Line Your Own Pockets

Michael: 00:00

Hello, everyone, and welcome to another episode of Line Your Own Pockets. Cool conversation we had recently with the CEO of a brokerage, and it kinda led us to start thinking we should start talking about what you should be looking for when you come to pick a broker. It's gonna be interesting for me with this conversation because like we joked about in Canada, we don't have a lot of options, but we got a couple. So I'll chime in when we can. And, you know, we've been talking about how both of us are Interactive Brokers clients for ages now.

Michael: 00:32

So I guess we could start with why that, and if you are looking for a broker, what what drew us to that one, and maybe what could draw you away from to other brokers if you were looking to move?

Dave: 00:44

Yeah. So when we came up with when we talked about this topic, we both sort of thought, yeah, surely we've done an episode on this, but we haven't, which is kind of odd. But it is sort of a topic more for beginners, which is great. I

Michael: 01:01

mean Yep.

Dave: 01:02

But but it's not a space that either of us sort of live in. So but I think it is worth talking through this. The the way I thought about this is I was going back. I was thinking through my entire progression about what brokers I've had money with over the years and and my progression. So I thought it would be useful to go back to the very beginning when I graduated high, college and go through each brokerage that I've used and why I switched between them or what happened.

Michael: 01:36

Yeah. I like that.

Dave: 01:37

Probably be a trip down memory lane to a lot of these. And I'm I'm interested to hear if you've heard of some of these because it's been a lot it's been twenty years since some of these names have been even mentioned, I think.

Michael: 01:49

Well, and what I think is is funny is that a lot of especially if you're a new trader, let's say, the last five years, you know, listening to this, a lot of people like, oh, it's Broker. You know, they all don't charge anything commissions, and they all have API access. They all have it was like, not not back then. It there's actually been a lot of change and a lot of update and growth from these different brokers going back really, like, COVID was a big change, but all through on the way there was, you know, $50 trades down to $20, down to 10, down to 5, and then some came online and some. So, yeah, there's there's it seems like something that may not have as much of a history if you weren't there living it, and you were just kind of in the world of of brokers as it stands right now.

Dave: 02:42

Yeah. And I remember when I opened a brokerage account for the first time, people were sort of saying the same thing. Like, I think I the first one I opened was with T. Rowe Price, which you can't even I mean, it's not like you can be day trading with T. Rowe Price.

Dave: 03:03

But that was the first one I opened. But even at the time, there was this massive battle for to see how low commissions could go, and they were it started for such a high level. I think the first ones the first one the first rate I remember paying is $9.99 a trade, which was so cheap. I mean, it was it undercut like everybody else in the market. And so this was, like, so inexpensive.

Dave: 03:33

Nobody could really believe it. But yet, look at where we are now. It's crazy.

Michael: 03:38

Well, and this is where the me joking on about Canada is gonna come all the way because there are still brokers out there that connect to your your bank, and they're still charging $9.99 a trade. And, you know, so that I guess would be one of the first things to look for. It's not gonna be nearly as much of a problem. I doubt there's a broker still standing in The US that's charging that amount, but that would be one of the first things to look at is what are they charging you for commissions? And, you know, different places in the world are gonna be different.

Michael: 04:12

But at the end of the day, if everything else is equal that we're gonna talk about, if price could be a determining factor, especially if you're active, you know, if you're talking, you know, $10 a trade and you're going to make a thousand trades throughout the year, it could be light if you're going to make even more than that, right? You just think about it, you know, how much you're paying your broker for accessing a market that they're all gonna get you to. Right? They're all it's all around the same area. So, yeah, I think that's it's crazy that there's still brokers out there that do charge it.

Michael: 04:48

And if you're at one, run as fast as you can.

Dave: 04:52

Well, we might come to that. That might not be like one thing I always go back to, you know, a lot of commissions are free now, but you get what you pay for. You're gonna get it's a reason that they're free. It's not free to them. So they're they're getting something out of your free commissions.

Dave: 05:14

So free may not may sound right, but you're gonna get what you pay for in executions and fills. So maybe that doesn't make a difference to the strategy you're trading, but there will be strategies that do make a difference. And, you know, you can imagine I can imagine using a free commission structure with some of the strategies I trade. This it just wouldn't work.

Michael: 05:40

How have you tested it? That's always my wonder because we really don't have. There's one broker that I'm interested in, and we'll probably talk about later, that is free in Canada. But we banned payment for overflow, which we can talk about. That's that's how it's free.

