MB commission schedule.
Think you have it the other way around..

IB is 0.2 basis points ($20 per 1M USD) on their initial tier, has been for years. MBT is $29.50 per 1M USD, formally $50 up until they dropped their rate. MBT was pretty uncompetitive until they finally dropped their rate.
  • #8
  • Aug 2, 2010 10:31pm Aug 2, 2010 10:31pm
I was about to pose this question to the MBT sales rep on his thread but perhaps you guys have the answers.... Being that they are an ECN (as is IB) I would have assumed they got the same rates as IB. Not so... Here are three brokers quotes compared on a couple pairs I was interested in:

Attached Image (click to enlarge)
Click to Enlarge Name: 2010-08-02 RateCompare.png Size: 201 KB
  • #9
  • Aug 2, 2010 10:44pm Aug 2, 2010 10:44pm
Quoting InfinitySL
I was about to pose this question to the MBT sales rep on his thread but perhaps you guys have the answers.... Being that they are an ECN (as is IB) I would have assumed they got the same rates as IB. Not so... Here are three brokers quotes compared on a couple pairs I was interested in:
As Crassius speculated, the difference is likely to do with the partnership & volume-level each ECN has/does with each bank. IB has higher minimums & services a great deal of institutional clientele, that is likely to account for the discrepancy. Trust me, every ECN will have different spreads, even though they're all basically partnered with the same 12 or so major LPs.
  • #10
  • Aug 2, 2010 10:59pm Aug 2, 2010 10:59pm
Still though, I was surprised by the magnitude of the differences. And you are probably right that it has to do with minimum sizes, but let's say you wanted to do a 100k unit trade... Why would you ever go to MBT (wider spread & higher commission)? Does their Nav/NavPro platform offer better spreads than their MT4 platform?

Anyway just stumbled across this thread and figured why waste a good screenshot...
  • #11
  • Aug 2, 2010 11:20pm Aug 2, 2010 11:20pm
Quoting InfinitySL
Still though, I was surprised by the magnitude of the differences. And you are probably right that it has to do with minimum sizes, but let's say you wanted to do a 100k unit trade... Why would you ever go to MBT (wider spread & higher commission)?
As someone with accounts at both brokers, I can readily answer that question for you. If you are a high volume/high frequency trader, IB really can't be beat in the total cost department (spread & commission). Most of the time, the lowest cost is at IB, though the difference is not always that large (I rarely trade GBP pairs outside of GBPUSD).

IB has some small drawbacks related to higher margins and inexplicably bizarre NZD trading hours (not 24h for NZD pairs). Let's say you happen to have other positions on (could be equities, futures, or other FX pairs) and you want to put on a large trade in say NZDJPY, well IB will require 7% margin, not counting your other open positions. Then you can't even trade that pair from 1-5pm EST. And then there's the fun of P&L settlement back into USD..
  • #12
  • Aug 3, 2010 1:43am Aug 3, 2010 1:43am
Hi Trader KGB,

Having those accounts, what is the cost of trading 1 contract 6E Euro currency futures against trading the same amount for EurUsd cross spot?
  • #13
  • Aug 3, 2010 12:07pm Aug 3, 2010 12:07pm
The 6E contract would be $2.46 for 1 contract (125,000 units of the Euro or about ~$165,000 USD). The commission on that same ammount via their spot forex broker would be...~$3.31 on IB (which would be roughly 125000 x 1.32 x 0.00002).

And as an added bonus of trading the 6E contract, you wouldn't have to reconvert your P/L back to USD, right?
  • #14
  • Aug 3, 2010 12:13pm Aug 3, 2010 12:13pm
So I have just downloaded the IB trader workstation Java. But mine doesn't look anything like yours (see attachment).

Did yours look like this too? If so, how did you change the look?

Quoting InfinitySL
I was about to pose this question to the MBT sales rep on his thread but perhaps you guys have the answers.... Being that they are an ECN (as is IB) I would have assumed they got the same rates as IB. Not so... Here are three brokers quotes compared on a couple pairs I was interested in:

Attachment
Attached Image (click to enlarge)
Click to Enlarge Name: ib_workstation.png Size: 68 KB
  • #15
  • Aug 3, 2010 12:26pm Aug 3, 2010 12:26pm
You basically just have to open a new page in your TWS (i.e. as if you were creating a page of stocks) and then pull in currencies instead. I think it will ask you if you want to switch to the other mode...just say no.

You can also just import all your tickers as a CSV file which makes the process alot easier...I will attach my CSV to this post...

