Stock and ETF brokerage costs plunge

Discussion of the Stock portion of the Permanent Portfolio

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foglifter
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 11:47 am

mathjak107 wrote:
Tue Oct 22, 2019 2:59 am
i have what is called a limited margin account at fidelity on my ira . Limited margin----------
Allows you to trade on unsettled funds and trade without triggering trading restrictions, such as good faith violations, in an IRA1
From my experience FIdelity allows trading with unsettled funds in regular brokerage as well as IRA accounts, although the good faith rules are still enforced (sounds like this is the biggest difference you experience in your limited margin account). Be it a just-initiated deposit from the bank or proceeds from a sale I can place buy orders on the same day.
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 11:50 am

pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
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Re: Stock and ETF brokerage costs plunge

Post by mathjak107 » Tue Oct 22, 2019 12:02 pm

Keep in mind that the fidelity zero expense funds follow their own index not the standard ones like s&p or Wilshire. They would have to pay to use the standardized indexes so they created their own ...I own fzrox and it is pretty close
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Tue Oct 22, 2019 12:36 pm

foglifter wrote:
Tue Oct 22, 2019 11:50 am
pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
I don't think that is accurate. If you place a buy order for a non-fidelity fund, you get the closing price that day. Why would an exchange be any different?
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Re: Stock and ETF brokerage costs plunge

Post by foglifter » Tue Oct 22, 2019 12:49 pm

pugchief wrote:
Tue Oct 22, 2019 12:36 pm
foglifter wrote:
Tue Oct 22, 2019 11:50 am
pugchief wrote:
Mon Oct 21, 2019 8:45 pm
Now what you can do at Fido is 'exchange' one mutual fund for another simultaneously and automatically always at the close. SInce they now have several ZERO expense ratio funds and plenty of super-low ER ones as well, maybe that would work better for you?
Yes, this is a neat feature at Fido. Just need to keep in mind that the "real" same-day exchange works only when both the old and new fund are Fidelity funds. Otherwise the buy order would be executed a day later.
I don't think that is accurate. If you place a buy order for a non-fidelity fund, you get the closing price that day. Why would an exchange be any different?
This is accurate. Here's an explanation from the Fidelity website:

When will this mutual fund be purchased?

When using the proceeds of the sale of a mutual fund to purchase another mutual fund, the purchase occurs on the settlement date of the sale as follows:

Mutual Funds in the Same Family
The settlement date for the sale is the same as the trade date. Therefore, the purchase takes place on the same date as the sale. On the sale and purchase of funds, you will receive the next available price.

Mutual Funds in Different Families
The settlement date for the sale is one business day later than the trade date. Therefore, the purchase takes place on the next business day following the sale. On the sale of your mutual funds, you will receive the next available price, and on the purchase of your mutual funds, you will receive the next business day's price.
This order first appears as a single order identifying both the sell and the buy. You can attempt to cancel the entire order before the sale executes. When the sell executes, the order will appear as a separate sell and buy order. After the sell order has executed, you can only attempt to cancel the buy order up until the buy order executes.

Some funds may not be eligible for either type of purchase due to longer settlement periods.
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Tue Oct 22, 2019 1:21 pm

Thanks for clarifying. I learned something new today.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Oct 22, 2019 4:21 pm

I tried the mutual funds, then got a nastygram from Schwab for excessive trading in mutual funds. My momentum stuff does trade a few times per year, on average. Too many times for Schwab!

VERY INTERESTING TODAY... I sold some SCHX shares at Fidelity. I got dinged about 1/2 penny relative to the posted prices at the time. Then 15 sec before the close, I bought BIL (T-Bills ETF). I got dinged about 1/2 penny per share again relative to the closing price. I think it's the halfway point between bid and ask.. which were separated by a penny. They can be no closer than a penny, they can't be zero. They can be much yuuuger than a penny.

I am going to buy and sell, buy and sell BIL until I have satisfied my curiosity about trade friction. I'll do it at Fidelity, then at Schwab.

