Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

abuguapo

Does My Broker Pocket the Spread when I Take a Trade?

Recommended Posts

I use Interactive Brokers to trade stock index futures (specifically the emini Russell 2000..symbol TF in esignal).

 

I don't think I'm nuts (though if I am or not...I guess I'm not the one to say)...but here is the thing, for the longest time I chalked it up to being paranoid...risk adverse...a 'newbie'...'life in the markets' etc...but it seems I can't win but (seemingly) half the amount that I can (easily) lose.

 

I realize this is why you have to be discriminatory about when to enter...but on a more empirical...nuts and bolts...factual level...what I want to know is...is it possible that IB is netting the spread on every trade I take? (in addition to commission? My commission is nothing really...compared to the amounts I'm losing) Again and again...if I win (and say I win a decent amount) it's always a bit less than expected...and then if I lose...seemingly just several tics (say 3-5)...it's almost (ALWAYS) twice the amount expected.

 

So one or two two trades in a day might yield X amount (several hundred dollars)...but then price action contracts...I get in...price goes against you a couple of tics (honestly just several tics)...get out...and I've just lost a couple of hundred. "But it was just a couple of freaking tics" - I scream...(bird in tree outside: blink...blink)...I live alone no one is offended except me. :doh:

 

Seems to take a breakout to make a couple of hundred but a small scalp against my position (that gets me out because my stop is too close...blah blah blah) but the move has only moved against me 4-5 tics...and ouch...wtf...how can that have cost me so much?

 

It's obvious the odds seemed stacked against you (as a small newbie) except in the case that you catch a larger move and ride the consensus...otherwise you can be chumpbait for scalpers etc. BUT is there an equation baked into the formula of buying and selling from the brokers side (the trade exchange?) where they net the spread? I know this is done in forex...anyone know if they do so or are allowed to do so in a regulated market?

 

In regulated markets who decides what the spread (difference between bid and ask price) will be...and who is pocketing that amount (difference when you do take a trade/side) in the market? Anyone know...excuse the ignorance.

 

Best,

 

g

Share this post


Link to post
Share on other sites

No. They aren't. At least not normally, and not systematically. And not the IB you are a customer of in your transactions.

 

But your problem may explain why most of us enter with limit or stop limit orders. If you give away the spread then it is always going to be a cost of trading. If it was a bucket shop like oanda or fxcm then the spread goes to the shop. If its an ECN/Exchange trader like IB then the spread is between you and your counterpart when you enter the trade.

 

There is a chance that TimberHill might be the counterpart from time to time. In that case, yes, someone in the IB group of companies is the other person. TH and IB broking maintain chinese walls and the size of their broking business negates the speculations that one sees at ET that they would get enough from screwing little guys by breaking those walls to make it worth the loss of business if it was ever discovered.

 

What market do you trade where the spread is regulated. In every market I've ever traded with IB its a true exchange and the spread is determined by someone willing to sell to my buy or vice versa.

Share this post


Link to post
Share on other sites

I used IB. Don't know if this helps, but their data is not tick data, it's a combined or compressed data (I forgot the exact wording).

 

I did have two very strange trades occur with IB that never happened with other brokers.

 

I was in a losing ES trade, placed my sell stop below the market - the market came within one tick of the stop - it never went bid, but my stop was executed. I checked the time & sales, no record of a trade at my sell stop. Then I downloaded the CME data for that day. Yes the market traded within one tick, but again, the market did not trade at my stop price. No data for my trade. My trade was offset at the stop price with no record at the exchange. And yes, the daily statement showed my original sell stop price to offset.

 

This happened twice. Once in the ES and once in Crude Oil.

Share this post


Link to post
Share on other sites

If you think that happened (assuming it was recent) then contact IB by phone or web. They will go back to the time and sales and if there is a problem then you'll be fixed. But I'll bet that if you do it you'll find that the (real, full) time and sales includes a trade before yours that tripped the stop.

 

Also though with IB ... there are a lot of different ways to set up stop tripping so make sure you actually understand how you are set up.

Share this post


Link to post
Share on other sites

In regulated markets who decides what the spread (difference between bid and ask price) will be...and who is pocketing that amount (difference when you do take a trade/side) in the market? Anyone know...excuse the ignorance.

 

Best,

 

g

 

I agree with Spidey, but you have to check exactly what it is you are buying. Often with some brokers you are effectively spread betting or using a cfd and they will report the market prices.....the only way is to check. Sometimes, the type of account you have with the same institution might be slightly different as well.