Michael: 05:59

So that we haven't had this and so all I'm going by is what kind of other people have talked about. I just wonder if there's like you've ever done a bake off where it's like I'm gonna I'm gonna because you're doing everything robotically. It'd be very easy to move a little bit of money into another brokerage account and say, okay, I want you guys to trade off the same signal generated through the same robot and into the into two different brokers, one for free and one for paid, and just track it for a month or so and see what the difference in the fills are.

Dave: 06:32

Yeah. I have done that many, many years ago with with IB versus there was a brokerage called MB Trading, which also had an API, which was, like, one of the very first brokerages that had an API besides IB. And I could tell that the fills were not as good. And they had I'm pretty sure they had a they didn't have a free commission plan, but they had a per trade commission plan, not a per share commission plan. So that's what I was so I was had these and I was trading larger and larger.

Dave: 07:16

So it did it actually if you do the math, it did make sense because I was actually paying a lot of commissions to IB. I still do. And if you do if you do the math, if you, you know, put a cap on the commission per trade, that could make a big difference. Mean, I a huge difference in the trading I was doing at the time. So I did that, and the fills just the platform wasn't as good.

Dave: 07:44

The the fills weren't as good. So I just the the platform, the reliability was a a big you know, an important thing in the way I thought about it. And I realized, okay. These these commissions that I'm paying with IB, yeah, it's it's it's a big number that I pay every year, but it's actually well worth it.

Michael: 08:10

Well, yeah. Because I and I think that's why, you know, people who are maybe doubting, it would make sense to run that experiment because at the end of the day, you wanna look and you wanna say, okay. Yes. This is a line item in which I'm writing off to IB, but is it just a hidden line item somewhere else? Right?

Michael: 08:27

Am I am I making the same paying the same thing or worse, but I'm just not seeing it overtly. It's just happening kind of under the hood by, you know, slippage being a little worse and and maybe your platform is not as good because the if they're not making money from commissions, then they're not gonna have the money to invest into the platform. They're not gonna be able to pay the devs. They're not gonna right? They're not gonna be able to do that.

Michael: 08:51

So by are you seeing it right in front of your face, or is it being hidden? So kinda your job to go in and dive in to see if it's if it's actually hidden.

Dave: 09:01

Yeah. Alright. So let's go back to you know, mentioned I that the first brokerage account was with T. Bear Price. I bought a mutual fund, held it for a year.

Dave: 09:11

I think it was, like, it was a tech fund, and this was 1997. So, like, of course, it did well. So but after that, I realized, okay. Well, I think I could do a little bit more work than just find a mutual fund and do better. So that was sort of my first toe in the water for making a trade at all.

Dave: 09:41

And then, okay, I thought I can do a little bit more work. Let me look at swing trading to see if that would make sense. So I switched from T. Rowe Price to a company called Daytech, Daytech online. Do you remember this name?

Michael: 09:55

No. Never heard of that one. I heard of T. Rowe, and I think I even heard of the other one. The but, yeah, not that one.

Dave: 10:02

Yeah. So Daytech online was I I'm pretty sure it was the most popular discount brokerage at the time. I mean, it was very popular in The US. They bought they got bought by TD Ameritrade or maybe even they they merged with TD Ameritrade, which was another big one at the time, so they got absorbed by by TDA. And and in fact, it may have been just Ameritrade at the time.

Dave: 10:30

Like, there's been so much change in this Yep. Industry. So I started using Daytech on, and this was one of the this was, you know, web based interface for making trades. I think pretty sure they were $9.99 a trade, and I started making trades on that platform. So the next I'm pretty sure the next brokerage I used was a company called Cybertrader.

Dave: 11:00

Do remember that?

Michael: 11:01

Yeah. I remember.

Dave: 11:02

Yep. So I I really liked CyberTrader. This was the first downloadable platform I used. Mhmm. So, you know, you go and install CyberTrader on your machine, and you make trades in this program that runs on your your machine versus a website.

Dave: 11:20

So I I think that's probably another thing for traders to think about. Are you do you need a downloadable platform, or can you get by with a web interface for entering trades? And I think day traders the more active you trade, the more you're gonna want a downloadable platform. So I don't know I don't know what your take about that is, Michael.

