I regularly make FX transfers, mostly using CurrencyFair. However, I looked at the quotes IB provides on its platform for EURUSD and USDCHF: these are much much better than CurrencyFair: they are actual interbank rates, which are much sharper than retail rates.

Is there a "catch" here - i.e. why wouldn't everyone use IB or some other online trading platform rather than one of the currency exchanges (CurrencyFair, Transferwise, etc), let alone a bank?

I really don't know why anyone would use a bank for this. Bank rates are a royal ripoff. I guess out of ignorance or lazyness. Same reason people shop in an expensive migros or coop next door

Well, some catches with IB are: monthly fees if you don't keep $100k invested with them, you get only one free transfer out per month, and as their account is abroad, CHF transfers to it aren't free

I think the only appeal of currencyfair and others is that it is really user friendly. With IB, you have to know what you are doing. Not everyone understands what buying usdchf means or selling it for that matter. Fx is treated simiarly to stocks.

Cf has the nice little drop down menus with country flags so you know you are tradng from currency A to B

probably because most people don't convert significant amounts of currency.

how much difference would there be between IB and Currencyfair on, say, 100kchf converted to USD?

Buying 98.5k USD on IB costs exactly 100'002.16 USD right now (including 2.18 commission)
Exchanging 100k CHF on CF get me 97'986 USD

A few secs delay in between the two quotes so not a perfect comparison. Rates are reasonably stable, the resulting 500-550 USD difference is present in all of multiple tries.

I agree with everyone that is in support of brokers offering effectively spot for the conversions. But that really benefits existing customers who perhaps use their brokerage account much like a current account.

If you are a new customer you have to get the money to them. Then you have to get it out. If using brokers as an intermediary, the fees from the source and then to the target should be considered although the total cost is better than most over the counter bank rates.


My 2¢ .

For a one-off conversion, obviously, IB would be an overkill and you'd be better served with currencyfari and the likes.

But if you also happen to be looking for a good cheap broker to trade stocks in your new currency, look no further.

I'm a Swiss citizen (former US) - couple of questions about TD Ameritrade vs. Interactive Brokers.

[Background: After receiving an unexpected inheritance of about 10K USD from my grandparents in the US, I've succeeded in opening an account at TDA, and I'm using that money to learn how to trade stocks. Grampa was a passionate hobby-trader, and I'd like to do him proud with it. OTOH, this money is completely outside our family budget/pension fund/etc., so I CAN feel free to put it in volatile things like stocks.]

Goals:

- I know a bit about tech and gaming companies, so I plan to invest in that general area.

- Also, I'm fascinated with the technical side of trading. I've implemented some simple tools like trailing stop losses and trailing buy orders to move in and out of positions fairly often. This seems to work pretty well, but it does add up to, say, 5 or more trades per week.

If you were in my shoes, would you stay with TD Ameritrade or would you switch to Interactive Brokers?

- Until the end of my first 2 months at TDA, I can trade for free - but over time, I think those $7 transaction fees could really add up - particularly if I'm using it to move "only", say, 3000 USD. From that standpoint, it looks like IB would give me more leeway.

- Besides the inheritance money, I don't really have money in the US - but it would ALSO be nice to connect my UBS account with my American one - for instance, to move over some cash for a family visit in a year or so. It looks like IB would be very good at that.

- Also, I might be interested in buying a non-US stock or two. (There's a Polish game developer I really like, listed on the WSE - or, of course, there's Logitech right here in Switzerland, or Samsung in Korea). Would IB give me access to, say, Swiss, Polish and Korean markets? TDA seems to be a wash for anthing outside the US,

- OTOH, I feel comfortable with TDA's tools (like thinkorswim). And I've received quick, competent and friendly service from TDA's support people. Would I be losing "quality of life" in terms of tools and service if I moved to IB?

- In particular: Longer term, I'd like to try my hand at using scripts to refine my technical game. TDA provides scripting tools in thinkorswim. Does IB allow something similar?

- Finally: Sometimes you run into little things that can ruin your day. For example, I pulled out of an index fund last Thursday afternoon to jump into NVDA, because it was starting to rise again - only to find out that I still had to apply for margin trading rights. The TDA guys were very helpful, but I won't be upgraded until Monday, which is irritating. Any similar catches, typical newbie errors I should look out for if I switch to IB?

You should NOT be trading with margin, this is something for sophisticated investors & something I would never do even after trading for for over 30 years.