Share this post


Link to post
Share on other sites

I'd look at your trade execution report too. It could be that you are using a market order rather than limit and due to feed or your connection latency, the market is not where you think it is when you place the trade. A market order will still fill you though at best possible price.

Share this post


Link to post
Share on other sites
If you think that happened (assuming it was recent) then contact IB by phone or web. They will go back to the time and sales and if there is a problem then you'll be fixed. But I'll bet that if you do it you'll find that the (real, full) time and sales includes a trade before yours that tripped the stop.

 

Also though with IB ... there are a lot of different ways to set up stop tripping so make sure you actually understand how you are set up.

 

Thanks SS, this happened in 2002 around there. I know the IB platform is a little tricky, but it was a simple stop order. I did call IB and they said it could have been a software issue.

 

Either way, we are responsible for any problems with the software or order placement, or even if MF Global chooses to drain our account and move out if the country.

Share this post


Link to post
Share on other sites

They pick the stop orders.No doubt about it. set an alert in emini even though it traded below my alert did not get triggered. My alert was set for a ask price say 1160 the market traded down to 1159.5 apparently there were no ask . That means the market was pushed down to pick the stops. Then the market was back at 1161. I try to set alerts then I look to see what the price action and then trade.

Share this post


Link to post
Share on other sites

s2prasad's post is interesting.

 

"They" are not defined. But I am one of "they" in that if I see a move toward stops and it doesn't move more than x beyond I will try to benefit. It's not the broker here, its your opportunistic trader(s).

 