Why BIL? It's the least volatile ETF out there.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Fri Oct 25, 2019 10:20 pm

Ahhhh.... I have to yank the Roth back to Schwab. If I straddle Schwab and Fidelity, I can't do Roth conversions easily at no cost.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Wed Nov 06, 2019 6:46 pm

I have figured out how to place simultaneous MOC buy and sell orders without getting into trouble. Trouble = negative cash balance. Schwab will make the trades, but they you'll have a negative cash balance and a trading violation, and you have to sell something really quick to raise cash. They you get a nastygram. I have done it accidentally in the past; once I was required to have settled cash for 90 days. Facing the corner with dunce cap on.

So to avoid all of this, let's say you're selling 1000 shares of XYX, it's very easy to find last 5 day high and low prices. So you assume you're going to get 100 * (the low price) from the sale.

Then on the buy side, you assume you'll buy at the high price per share from the last 5 days. So you size the buy that way. And then maybe buy 1% less just to be sure.

The odds of exhausting your cash would be small.

Let's say you ended up buying shares and you have money left over. Place a limit order to buy at or below the closing price the next day; pretty good odds it will trade over the next few days. If not, you can turn it into a market order.

What I just described - Fidelity won't let you do.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Nov 19, 2019 6:27 am

"Self-Directed Trading

$0 commissions.

That's right – you can trade commission-free with Ally Invest Self-Directed Trading."


A unit of Ally Bank, of course.
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Re: Stock and ETF brokerage costs plunge

Post by sophie » Tue Nov 19, 2019 7:53 am

Be careful with Ally Invest.

They have fees on top of the commissions - and the website may not inform you of the fees until after you've bought the security (this happened to me). I presume the fees are still intact.

Also, if you buy a bond on Ally you can't sell it, nor is there any info on its current value (only face value). Based on the one phone call I made, you can't call them to sell it either. It's possible I just got someone who didn't know what they were doing, but I didn't want to waste time finding out. I just let the bond mature, moved my money out and that was that.

To add insult to injury, the Ally Invest tax forms are not bundled in with those from Ally Bank proper. And they arrived very late (mid to late March). Bit of an issue for my file-early-to-head-off-tax-scammers plan.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Sat Dec 14, 2019 6:41 pm

The "Get Smart" inspired TD Ameritrade commercial is very funny... but why? They got bought!
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Re: Stock and ETF brokerage costs plunge

Post by dualstow » Sat Dec 14, 2019 7:35 pm

Good to know, Sophie!
ochotona wrote:
Sat Dec 14, 2019 6:41 pm
The "Get Smart" inspired TD Ameritrade commercial is very funny... but why? They got bought!
Love that ad.
Feels like the end of the everything rally.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Sun Jan 05, 2020 12:46 pm

New trading problems... the drama continues.


Please escalate this to a trading manager. I am thinking about moving my accounts.

Back in 2019 timeframe, I started experimenting with MOC orders (Market On Close) on Street Smart Edge as a way to avoid Schwab selling my order flow to Citadel and others. That way I could buy or sell at the exact closing price. I was putting in simultaneous buy and sell orders, with the buy slightly smaller, so that I would not run into a cash shortage. It worked fine, and I was hoping to continue.

This last week, I was unable to place this kind of trade. This is now blocked across all of my accounts as far as I can tell. I had to call for help, pay $25, and assert on the recorded line that I would not have a trading violation. It took a long time, and was more than a little bit humiliating. This is not going to work going forward.

I do not want to trade MOC orders on two seperate days because the ETF I want to buy might gap-up before the next trading day. If I’m trading $500,000 then a 1% gap like we’ve seen when Important People tweet after-hours to pump the market is very tough to swallow.

If I have to trade during the day, then I want to trade with a brokerage that doesn’t sell my order flow, and will give me better price improvements, namely Fidelity. I just don’t see how I accomplish my objectives at Schwab. There has been some kind of policy change for my accounts and I can’t do what I was doing earlier with the MOC orders.