This post reminds me of that saying.....a fool and his money are soon parted

Margin trading can mean a lot of things.

In this case, it simply means that after closing a position - say, for a 2% gain - I can re-invest immediately; otherwise, I have to wait 3 days. That, at least, doesn't seem too speculative.

[Edit: Shorts and Options are NOT something I'm interested in ...]

10k is not enough money to use Interactive Brokers. I think the minimum is more than that? In any case I am sure there are cheaper brokers to buy stocks with 10k. With IB and trading you need to invest a lot more money.

AFAIK, their minimum for individual punters is exactly 10K. But I've sent them an email asking a few specific questions along those lines - in my experience, you can run into all kinds of nasty, hidden costs, particularly as a small investor.

[Edit] OTOH, would there be other brokers you would recommend? I spent quite a while looking around, and TD Ameritrade is certainly a lot cheaper than, say, Saxobank!

i would not do any technical trading in my own personal account. You can easily become liable big time for capital gains taxes and social security if they decide to label you as a professional trader. Easily half of your profits will gone be out of the window this way (and you'll learn about it only 2-3 years later), while you'll still be fully on the hook for any market risks. Establish your own GmbH/AG and do the trading on its behalf to eliminate tax surprises. 10k is a bit too little for that though.

It's pretty good for trading on international exchanges. Bear in mind though, that trading on non-US exchanges is significantly more expensive in general regardless of your broker. Exchanges themself charge an arm and a leg and occasionally you can be hit by nasty surprises like stamp duties.

It has its risks, but if the market goes down, I might want to go on a shopping spree right now, not wait for a few days or weeks until my next salary or while my international bank payment clears. Trading on a margin helps widen your opportunities. Interests are very reasonable, just keep in mind the risks.

With IB you need to subscribe to the various realtime quote groups you want. Usually that comes at a cost, exceptions are the basic US quotes which are free. Without realtime subscription, quotes are delayed 15min.

You can subscribe and unsubscribe at any time but both minimum and increments are one full month (the 28-31 day period starting with your subscription date). So if you subscribed to Taiwan realtime market data because you want to buy Taiwan Semi the cost for the realtime data feed would be deducted even if you unsubscribed ten seconds later. The realtime data are fed to your client for the full time you paid for. You don't need realtime data to trade but not having them brings of course risks of its own.

IB charges a minimum account maintenance fee of $10 a month. This is waived if broker fees paid during the calendar month are more than that. With less than $10 in brokerage fees I think the maintenance fee is reduced by the brokerage fees generated.

With your trading frequency I dont' think you'll find a (significantly) cheaper broker. Definitely not a Swiss one.

In my experience (Raiffeisen and UBS) electronic bank transfers from and to Swiss banks are reasonably quick. If the order was entered before they daily cutoff, whenever I checked it appeared on the other side no later than on the next banking day.

someone mentioned you don't have the $10 fee if you have over 100k with them. is that the case?

You can get the same realtime market and order book data elsewhere, sometimes for free, often at least cheaper. It comes from the exchange, not the broker, there's no need to buy it from IB - it makes zero difference on how your order will get executed. What you'd be (over)paying for is just for getting it conveniently right in their trading UI. To avoid risking a trade at an unfavorable price just get into habit of placing limit orders.

Yes, usually it's quick. What about salary? You can't ask for a few months' advance just because market is down and you want to buy stocks right now. That's where a margin loan is useful.

Also you'll need a margin loan if you want to trade immediately with a stock sale's proceeds, because the broker gets the cash only a few days later.

Yes

Of course you may get the data elsewhere but that's not really the point.

I don't think so. While it's correct to say that settlement doesn't happen until T+3 (with T0 being the day of the trade) your funds available for trade include the trades that haven't been settled yet. However you can't withdraw amounts that have yet to be settled.

Thats very odd, if you have made a sale you don't need margin to trade.
Quite why anyone would invest & sell for a 2% gain beats me,

Unless you want to trade before settlement has happened, i.e. between T+0 and T+3.

Around here this is reflected by "Buchdatum" (= T+0) and Valutadatum (= T+3). You only earn interest after Valuta has been reached. You may be able to withdraw funds before the Valuta for incoming cash has been reached (or not, depends on bank policy) but if you do and overdraw the account you'll pay debt interest even if the incoming payment is more than enough to cover the overdraw.