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Anonymous

26 Nov 2021

∙

General Investing

Understanding the fee structure for brokerage platform

Hi all,

I dont understand why everyone is recommending IBKR as their preferred US stock platform.

Assuming Tiered structure, if im buying USD 1000 worth of shares, wouldnt the fee be 1000* 1% = 10 USD?

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Tan Choong Hwee

26 Nov 2021

Investor/Trader at Home

Take note that the IBKR commission is quoted as USD 0.0035 per share for monthly volume of less than 300,000 shares, probably the most common scenario for retail investors.

Lets say you are buying 100 shares of stock A with share price at USD 10, so the trade value is USD 1000, but the commission is 100 x USD 0.0035 = USD 0.35, which happens to be the minimum commission per order. The 1% of trade value fee refers to the maximum commission per order, so it means your commission is capped at USD 10 for a USD 1000 trade.

Express in formula:

Trade Value = # of shares x share price

Commission = min( max( (# of shares x USD 0.0035) , USD 0.35) , (Trade Value x 1%) )

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