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  • REVIEW: Interactive Brokers Canada a Scam?

    Posted on June 10th, 2009 8 comments
    Interactive Brokers Canada

    Interactive Brokers Canada

    First off, don’t trust Interactive Brokers. My experience with them was the worst I’ve ever had with any company in my life. I was forced to liquidate my account, sell my positions, completely shut down, and they also managed to freeze my personal bank accounts for over 3 months. The question is why? Let me get into detail for you…

    Around late April 2008, Interactive Brokers kept sending me deposit notification emails saying to confirm a deposit to my account. After ignoring them for a few weeks (since it’s not my money) someone from IB called me. He told me that there is a deposit going into my account for $25,000. I told them that it’s not for me, but he insisted it was coming from me and intended for me. I made him repeat my name, the amount and where it was coming from. So I went online as he instructed and setup the deposit notification (heck I thought a family member was sending me a gift!). Monday came along and I thought it was dumb so I cancelled the deposit notification. Soon after, $25,000 finds its way into my account even after I cancelled the deposit notification. My first instinct was to hold the money in an interest bearing account at PC Financial.

    Roughly two weeks later, all my personal accounts freeze at PC Financial and IB tells me I must liquidate all my positions because my account was being closed down. For the record, I was holding short options on Lehman Brothers that expired on September 19, 2008… oh boy; I missed a boat load of cash because of this fiasco!

    So Interactive Brokers Canada puts the blame on the initial bank that sent the money. They claimed that TD Canada Trust made a mistake in sending the money to me. I told Interactive Brokers I have no problem returning the money and they’d get it immediately, but asked why my brokerage account was being closed. Although this scenario is not covered in their terms and conditions and I didn’t do anything wrong, they decided to permanently ban me from Interactive Brokers on the grounds that I took the money knowing it wasn’t mine. It’s funny because they insisted it was mine and even when I told them it’s not mine they still forced that money into my account. Go figure…

    At the end of the day, Interactive Brokers has a very complex trading platform only intended for high volume traders, but they rank at the very worst in my books for customer service. They may boast cheap trades, but their customer service can cost a lot more then any commission fee will be, and in my case that’s what happened. Poor discretion, poor service and just outright jerks are found at Interactive Brokers.

    So the story ends with me bring ostracized from my bank accounts and missing mortgage payments for over 3 months. Interactive Brokers received their money and shut me down. Oh, I forgot to mention, I lost my Lehman, Citibank and JP Morgan put options, which would have had me laughing to the bank!

    I hate Interactive Brokers Canada, they are an outright scam!!

  • Questrade FX Changes the Rules

    Posted on February 19th, 2009 3 comments

    I just wanted to update the folks in Canada that are using QuestradeFX (questrade.com) for their Forex dealings. If you are a mini account holder, this definitely works against you. I’m seeing spreads as high as 10 pips for the USD/CAD. It seems the only way to reasonably bring down the spreads is to throw $10,000 into your account and apply for Tier 2 (which still doesn’t guarantee a much tighter spread). In any case, I’ll have to move my Forex trading to another destination. Stuff like this just isn’t tolerable if you are looking to make money trading. My experience thus far with Questrade certaintly isn’t the worst, but it isn’t the best either. Here is the email I recieved from them…

    In a move to more accurately reflect market pricing, forex fixed pricing will be replaced with variable pricing at the close of trading on February 13, 2009.

    Why are we eliminating fixed pricing?
    The dynamics of forex liquidity have changed dramatically in the last six months, so much so that fixed spreads are no longer representative of what the market is really pricing.  For currency traders, variable pricing offers:

    • More realistic pricing and therefore better execution
    • Spreads that typically narrow during periods of increased liquidity.  During these periods the spreads will be marginally better than the legacy fixed spreads and can get as low as 1 pip
    • More precise order entry – you can specify your limit and stop prices in 10ths of a pip.

    What is the difference between fixed and variable pricing?
    In fixed pricing, the difference between the buy and sell price remains the same and the currency pairs are priced to the 4th decimal place (except for JPY pairs which are priced to the 2nd decimal place). 