Michael: 11:46

Yeah. The only kind of caveat I'd give there would maybe be to like a like an alpaca or something like that where if you're doing all of your trading, there's kind of like this weird middle ground where if you're not doing very much trading, a web platform will probably be fine. If you're day trading like super actively yourself, then you definitely need a down you know, a downloadable platform. But then I think there's another world all the way on the other side where there's an argument for guys like us that aren't doing the trading ourselves that it's the it's kind of the API interface between whatever is sending the signals or whatever is receiving the signals is more important, you know, as long as we can very quickly access and like flatten positions and, you know, cut off things kind of remotely, that would be important. So it's like the more active and the more discretionary you are, the more that that downloaded platform, I think, is is important.

Dave: 12:44

Yeah. And and as I'm thinking through these old brokerages I was using, I realized a lot of them were very influential into how my trading strategies evolved and the way I started thinking about automation. And I remember specifically with cyber trader. Did you ever use cyber trader?

Michael: 13:06

No. Not not in Canada. Yeah. That's gonna be

Dave: 13:09

the So there was a very unique thing that they offered, which to this day, I think is the only thing that I believe, in my mind, competes with IB in the way they do it, which we'll get to in a minute. They had these things called order templates. So it was a a form that you could you could basically you could basically set up a batch of orders and be sent at once. And I don't it's a little bit fuzzy, but I remember thinking that, okay, this is a really cool way to do it. Like, set up a batch where you could have your entry order and your exit orders, at least some of your exit orders in this batch, which I thought, okay.

Dave: 13:55

This is this is really nice. And the way they did it, I think you could you could set up some templates that would live in your platform that were customized to you so you could use one of your custom templates from that point forward when you made a trade. Really cool concept, and that really got me thinking, okay. There's probably an even better generic way to do this. This is by the time, it was really, really cool.

Dave: 14:21

It really opened my eyes to what was possible.

Michael: 14:24

I I think that's a that's a fun thing too about exploring different. I've I've played with a lot of prop softwares, right, like DaaS and jeez, there's called Fusion. I think there's there's like a handful of those kind of things. And it's the same thing is that as you start to see other bits of technology out there, it does start to kinda wake up the brain to say, oh, that's an interesting way to do that, and this is the way. And it seems like kind of what you're describing is almost like IB's Basket Trader, but just more like a like a interface, which would probably be easier to get get started with.

Michael: 15:02

So, you know, as you're I guess as we're ticking off features to look for in the Brokers, you know, make sure you're not getting obliterated by commissions for no reason. And then also, what what tech do they have? Especially if you're on your path to the kind of systematic side of things is if you are taking this seriously and it's just a web based interface that has a buy and a sell button. Well, you know, maybe Switch Brokers is something that has, like, even like a Weebull or something that has a pretty robust platform. And maybe there's something there that can just help, you know, pull you into the journey if you see something like, oh, that's a cool scanner or a new way to enter orders or something like that.

Dave: 15:41

Yeah. And I think you see some of the features you see in platforms that are catered to professionals are will give you some ideas. And and when you see the differences, you're like, okay. I could see, you know, okay. Why is this offered here?

Dave: 16:00

You know, this advanced feature that's not in this other simpler platform, whether why would somebody wanna use this? It it does give you sorta nudges you in certain directions and and makes you think about what's possible.

Michael: 16:15

Yeah. So and it's one of those things where more and more, you know, not not to always bring everything back to AI, but As developers get more efficient and and are able to, you know, pump out code and build things more effectively, I do think there'll probably be, you know, a convergence here of different brokers. Like, even Robinhood, for example, launched a downloaded application with, like, hot keys to enter trades and and all that kind of stuff. So as it's easier and easier to make this tech, I think what you'll find is that more and more brokers out there are going to have access to, like, more and more tools. So maybe switching around will be less important.

Michael: 16:55

But if you're sitting with a broker right now, especially ones with, like, an like, an old bank or something like that, they're probably not gonna be innovating this quickly. So, you know, maybe look for that. And, you know, it's not one of those we're not just talking about if you're picking a broker for the first time, but if, you know, you've got a sizable account, you can move, especially with the the pattern day trader rule going away, which is something I'm sure we'll talk about on another podcast. But you could move cup grand over to another account and play. And if you don't like it, move it back or move it somewhere else or maybe just have that as your testing ground and you're gonna you're gonna move between brokers because, you know, you guys have the option.

Michael: 17:34

So you definitely should take advantage of it. Right?

Dave: 17:37

Yeah. And, you know, thinking back on CyberTrader, this was the first platform I was on that was catering to pros.