This illustrates why IB have so many different ways of setting stops now (double tap etc). If your market does regularly show certain group behaviours then you may want to use non-standard stops. Either that or use a programmable platform like Sierra Chart to build complex off exchange/broker server rules for exit.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 11th July 2025.   Demand For Gold Rises As Trump Announces Tariffs!   Gold prices rose significantly throughout the week as investors took advantage of the 2.50% lower entry level. Investors also return to the safe-haven asset as the US trade policy continues to escalate. As a result, investors are taking a more dovish tone. The ‘risk-off’ appetite is also something which can be seen within the stock market. The NASDAQ on Thursday took a 0.90% dive within only 30 minutes.   Trade Tensions Escalate President Trump has been teasing with new tariffs throughout the week. However, the tariffs were confirmed on Thursday. A 35% tariff on Canadian imports starting August 1st, along with 50% tariffs on copper and goods from Brazil. Some experts are advising that Brazil has been specifically targeted due to its association with the BRICS.   However, the President has not directly associated the tariffs with BRICS yet. According to President Trump, Brazil is targeting US technology companies and carrying out a ‘witch hunt’against former Brazilian President Jair Bolsonaro, a close ally who is currently facing prosecution for allegedly attempting to overturn the 2022 Brazilian election.   Although Brazil is one of the largest and fastest-growing economies in the Americas, it is not the main concern for investors. Investors are more concerned about Tariffs on Canada. The White House said it will impose a 35% tariff on Canadian imports, effective August 1st, raised from the earlier 25% rate. This covers most goods, with exceptions under USMCA and exemptions for Canadian companies producing within the US.   It is also vital for investors to note that Canada is among the US;’s top 3 trading partners. The increase was justified by Trump citing issues like the trade deficit, Canada’s handling of fentanyl trafficking, and perceived unfair trade practices.   The President is also threatening new measures against the EU. These moves caused US and European stock futures to fall nearly 1%, while the Dollar rose and commodity prices saw small gains. However, the main benefactor was Silver and Gold, which are the two best-performing metals of the day.   How Will The Fed Impact Gold? The FOMC indicated that the number of members warming up to the idea of interest rate cuts is increasing. If the Fed takes a dovish tone, the price of Gold may further rise. In the meantime, the President pushing for a 3% rate cut sparked talk of a more dovish Fed nominee next year and raised worries about future inflation.   Meanwhile, jobless claims dropped for the fourth straight week, coming in better than expected and supporting the view that the labour market remains strong after last week’s solid payroll report. Markets still expect two rate cuts this year, but rate futures show most investors see no change at the next Fed meeting. Gold is expected to finish the week mostly flat.       Gold 15-Minute Chart     If the price of Gold increases above $3,337.50, buy signals are likely to materialise again. However, the price is currently retracing, meaning traders are likely to wait for regained momentum before entering further buy trades. According to HSBC, they expect an average price of $3,215 in 2025 (up from $3,015) and $3,125 in 2026, with projections showing a volatile range between $3,100 and $3,600   Key Takeaway Points: Gold Rises on Safe-Haven Demand. Gold gained as investors reacted to rising trade tensions and market volatility. Canada Tariffs Spark Concern. A 35% tariff on Canadian imports drew attention due to Canada’s key trade role. Fed Dovish Shift Supports Gold. Growing expectations of rate cuts and Trump’s push for a 3% cut boosted the gold outlook. Gold Eyes Breakout Above $3,337.5. Price is consolidating; a move above $3,337.50 could trigger new buy signals. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Back in the early 2000s, Netflix mailed DVDs to subscribers.   It wasn’t sexy—but it was smart. No late fees. No driving to Blockbuster.   People subscribed because they were lazy. Investors bought the stock because they realized everyone else is lazy too.   Those who saw the future in that red envelope? They could’ve caught a 10,000%+ move.   Another story…   Back in the mid-2000s, Amazon launched Prime.   It wasn’t flashy—but it was fast.   Free two-day shipping. No minimums. No hassle.   People subscribed because they were impatient. Investors bought the stock because they realized everyone hates waiting.   Those who saw the future in that speedy little yellow button? They could’ve caught another 10,000%+ move.   Finally…   Back in 2011, Bitcoin was trading under $10.   It wasn’t regulated—but it worked.   No bank. No middleman. Just wallet to wallet.   People used it to send money. Investors bought it because they saw the potential.   Those who saw something glimmering in that strange orange coin? They could’ve caught a 100,000%+ move.   The people who made those calls weren’t fortune tellers. They just noticed something simple before others did.   A better way. A quiet shift. A small edge. An asymmetric bet.   The red envelope fixed late fees. The yellow button fixed waiting. The orange coin gave billions a choice.   Of course, these types of gains are rare. And they happen only once in a blue moon. That’s exactly why it’s important to notice when the conditions start to look familiar.   Not after the move. Not once it's on CNBC. But in the quiet build-up— before the surface breaks.   Enter the Blue Button Please read more here: https://altucherconfidential.com/posts/netflix-amazon-bitcoin-blue  Profits from free accurate cryptos signals: https://www.predictmag.com/ 
    • What These Attacks Look Like There are several ways you could get hacked. And the threats compound by the day.   Here’s a quick rundown:   Phishing: Fake emails from your “bank.” Click the link, give your password—game over.   Ransomware: Malware that locks your files and demands crypto. Pay up, or it’s gone.   DDoS: Overwhelm a website with traffic until it crashes. Like 10,000 bots blocking the door. Often used by nations.   Man-in-the-Middle: Hackers intercept your messages on public WiFi and read or change them.   Social Engineering: Hackers pose as IT or drop infected USB drives labeled “Payroll.”   You don’t need to be “important” to be a target.   You just need to be online.   What You Can Do (Without Buying a Bunker) You don’t have to be tech-savvy.   You just need to stop being low-hanging fruit.   Here’s how:   Use a YubiKey (physical passkey device) or Authenticator app – Ditch text message 2FA. SIM swaps are real. Hackers often have people on the inside at telecom companies.   Use a password manager (with Yubikey) – One unique password per account. Stop using your dog’s name.   Update your devices – Those annoying updates patch real security holes. Use them.   Back up your files – If ransomware hits, you don’t want your important documents held hostage.   Avoid public WiFi for sensitive stuff – Or use a VPN.   Think before you click – Emails that feel “urgent” are often fake. Go to the websites manually for confirmation.   Consider Starlink in case the internet goes down – I think it’s time for me to make the leap. Don’t Panic. Prepare. (Then Invest.)   I spent an hour in that basement bar reading about cyberattacks—and watching real-world systems fall apart like dominos.   The internet going down used to be an inconvenience. Now, it’s a warning.   Cyberwar isn’t coming. It’s here.   And the next time your internet goes out, it might not just be your router.   Don’t panic. Prepare.   And maybe keep a backup plan in your back pocket. Like a local basement bar with good bourbon—and working WiFi.   As usual, we’re on the lookout for more opportunities in cybersecurity. Stay tuned.   Author: Chris Campbell (AltucherConfidential) Profits from free accurate cryptos signals: https://www.predictmag.com/   
    • DUMBSHELL:  re the automation of corruption ---  200,000 "Science Papers" in academic journal database PubMed may have been AI-generated with errors, hallucinations and false sourcing 
    • Does any crypto exchanges get banned in your country? How's about other as Bybit, Kraken, MEXC, OKX?
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.