    In variable pricing, the difference between the buy and sell price fluctuates, and the currency pairs are priced to the 5th decimal place (except for JPY pairs which are priced to the 3rd decimal place). The fluctuation in variable pricing is caused by changes in Interbank liquidity.

    The chart below outlines our new tier one pricing. If you are a casual trader, this is the pricing you will likely use.

    Currency pair

    As low as

    Currency pair

    As low as

    Currency pair

    As low as

    EUR / USD

    1.9

    USD / JPY

    1.9

    GBP / USD

    2.3

    USD / CHF

    2.3

    USD / CAD

    2.3

    AUD / USD

    2.3

    EUR / JPY

    2.3

    EUR / GBP

    1

    EUR / CAD

    3.5

    EUR / CHF

    1.2

    GBP /JPY

    3.8

    AUD / JPY

    4

    CHF / JPY

    3

    EUR / AUD

    4

    GBP / CHF

    4

    NZD / USD

    2.3

    NZD / JPY

    4

    CAD / JPY

    3.5

    AUD/NZD

    4.5

    AUD/CAD

    2

    GBP/CAD

    3.5

    GBP/AUD

    4.5

    EUR/NZD

    7.5

    GBP/NZD

    17

    AUD/CHF

    5.5

    NZD/CHF

    6

    NZD/CAD

    7.5

    CAD/CHF

    6

    USD/HKD

    4

    USD/SGD

    5.5

    SGD/JPY

    4.5

    USD/NOK

    24.5

    USD/SEK

    25

    USD/DKK

    8

    EUR/NOK

    23.5

    EUR/SEK

    25

    EUR/DKK

    4

    Tier two pricing, previously referred to as volume based spreads, is for more active traders and requires an initial deposit of $10,000 USD. There are no changes to tier two pricing.

    Currency pair

    As low as

    Currency pair

    As low as

    Currency pair

    As low as

    EUR / USD

    1.4

    USD / JPY

    1.4

    GBP / USD

    1.8

    USD / CHF

    1.8

    USD / CAD

    1.8

    AUD / USD

    1.8

    EUR / JPY

    1.8

    EUR / GBP

    1

    EUR / CAD

    3.5

    EUR / CHF

    1.2

    GBP /JPY

    3.3

    AUD / JPY

    3.5

    CHF / JPY

    2.5

    EUR / AUD

    3.5

    GBP / CHF

    4

    NZD / USD

    1.8

    NZD / JPY

    3.5

    CAD / JPY

    3.5

    AUD/NZD

    4

    AUD/CAD

    2

    GBP/CAD

    3.5

    GBP/AUD

    4

    EUR/NZD

    7

    GBP/NZD

    16.5

    AUD/CHF

    5

    NZD/CHF

    5.5

    NZD/CAD

    7

    CAD/CHF

    5.5

    USD/HKD

    3.5

    USD/SGD

    5

    SGD/JPY

    4

    USD/NOK

    24

    USD/SEK

    24.5

    USD/DKK

    7.5

    EUR/NOK

    23

    EUR/SEK

    24.5

    EUR/DKK

    3.5

    More about forex pricing
    As a reminder, forex pricing comes from the core of the market through Interbank, the 15 largest banks in the world.  There is a natural spread already in the market that fluctuates depending on liquidity. Questrade includes its commission in the spread displayed.  Important: Questrade does not earn revenue from the entire spread and cannot quote spreads lower than what is received from its banking partners.

    Banks do not deal directly with the retail market unless an individual has extensive credit, collateral, and a certain level of trading volume. Questrade provides the retail public with access to a market in which they otherwise wouldn’t be able to participate. As a rule, Questrade continually seeks new partners to offer attractive spreads to our clients.

    We value your business. Please feel free to contact us if you have questions.

    As you can see, the only real benefit here is the opportunity to trade in the 10ths of a pip. They claim tighter spreads during peak hours of liquidity, but frankly I haven’t seen it. I’ll keep my eyes open in the next few weeks to see if things change. In the meantime, I’ll have to use FXCM or Forex.com.