Michael: 17:45

Right?

Dave: 17:46

And I knew some, what I would call, professional traders were using the platform. So, you know and those order templates, the more I think about it now, the more that influenced what you see in the trade client now. Like, there's the the the batching of orders that you can do, like, the the trades as far as, like, a trade a whole trade setup that's automated. Mhmm. All that has lineage all the way back to that experience I have with CyberTrader.

Dave: 18:21

So, yeah, it's it's this has been really fun for sort of thinking back through this. So I'm interested to hear I'd be interested to hear if any listeners you know, at what point they remember one of the brokerages referring to. So I I'm I'm guessing very few remember CyberTrader.

Michael: 18:38

I was gonna say you're just asking them to date themselves.

Dave: 18:40

Yeah. You

Michael: 18:40

know? I mean, that's the which one of these that you've you've remembered. And, yeah, it's just it's really cool to, I think, go down this just to show it, especially like we talked about with new people, that this stuff is this has changed. Right? This is not the the way it was before.

Michael: 18:59

These things kind of over time have have drifted into into different directions, and you're starting to see that, I think, more and more. I think you're gonna see more kind of mergers and and buyouts and as thing goes on. And I think the next kind of frontier, and you're seeing a little bit pop up, is like, you know, using agents to place trades for you. And like I know this public company, I hear this all the time, where you can you can just tell it what strategy you want it to run, and it can just run the strategy for you forever with your money. Right?

Michael: 19:33

And like with most technology, it's probably gonna be real crap to begin with. But ten years from now, who knows? Right? So whatever broker you're doing, you wanna make sure they're keeping up enough, I think, with technology, but not, like, building out dumb stuff that you you don't really care about.

Dave: 19:49

Yeah. So after CyberTrader I'm pretty sure CyberTrader got bought out by Schwab, and they spent a long time working on this new version of CyberTrader, merging it in with Schwab's platform. And what they came up with, I I I think was different enough that I was like, okay. I I'm I don't like this anymore. They they I could tell they'd made some shortcuts, and it just didn't feel like the right thing to do.

Dave: 20:23

So I'm pretty sure from then, I switched to Scottrade Elite.

Michael: 20:28

Yeah.

Dave: 20:29

And so Scottrade was the brokerage at the time. They had a downloadable platform called Scottrade Elite. Pretty sure that was I can't I can't remember if I've made my first day trade on Cybertrader or Scottrade. Pretty sure it was Scottrade. That's

Michael: 20:56

if anyone's that old, right, the what the hell? That's the helicopter commercial that was on CNBC every five seconds. The guy's got got off the helicopter he was so important and had some trades to make. I I remember this. Because we had at my old prop firm, we had CNBC just playing all day, drove me nuts up up in the corner.

Michael: 21:16

And, yeah, you you would see that commercial just every five seconds over and over again.

Dave: 21:21

And so I think a big part of the reason that I switched to Scottrade Elite was trade ideas was built in to the platform.

Michael: 21:31

Mhmm.

Dave: 21:31

And you got it for free. So which was kinda crazy because there's one of those helicopter commercials. I'll have to find the YouTube video for this. Highlighted it was the CEO of Scottrade riding in this helicopter, and he was talking about trade ideas. It was, you know, it was in the default view when you brought up Scottrade Elite.

Dave: 21:56

And they highlighted it in this commercial and really put trade ideas on the map, I think.

Michael: 22:02

Yeah. Well, that's I think that's probably where again, if you were especially back then when there there was some advantage to news flow like that, that's, right, all gone now with with high frequency traders and stuff. To be most active traders were watching like a CNBC at at some point and to just get inundated, like, all the time. Seemed like like CNBC always has five commercials they're allowed to run. It's just one of those over and over again.

Michael: 22:33

It's it's gonna make a huge difference, you know, that, you know, having that kind of stuff built in. But, yeah, just that brought me back that that and I'm sure I don't know if you ever went with E Trade, but if we're talking about famous commercials from that era

Dave: 22:47

Yeah.

Michael: 22:47

That was the other one with the with the E*TRADE baby. That was a Yeah. And it it shows how much I don't see that kind of stuff right now, but it shows how much interest there was to get your money in a broker, especially when they were charging those commissions because you had, yeah, like the viral E Trade baby that was on like the Super Bowl and all of this, and you had Scottrade advertising, and you had it was the guy from Law and Order that was doing TD Ameritrade, I remember. And, yeah, there are tons of commercials all the time, and I just don't really see that too much anymore. So just probably not profitable, I guess.

