Switching Brokers ... A Real Pain!

July 12, 2017

Online retail brokers change features all the time - some of them are welcomed by the majority of clients, but most of the time they annoy us. What's more rare is when a broker is acquired by another, yet this has happened to me TWICE.

 

I first started using the brokerage tradeMONSTER in 2012. I found it the most user-friendly of any online brokerage and with some of the lowest fees and commissions around. They were acquired by OptionsHouse in 2014 I believe, and nothing changed. All the fees stayed the same, the platform stayed the same, etc. In 2016, OptionsHouse was acquired by E*Trade, and at first I thought things would go the same way. Wrong! E*Trade is rolling out a new platform that is similar to the OH platform, but draws away from all the areas where OH's platform shined and instead favoring new things like useless indicators and fancy charts. Basically, I'm having to learn a whole new platform anyway, and I think it's time to switch. I'm a big fan of low commissions and easy-to-use desktop client platforms. But who should I choose?

 

INTERACTIVE BROKERS

 

IB has some of the lowest commissions and fees around, although a tad confusing, and their platform has been described as "archaic." From what I've seen, it looks really complicated and is probably the least user-friendly of the brokers I'm researching. However, they have this thing called the "Probability Lab" which seems especially tailored to my trading style and the methodologies taught here in the Comprehensive Trading Course. I may warm up to them.

 

Fees: $0.70 per contract + exchange and clearing fees (negligible)

 

Pros: Great rates and seemingly lots to offer from their platform

 

Cons: Minimum activity requirements, $10,000 minimum acct balance, overall confusing pricing policies. Platform may take a large time investment to become acquainted.

 

 

TD AMERITRADE / THINKORSWIM

 

This broker and platform is typically the "go-to" for options traders. Indeed, their platform is quite good; I currently use it as my research platform with OH as my execution platform. And there is a reason for this ... they have some of the highest commissions in the space.

 

Fees: $9.99 flat rate + $1.00 per contract + exchange and clearing fees (negligible)

 

Pros: No account minimums, no minimum activity fees. Great platform for charting and conducting research, great scanning and analysis tools.

 

Cons: Very high fees and (IMO) difficult position tracking, placing, and P&L accounting.

 

 

TASTYWORKS

 

This broker is the new kid on the block, having just been founded this year. That's not necessarily a bad thing, but it does mean that things likely have not been fully ironed out. That said, their platform seems to be the easy-to-use kind that I prefer, but it may be like OH in that I need a second platform to conduct research, charting, and scanning, which I would prefer not to need. I also have no idea how they will maintain their phenomenal rates.

 

Fees: $1.00 per contract + exchange and clearing fees (negligible) ... $0 to CLOSE

 

Pros: Platform appears easy-to-use and user-friendly albeit could be lacking in vital analysis tools. Best fees around.

 

Cons: Brand new platform could mean problems arise when trying to do simple things like filling orders or setting alerts, etc.

 

 

Overall I'm inclined to pursue IB, as I'd like to have an all-in-one platform rather than use two, but I'm turned off by their confusing rates, tiers, and their minimum acct balance and activity fees. Tastyworks has phenomenally low rates, and from what I can tell no minimum activity or account balances. That said, TW's rates aren't all that much lower than IB. Example:

 

Trading a 2 lot iron condor in TW cost: $1.00 x 8 = $8.00, because $0 closing fees.

Trading a 2 lot iron condor in IB cost: $0.70 x 8 x 2 = $11.20 (40% higher)

 

Compare these to my current cost: ($4.99 + $0.50 x 8) x 2 = $17.98

or to TD Ameritrade's swindling: ($9.99 + $1.00 x 8) x 2 = $35.98

 

Either IB or TW would be great savings to my current costs, and so I have some testing and research to do over the next week or two. 

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