Before I move the accounts out of Schwab, do you have anything to offer? I don’t just want to leave without letting you know about the situation.
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Sun Jan 05, 2020 8:28 pm

Sorry Ocho, that sux. I used to be a Schwab fanboy, but various crap like this made me move my loyalties to Fido.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Jan 07, 2020 11:56 am

Change underway... scary more than $1 million in motion
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Re: Stock and ETF brokerage costs plunge

Post by Kbg » Tue Jan 07, 2020 4:00 pm

You've probably made up your mind, but I find IB excellent.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Jan 07, 2020 5:23 pm

Kbg wrote:
Tue Jan 07, 2020 4:00 pm
You've probably made up your mind, but I find IB excellent.
I agree it looks interesting. What pricing plan you on?
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Tue Jan 07, 2020 5:31 pm

Would you agree to a trading test? Buy some specific shares on a set time and date, and see what the price is?
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Re: Stock and ETF brokerage costs plunge

Post by Kbg » Tue Jan 07, 2020 8:03 pm

I do IBKR Pro. For my trading account I use margin from time to time and I like the execution control PRO provides. The margin savings alone make it worth to me.

I’m confident trade execution will be quite satisfactory.

A couple of things you should be aware of if thinking about going with IB.

It is assumed you have high a degree of knowledge and the platform is built for those types of users (desktop/web). However, their phone app is pretty easy to use and they have more simplified options as well. There has been a lot change recently in options provided that are clearly aimed at less sophisticated traders.

If you go with pro...

You do have to select and pay for quotes. My data package comes in at $14 per mo. Cost is based on what you need/order. You can do free quote snapshots if you trade during the day. There is monthly account fee of $10 for accounts under I think 100 or 110K, however commissions are deducted from the fee on a month per month basis. On the positive side margin is a full 1% lower than free trading and you have full control over how your order executes. I almost always use their price improvement algos and they do make a difference I think.

I would do two things...call them and talk about how you trade and what they recommend. Get a demo account and check out their technology. I would be totally shocked if you ever had the same problem you had with Schwab but you should ask them how they would handle it...but I imagine they will tell you about their various trade execution options/algos and it will be up to you.

I think their main weakness in my view is bonds. Not impressed. If you are a treasury/other bonds guy, I would definitely pay attention to that if you do a demo account.

Here’s my personal take...I have Schwab, Fido, IB and M1 accounts. My favorite two are IB and M1. IB is way advanced and dirt cheap when looked at as a total package. M1 is phenomenal for making buy, add monthly amounts, rebalance and auto reinvest dividends for a fixed allocation portfolio as simple as probably possible. I find Schwab and Fido sorta just middle of the road ok when compared to IB and M1.

The above assessment could change once I get into drawdown mode as I believe the others have pretty good retirement funds management/withdrawal capabilities which M1 and IB don’t seem that robust in.

In sum, best brokerage depends on what is important to you.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Wed Jan 08, 2020 5:26 am

Nice report. Honestly I'd just like as simple an interface as possible. I trade but I don't want to be a trader, if you know what I mean. I want to get a good price above all.
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Re: Stock and ETF brokerage costs plunge

Post by Kbg » Wed Jan 08, 2020 8:41 am

Without fail, every "free trading" broker is selling your flow and receiving compensation for that flow. So if anyone believes free is actually free, it isn't. If you go IB then there are simplified options. For smaller trades I mainly use their phone app which is quite easy to use.

Spend some time here: https://www.interactivebrokers.com/en/index.php?f=4985

Recommend filtering on IBKR Lite and Price Improvement
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Wed Jan 08, 2020 9:21 am

"IBKR Lite was designed to meet the needs of investors who are seeking a simple, cost-free way to trade US exchange-listed stocks and ETFs and do not wish to consider our efforts to obtain greater price improvement through our IB SmartRoutingSM system."

IBKR Lite does sell order flow... not sure how that's better than Schwab.
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Re: Stock and ETF brokerage costs plunge

Post by pugchief » Wed Jan 08, 2020 11:45 am

Pretty sure Fidelity does not sell order flow. And they are 'free'. More money to be made on low interest on idle cash, and even there, Fidelity excels. Not as well as Vanguard, but way better than the rest.
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Re: Stock and ETF brokerage costs plunge

Post by ochotona » Wed Jan 08, 2020 12:47 pm

Schwab and cash.... Grrrrrrr
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