Dave: 23:26

Yeah. So I stayed I I liked Scottrade. I think their platform was pretty good. At the time, though, I was starting to day trade, doing well, increasing my size, and I started realizing that I wanted a couple things. One, I wanted to be able to use an API or I was starting to think about that.

Michael: 23:56

Mhmm.

Dave: 23:57

Scottrade didn't have an API. And it's funny because you would talk to a lot of these brokers about, hey. Are you gonna have an API soon? And they would say, yeah. We're interested in that.

Dave: 24:07

You know, it's not really a priority now, though. And you could tell at the time that the ones that were interested in it were sort of thinking ahead. And so that was one reason that I wanted to switch from Scottrade was I wanted I was looking for some place with an API. The other reason was I was doing a lot of shorting. Probably, I would say about 60% of our profits were coming from the short side then.

Dave: 24:37

And I a lot of the some of the signals that were coming through were for trades that were hard to borrow. And SkyTrade at the time didn't have as good well, I didn't think it had as good a borrow list as Interactive Brokers. I wasn't sure, but sort of the word on the street and just anecdotally, I heard that their locate list was a lot better. So for those two reasons, I was like, well, you know, I don't even though IB, I don't really see a lot of commercials during the Super Bowl for IB.

Michael: 25:15

Yep.

Dave: 25:16

But I knew that there were some traders that were using it. I knew there was a bit of a learning curve. I knew some people just hated it and would never use it. Some people said the support was terrible, but for everything Yeah. About their platform, their API, it and from a certain subset of traders that I knew were using it that I knew did well, I thought, okay.

Dave: 25:44

This is I I think I should switch to IB, at

Michael: 25:47

least give it a try. Well, and and that's another one we can add to kinda, I guess, the checklist. Right? Is that, you know, we we talked about, you know, make sure you're not getting killed on the commission side of things and that they're not selling your order flow as well. That's probably two things put together.

Michael: 26:04

The technology aspect, right, make sure that they're at least have the technology of things that you're interested in. And even if you don't know what you're interested in, like, try a couple because there there might be some that's there. And then like you mentioned, I know the the short locate thing is a big deal. Right? Do they have access?

Michael: 26:22

You could almost even, I think, bucket that in. Do they have access to instruments that you're interested in? There's some brokers out there. If you're an options guy, if you built your options models, and I know there's a lot of quant out there in the option space, make make sure they have ability to to do that stuff. If you're a futures guy, if you're crypto, whatever it is, and same with shorting.

Michael: 26:44

If you're shorting, you need to kinda understand that they're not all shorts are created equal. And that's what we heard when we were interviewing the the CEO of the broker there is that it's everyone's got different access to different things. I know some of the people who are real hardcore in shorting will have multiple brokers and because if one doesn't have it, maybe the other one does the kind of thing. But if that's important to you, you have to look that up. And it might be as simple as going through some of your most recent trades or even trades that you wanted to get and maybe your current broker couldn't, and then going in and checking the the locate with the other broker.

Michael: 27:21

And could you have made those same trades or or even the ones that you missed, could you have maybe made some trades there? Because, you know, like we talked about with commissions, well, you know, what if you're gonna pay an extra $10 a year in commissions, but that one trade that you would have been able to get locates for, that broker had it and you would have made 20 k. Well, then it makes way more sense even go and pay that broker a little bit more. Right? So that's something I think you need to look at as well.

Michael: 27:50

I know that's huge for a lot of the people, especially you're showing, like, low float runners and things like that.

Dave: 27:56

Yeah. So so I switched to IB, started using their API. And as I developed the software that I was using to make my trades, I started using that API. Then I had an account with MB Trading at so and that's when I did the comparison because I had code that would connect to either one. I would run the same strategy through both and compare the fills.

Dave: 28:27

Mhmm. And I'm not sure it was just pure execution. I think there was something with the platform with MB trading that just wasn't fast enough. But for whatever reason, the fills weren't good enough, and I felt like, well, the reason I can't just I'm just gonna continue with IB here. Mhmm.

Dave: 28:47

So the other thing that IB did, and they still have it up on their website, some of the stuff's probably not even changed since then, but they had extensive documentation on their extensive library of order types. We long ago, we did an episode on order types you could go back and listen to. There are so many order types that IV supports that you will not find anywhere else. And I just I remember just looking at the documentation for all these order types thinking, okay. How could I use this one?

