OK, first of all ,this post is not meant to point out any fishy scam of retail FX broker like this one. Price feed and trade execution of IB are mostly flawless, I have no complaint about that, at all. Yes, the learning curve is steep in order to master the trading platform, TWS. To be honest, I hated it at first, however, after spending time watching IB webinars, and playing with the platform, I found the platform to be pretty stable and reliable.
Now, back to spot FX trading with IB. I found it to be a little bit troublesome, and, maybe, painful. IB charges commission for every trade. This is fine. The painful part of it is, if the underlying currency of the traded currency pair is different from your account base currency, you will have to convert your P/L manually back to your account base currency. And, yes, the conversion is considered as a new trade, and commission is charged. For example, you have just traded USD.JPY, and your account base currency is AUD, then you will have to convert your P/L in JPY to AUD once the position is closed.
Try making a couple of trades in IB paper account, and have a look at your account balance, you will understand what I am trying to say.
Well, overall, the commission might still be considered as low, but the whole process is a hassle. I am not sure if there is any workaround for this issue that I might be missing out. Shoot me a comment if you are an experienced spot FX trader with IB.
A broker with good reputation, financial strength, solid platform(provided you know how to use it), and easy access to any market in the world, I feel comfortable trading with IB, however, for spot FX trading, I am rethinking now…..
Gav, I mainly use IB for swing trading futures and stocks and Mirus for daytrading futures. For years I have used Oanda for FX spot. But IB's Ideal Pro platform is indeed very stable and their fills are good. Commish is just okay. Oanda is still the cheapest in that department. BUT, IB has a very good API that can be used, and it isn't the $600/mo that Oanda charges. You could run all of your FX strategies in Excel if you wanted to. It's pretty easy to set up. There are also a number of front ends that are compatible and although the learning curve is steep, it's well worth the effort.
The reason for the hassle of conversions is that the account is universal. If they had segregated accounts, it wouldn't be an issue. But at least I'm not switching back and forth between platforms when I trade futures and FX, as MB Trading would have me do.
The main thing about IB Ideal Pro: You can overlay. Let's say I am thinking the USD is due for a long term decline. I can convert my entire account to AUD, CHF, or some other currency that I think will appreciate in order to protect the value of my account (and thus any future investments made in that account). This is a very important benefit in volatile times.
Still, you raise good points. Which is why I primarily trade FX spot through Oanda — a broker that seems to get better every year. For me, the main thing is flexibility.