Finally, you can also do it like this:
Type in base currency, e.g. EUR
Then select Currency
Then select IDEALPRO as the exchange
Then it should bring up every pair that has EUR in it...after that click OK and they will all show up in the window.
Attached File(s)
File Type: csv crcy.csv   < 1 KB | 393 downloads
  • #16
  • Aug 3, 2010 12:34pm Aug 3, 2010 12:34pm
Thanks. MT4 is IMO way better. The demo of IB's TWS seems to show old recorded quotes (1,30) lol. And the charting is very crappy, I only get 1 candlestick.

Quoting InfinitySL
You basically just have to open a new page in your TWS (i.e. as if you were creating a page of stocks) and then pull in currencies instead....
  • #17
  • Aug 3, 2010 12:42pm Aug 3, 2010 12:42pm
Quoting InfinitySL
The 6E contract would be $2.46 for 1 contract (125,000 units of the Euro or about ~$165,000 USD). The commission on that same ammount via their spot forex broker would be...~$3.31 on IB (which would be roughly 125000 x 1.32 x 0.00002).

And as an added bonus of trading the 6E contract, you wouldn't have to reconvert your P/L back to USD, right?
Right on both accounts.

As the euro trades higher, the futures commission advantage weighs in more. I traded it heavily back in the 1.4 - 1.6 range.
  • #18
  • Edited 3:33pm Aug 3, 2010 2:20pm | Edited 3:33pm
Quoting Trader KGB
Think you have it the other way around..

IB is 0.2 basis points ($20 per 1M USD) on their initial tier, has been for years. MBT is $29.50 per 1M USD, formally $50 up until they dropped their rate. MBT was pretty uncompetitive until they finally dropped their rate.

The minimums are lower than I remember, but it is a fact that small accounts are cheaper to trade at MB than IB. This is due to the $2.50 minimum per order charged at IB.

10,000 USD/JPY = 29.5 cents at MB Trading
10,000 USD/JPY at IB = $2.50

100,000 USD/JPY at MB Trading = $2.95
100,000 USD/JPY at IB = $2.50

Also IB has a 10,000 account minimum to open.

Once you are trading 90,000 lots, IB would be cheaper. The point is you have to compare apples to apples. MB is better for small players, or players getting their feet wet. They can open an account for $400 and trade down to 1000 lots for 2.95 cents commission, as there is no mimimum per order.

Now trading 100,000 lots will not get you a discount at MB, so my memory may be faulty in that regard.

No one wants to pay more than they should. But I think new players get caught up too much in spread comparisons because a deal desk hides the commission inside the spread. When you are comparing deal desk to deal desk, that's how you do it.

At an ECN, spreads have less impact on your expenses, as the commission is broken out and you can compare apples to apples. MB seems to have made a marketing decision to go after the smaller player and provide a venue for them to trade that is as competitive as they can make it to a broker like IB, who is targeting larger accounts, hence the 10,000 min to open, and a price structure that really demands you trade full 100,000 lots.

It depends on what you are shopping for. If 10,000 account opening minimums and full 100,000 lots are are what you want, I'd agree that MB has some competition out there.

This thread started with a statement that spreads are tighter at IB than MB. True. I have only tried to point out that you have to look deeper at what you want and what size you are trading at, than just the fact that the spreads are .7 pips instead of .9 pips.
  • #19
  • Aug 3, 2010 2:59pm Aug 3, 2010 2:59pm
Good post.

To further your main point -- Even on IB, You don't get the same quotes on a 10,000 trade as you would on a 25,000 trade. Trades smaller than the minimum they stipulate go through their "IDEAL" platform and not "IDEALPRO". For most transactions the minimum trade size is 25,000 with some going as low as 17,000 and others going higher.

The list can be found here.

Honestly, for small players with <$1,000 in starting capital, Oanda can't be beat (IMHO) and I've used MBT's MT4 platform, IB, and Oanda for live trading.

Here's that list of minimums for IB:

PHP Code
Crcy      Min            Max
USD       25,000       6,000,000
AUD       30,000       7,000,000
CAD       30,000       7,000,000
CHF       30,000       7,000,000
EUR       20,000       5,000,000
GBP       17,000       4,000,000
HKD      200,000      50,000,000
JPY    2,500,000     550,000,000
MXD      325,000      80,000,000
NOK      160,000      40,000,000
NZD       40,000       9,000,000
SEK      200,000      45,000,000
SGD       35,000       5,000,000
  • #20
  • Aug 3, 2010 3:11pm Aug 3, 2010 3:11pm
So, who is IB? ... IBFX? If not, I have never heard of them.
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