Dave: 29:23

Where would this make sense? How could I and I just you kinda get I got an education there just looking at the documentation and brainstorming. The same with their API. The the main thing that IB provides still to this day, and I still bring this up when I talk to other brokers, and I don't know why nobody else supports this. And that's the timed exit.

Dave: 29:52

A server held timed exit order. That sort of completed the loop for my 100% automation for my trades because that was the one thing that no other broker had the order type for, which is yeah. Okay. So I've got I enter my entry order, and then I've got a stop order, an optional target order, all those going at the same time. But in addition to that, I've got a timed exit that gets me out at a certain time of day before the end of the day, typically, for both strategies.

Dave: 30:35

So And that's All of that server held.

Michael: 30:39

And that's the the part I was gonna hammer on. And I think that's the important part is because there's probably a lot of devs and things watching us. Oh, well, you know, I just have something wake up and and make sure it everything's liquidated by the end of the day or something. But that assumes, which I I think is a podcast we're gonna record soon, is that you have an active connection and there's nothing broken, there's nothing whatever. And, you know, to feel confident in full automation, I e, turn it on and walk away, right, you have to know that all aspects of the trade are covered.

Michael: 31:14

So the trade is entered, there's a protective stop loss order, and that you're gonna be out near the end of the day because stop losses don't work at the end of the day. So it'd be very unfortunate to, you know, have a short one of these low float penny stocks and be killing it because it's just tanking all day. And then something happens and you don't enter by the end of the day and then it gaps up 200% tomorrow. It's it's just to, you know, show that that it could be a catastrophic loss if Yeah. If that exit doesn't take place.

Dave: 31:44

Yeah. And I'm sure we'll do a whole episode on that because I think it's such a great topic. But that's the kind of thing I was thinking about because I knew that, okay, the strategy is working well. I can make a lot more money by scaling wide. So there was one year there where I took 300 trades.

Dave: 32:04

The following year, I took 3,000. And that was when I as I implemented the automation at IB. And, yeah, that just opened up a whole set of like, a whole way of thinking that nobody ever taught me. I never talked to anybody that did it this way. And I was like, okay.

Dave: 32:24

This this is a very good path for me. But I needed the platform to be solid, reliable, and I really like that those orders were server held. Mhmm.

Michael: 32:37

Again, I think that's just a level of comfort. Right? That's one thing that I really do appreciate with Interactive Brokers is that I don't I don't worry about again, I live in Canada. So a lot of ice storms, a lot of you know, I live in the middle of the woods, trees fall down, hit power lines, and all that kind of stuff. And I'm just not it's like, okay.

Michael: 32:59

At the very least, I know that everything's being run there. I can usually get on my phone and and close things manually or something if I have to. But I just know that if I just leave it, then everything, even for things like swing trades. Right? You can set for you, it's like at the end of the day, where you can set time stops for specific days.

Michael: 33:19

So you can kind of have the whole thing on rails for a lot of different kind of trading ideas as well. So is there anything else I think that we're missing? Right? Because it's funny that we glossed over like customer support. Is that something that because, you know, Interactive Brokers felt filled, right, the technology and the decent commission rates without really having the option not to sell your order flow.

Michael: 33:44

I know they have like a light version or something that you can. And then also decent on the short locates, But like you mentioned, and I and I kinda joked, their customer service is atrocious. Like, so where is it that you you rank that?

Dave: 34:00

Yeah. So it's interesting. So the other thing so there were two questions in my mind. One was, is the short locate inventory really better than Scottrade?

Michael: 34:13

Mhmm.

Dave: 34:14

And when I got there, I realized, yeah, it is significantly better. It's not perfect, but it was better than what I was using at the time. So that was confirmation. The other nice thing about that is I could log that information to log files from my trading rob robot I was using. Same thing you could do now with trade client with Mabe kit, but it logs it so I could see over time.

Dave: 34:42

So I have this archive of, okay, I tried to trade this, but it wasn't shortable. So I could go back and see and then compare and sort of brainstorm about ways to improve that. The second thing was the the second unknown was customer support.

Michael: 34:56

Mhmm.

Dave: 34:59

And when I created my account there, you know, the whole process is was completely automated. So I didn't really have to interact with support as I onboarded. I I I don't remember major issues with the that I needed to get somebody on the phone, which was good. The there were occasionally times where I did need to. So that was that but but but it was pretty rare.

