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I have some experience with international trading, but not via IB.
I am researching IB at the moment, but only as a competitor for other
international platforms available in Aus (I am biased a little
towards IB because of the AB preference to use it as an auto and/or
trading platform but if the 'cost' in other areas is too high then I
will have to stay away and continue to sit in the chair between AB
and the broker platform).
My generic criteria for a broker includes:
- single desk
- diversified instruments and countries to trade in
- no data fees for active traders
- where the account is held i.e which country (plus the denomination
of the base currency and the security of the account)
- interest paid on idle funds
- regulatory authority that the broker operates under
- after hours phone access to adjust trades, and the cost (based on
local hours)
- commissions
- margins
- disclaimers
- exotic instruments available
- insurance for funds held by the broker (in the event the broker
goes belly up)
- my comfort levels
- the levels of my local knowledge/understanding of the local
investment culture
- etc
AND if any of the above are changed when you move money into another
currency/instrument?
Since you are an existing IB account holder you would be used to
considerations of the above type, however I am listing them for the
benefit of others (I have had an international account for several
years and my experience is that these bread and butter issues take
quite a bit of management and also impact on the bottom line - often
a lot more than the things traders seem to spend their time talking
about).
I will make some specific points later, but only on basic matters (I
am holding back and waiting for someone, who knows their stuff, to
give us the lead).
> Things may be a little more complex than I thought.
Yes, I find it is a complex process.
The 'business' side of it keeps growing (you find more and more admin
trails to follow and the brokers/regulators/providers keep moving the
goalposts).
In my experience the small details are very important and you
definitely need to read the fine print, in the broker docs, several
times.
>I would have thought that trading international portfolios would
>have been popular by now... but the lack of replies seems to
>indicate the opposite.
My assumption is that it is more common amongst
professional/institutional traders and that while we have our share
of those they don't tend to chat (too busy and they live in a
different trading world?) - perhaps they talk to their own in other
places. I also assume that they have international data/platforms
laid on for them - perhaps they are even locked into proprietry
platforms.
As far as retail traders go I came to the conclusion, a fair way
back, that this is a somewhat parochial forum, in more ways than one
i.e. I don't expect that a lot of retail traders in this forum have
gone outside their own country for stocks, unless they are non US
based and they trade the US market from offshore (I think a lot of
them would find the administrative going too tough).
>If you trade a system that scans the market to find candidates
>surely adding foreign markets would increase the reward.
Not necessarily.
It depends entirely on the strategy.
I am, reluctantly, active outside Australia because my strategies are
based on leveraging and non-correlated trades, at a portfolio level.
If I could get the instruments I need locally I definitely would not
take on the extra work of dealing with international admin issues.
Example:
In Australia only a small number of stock are optionable and only a
handful of those options trade with enough liquidity to make them
viable propositions (for me) - I first went to the US just to get
access to their option market.
Even if I could get the instruments that I need in Aus, it is not so
easy to get the non-correlated trades that I want in a small market.
So, IMO you have to have a strategic reason to go on a world wide
hunt and the payoff has to make the overall cost worthwhile - start
with the strategy and then look around to see how you can put it
together. If you can put it together in your home town go no further -
do the business the easy way and then go fishing with your spare
time.
If you are after high performance then of course you have to work a
lot harder for it.
>In this time and age I expected that maintaining foreign data bases
>and trading foreign markets would be quite common.
IMO that is the trend.
I favour providers (data/software/brokers) where I can get a one stop
international solution (if you don't have that it all bogs down at
the admin level).
I think that brokers trading platforms, with integrated advanced
software features, will eventually win the day.
Unfortunately that means corporates.
Like everything else, brand loyalty quickly breaks down in the face
of cheap, time efficient products/services that the multi-nationals
put on the table i.e. I don't see Metastock as the future challenger
of AB, rather it is the multi-national brokers, with cheap
commissions, who then morph into software efficient customiseable
trading platforms who are going to take up future trading space (if
they haven't done so already).
Anyway, I will make some more useful/specific comments on IB later.
brian_z
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