Dave: 35:30

Now partway through. So I would say probably, I don't know, two or three years into using Interactive Brokers, I get this email. And it's from Interactive Brokers, and they say, hey, Dave. You from your trading activity, you qualify for key what's called key account services. So at that point, I was in this key account services.

Dave: 35:58

They said, here. Here's a phone number you can call. And they would answer on, like, like, the second ring every time I called, which was completely different than everything I'd heard about IB.

Michael: 36:10

Mhmm.

Dave: 36:10

I think this this I I think this support thing has tailed off over the years. They don't put as much emphasis into it. I think just because they've grown so much and they have more accounts, they they can't do it. But at the time, it was pretty perfect. Right?

Dave: 36:26

It's nice to be able to have somebody like, you know, I think it was, like, the same guy or the same one or two guys would answer the

Michael: 36:31

call. Mhmm.

Dave: 36:33

So that was really fantastic. But like I said, I was in a pretty unique situation, and I I don't think they I don't believe they do that anymore, but, it was it was quite nice to have at the time.

Michael: 36:47

Well, yeah, there is something we said if your account is large enough, and it's gonna depend on your account and the broker that you're with. As soon as your account is large enough, then you will get some sort of preferential treatment. Now, yeah, for a large broker like IB, it might that bar might be way higher than, you know, maybe a niche broker, you know, that's only got a handful of clients. But that's another thing to keep in mind is, right, if you're bringing over couple thousand dollars, it doesn't matter what broker it is, you're just gonna be kinda with the riffraff. But I do think that even though they may not have that service advertised directly, I bet you it's one of those that if you raise the stink that you would get it escalated.

Michael: 37:38

Right? Because these are, you know, glorified call centers. Right? So you got your, you know, slightly above minimum wage, you know, bottom of the rung type person who's basically mostly trying to get grandmother signed on. And then you probably have tiers above that and and how quickly you go to it and you say, you know, this is my account value.

Michael: 37:58

I'm gonna move it somewhere else. I'm sure you'll get you'll get popped up a little bit there as well. So that's something to think about. If you're if and and that would be like a personal thing depending on how much you think you need to contact. Because hopefully, you're you're never contacting the support of your broker.

Michael: 38:16

And it it's it's never a good thing if you're not just doing it because they did an awesome job. And so hopefully, you're never doing it. So if you're very competent in your ability to utilize their platform or if you're using API stuff to to build into that, then you shouldn't have to contact your broker, and that's fine. But if you're someone who's, you know, listening to this and you don't even have a broker yet and you don't know what buttons to hit or whatever, it may be worthwhile going to someone that has a little bit better reputation or, you know, someone that you would be a little bit of a a bigger fish in a smaller pond to get those questions escalated quickly. But the way I look at it with Interactive Brokers, I know that their customer service is not good, but I it's been years since I've ever had to ask anything about it.

Michael: 39:05

Yeah. So, you know, it's one of those it might be like insurance that when when I need it, I really wished it was better. But it's I I don't need it very often, so I'm not using it.

Dave: 39:16

Yeah. So the the last change I've made in brokerages is I wanted to be able to actually pay for locates. So some of the short trades I was making, I could even the improved locate availability of Interactive Brokers, there was some that I could see, well, I could get this with by paying for a locate, but I'd I'd need to use it under the brokerage. So I moved I have an additional account now just for being able to to get the short locate for the the strategies that I where where that comes into play. And I use a DOS baked based broker called Think Alpha.

Dave: 40:05

And, you know, we might have a representative from from them on the podcast at some point. But, yeah, it's a it's so I basically have two main accounts now that I direct trades to, IB and DOS, where where I would get be able to get the short locate.

Michael: 40:28

So that's interesting. So before we I think I think I think we painted a good picture of of the major things to look for. But, you know, up here in Canada, right, I don't have access to these. So why don't you just speak a little bit about these DOS based brokers for people who might not know? I I I understand the the kind of mechanic behind them, but just so people can see.

Michael: 40:52

Because it's one of those things that if you look at them and you think they're all kind of individual, like, brokers kind of in and of themselves, you might get a little bit worried because they're smaller. But, you know, the way they're attached to things in the back end, I think, make people feel a little better if you just wanna explain that.

Dave: 41:08

Yeah. So DOS is a software, like a front end

Michael: 41:13

Mhmm.

Dave: 41:13

A downloadable front end that a lot of so I would call them boutique brokerages support. And there's there's a few different softwares that these brokerages can use as their front end, but it seems like DOS has sort of won out or is there's seems like they've had momentum for a long time now, and that's sort of the default, partly because they have a good API that's well supported. And so a lot of API traders will use that by default. So there are brokerages that will offer DOS as their front end. And a lot of these are smaller, like I said, boutique firms that are catering to active traders, a lot of times short traders.

Dave: 42:00

And you have like, they'll compete on support. Like, so like, we have Brandon on his broker just his broker has DOS as a front end, and his pitch is, I'm gonna pick up the phone when you call, which, like you said and like we said last time, go back and listen to the episode if you haven't. If you haven't, I mean, you don't really need to do that very often, but when you do, it's really usually a very urgent issue. So it's nice to have somebody that answers that knows what they're talking about.

Michael: 42:38

Yeah. And the unless I'm wrong here, which I could be, and I'll just be wrong on the podcast, but they're all, like, they're filling brokers. So somewhere on the back end, they're linked to a big giant name that you will know. Right? They're not themselves sending their your order to the market that's flowing through somewhere.

Michael: 43:01

Because when I look at these things, I start I I know there's an initial worry of, oh, well, if this is just like a a one or, you know, there's like two guys that work at this broker, is it kind of less legitimate or or what's going on there? But the way I kind of understood is they're they're kind of the front facing the the people you talk to, they're the place you send your money and all that kind of stuff, but they have the backing of these kind of monolith brokers that just don't wanna deal with kind of individual retail clients anymore. So they kinda outsource I don't know if franchise is the right word, but like you you can set up these like me and you could set up one of these brokers if we wanted to. We would just need to have the backing of of one of these big corporations. Yeah.

Michael: 43:42

That's true. And I think that's the right way to think about it. Yep. So yeah. So, again, we were both surprised we didn't do this episode, but I think it's important.

Michael: 43:52

You know, we we both settled on a broker, but, you know, if you want to, again, experiment or go out and and find kind of your own thing, that's some framework that you have to look at. Right? Make sure you get the right technology for you, the right instruments for you, that you're not getting ran over by commissions, especially you Canadian people, because I still think there's even nineteen ninety nine trades out there. So so just be careful.

Dave: 44:18

And the other thing to point out is when you go researching for a broker, be careful about who you see recommending these because a lot of times they're getting paid when you sign up for an account. Mhmm. So they're getting some commission by you putting money there, which I don't do. Like, anytime you hear something on this podcast, it's gonna be because I think it's the best thing. I'm not getting paid for to for you to open account at iBee or Think Alpha or anywhere.

Dave: 44:49

So just keep that in mind.

Michael: 44:52

Well, and and I would always look at that. I don't I'm not anti that at all. I just think, like you mentioned, you do your own research on top of it. Right? Someone can say, hey.

Michael: 45:01

Use this broker. It's great. Here's an affiliate link. And that might be a good starting point. And then you go and you look at it and then make that checklist and say, okay.

Michael: 45:10

Does it have all the things that I need? And it's one of those places that there is some comfort in being with someone huge. Like, I do feel comfortable being with Interactive Brokers knowing that they've existed forever. They have multibillion dollar hedge fund clients. I know this because when I worked in the hedge fund space, you'd be surprised how many massive, like, $10,000,000,000 hedge funds use Interactive Brokers as as their clientele.

Michael: 45:40

So that makes me feel good because they're not gonna be they're not gonna screw around with someone like me. It's not worth their reputational damage. It's not worth any of this. They're gonna be kind of on the up and up. So sometimes, and and like Dave mentioned, in some instances, it's good to go niche and boutique, but I do think there's some advantage in just large name recognition kinda corporation.

Michael: 46:04

Like, they're just not going to, I'm not worried about Interactive Brokers, like, disappearing with my money anytime soon.

Dave: 46:11

Yeah. Yeah. It's true. I mean, the length of time they've been in business is an important thing you wanna look at in a brokerage for sure.

Michael: 46:19

Well, thank you guys for tuning in. And, again, you can date yourself in the comments the way Dave wanted to if you want, if you remember all these ancient brokers. But until next time, I'm Michael Nauss.

Dave: 46:31

And I'm Dave Mabe. Talk to you next time on Line Your Own Pockets.