Interactive Brokers  

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Description

Interactive Brokers is known for its international trade capabilities, low commissions and advanced trading platform. The broker is a favorite among active, advanced traders. However, its high minimum investment requirement and inactivity fees will turn off beginner traders.

QUICK FACTS

  • Commissions: Fixed-rate and volume-tiered pricing, starting at $1
  • Account minimum: $10,000
  • Promotion: Special terms for clients 25 and younger

Interactive Brokers is best for:

  • Advanced traders
  • Day traders
  • Penny stock traders
  • Margin accounts
  • Options trading

Where Interactive Brokers shines

Low commissions: It’s hard to beat the stock and ETF commission structure at Interactive Brokers, which favors frequent, high-volume traders at just $0.005 per share. There’s a $1 minimum trade commission and a 0.5% maximum, and exchange and regulatory fees are included. The broker also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay $0.002 or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan.

Options trading, too, is offered at rock-bottom pricing, with just a $0.70 charge per contract and no base (minimum $1 per order), plus discounts for larger volumes.

Trading platform: Interactive Brokers’ Trader Workstation is considered one of the best trading platforms available for advanced traders. The desktop platform is fast and includes standard features like real-time monitoring, alerts, watchlists and a customizable account dashboard.

An options strategy lab allows users to create and submit both simple and complex multi-leg options orders and compare up to five options strategies at one time. Other tools include a volatility lab, advanced charting, paper trading and a mutual fund replicator, which helps users identify ETFs that replicate the performance of a selected mutual fund but offer lower fees. Research, news and market data are also available, although in many cases there is a premium subscription fee.

Novices will find Trader Workstation completely overwhelming, to the point of being unusable. But Interactive Brokers also offers a strong mobile trading app and IB WebTrader, a streamlined browser trading platform that is a bit easier to navigate.

Margin rates: Traders looking to utilize margin will love the rates offered by Interactive Brokers; they’re extremely low, with the maximum margin rate the benchmark rate plus 1.5%. The broker charges a blended rate based on account balance, but has a calculator on its website to help investors quickly do the math based on their account balance. For example, based on current rates, a $100,000 balance will pay a margin rate of 1.62%, and $200,000 will pay 1.12%.

Investment selection: Interactive Brokers offers access to a huge selection of products, from standard offerings of stocks, ETFs, mutual funds and bonds to precious metals, forex and futures options.

Where Interactive Brokers falls short

Minimum investment requirement: The $10,000 minimum investment requirement is steeper than at other online brokers, which brings Interactive Brokers’ rating down a notch. The company does lower its minimum to $5,000 for IRAs and $3,000 for clients 25 or younger, which is a nice offering.

Inactivity fees: Here, too, the minimums are high for all but very frequent traders. Accounts with balances under $100,000 must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20. Again, there is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.

Customer experience: Because Interactive Brokers has a variety of commission structures and added fees, it can be difficult for investors to quickly identify what their costs will be. The website and trading platforms are clearly geared toward advanced traders, and the customer service is frequently reported to be subpar.

Full Broker information

Status
Foundation Year 1993
License FSA, IIROC, CFTC, SEC
Trading Platforms Trader Workstation (TWS), IB WebTrader
Reliability Rate AAА
Authorised Capital
Brocker Fee
Exchange Fee
Withdrawal Fee
Minimum Deposit 2000
Mobile Trading
Seminars, Education

Contact information

Phone: 1 (877) 442-2757, 00800-42-276537, 1 (877) 745-4222
Address: Greenwich, Connecticut, United States
Website: https://www.interactivebrokers.com/

Rating

  70%   30%

User Reviews

I will not recommend them. Based on my experiece with customer service. If you are a trader you need to be confident that when why call your broker they will deal with your request immediately. At the account opening stage and I am not impressed at all. They feel and act like they are the best in the industry. No company grows without its client. I hope more competition will come out for the united kingdom. Luckily there are plenty out there.
  coolTrader   2016/10/04 14:30    
I am new customer of IB from Australia... Was attracted by low fees ( it cheaper for me to trade ASX stock and option with IB in US than using an Australian broker) However he experiences so far has been not that good - 1) Staff not very helpful mainly US support staff ( Asian time zone staf is good but not knowledgable on soem US products) They give stock standard answers rather than understanding the question Had real difficulty gainging information on things like Singale Stock Futures most of staff had no idea - 2) High data cost The biggets problem for me as an Australian resdeint client is IB only allows CASH account no margin account I feel like I have been treated like a person from an enemy teritory! The reason they give is Australian regulations.. which is BS. it is hard to believe that a big broker like IB can't get Australina licence? other brokers like Options express alows Australian to trade everything This restiricts me in 3 ways A) Levergae B) Can't do naked option writing C) Can't trade Single Stock Futures NOT HAPPY AT ALL thinking of pulling out
  moka3   2016/10/04 14:30    
IB has introduced an exposure fee. With only a weeks norice, they imposed a fee on many of their customers. This fee is on a daily basis and based on an extreem (unrealistic) (overnight) risk scenario (especially for index related products). This fee will easily tripple the cost as compared to the commissions. It is a daily fee, that easily amounts to 20 USD a day for an average account.
  GdR12   2016/10/04 14:30    
My issue with IB is they do not have a full range of AIM stocks listed on the LSE. This is a major issue if like me, you hold those stocks and wish to transfer them over to IB from your previous broker and trade them using IB. The platform sounded OK but a nonstarter because of this. Your broker must be able to trade the stocks you want to trade right? Why restrict the equities you can trade? ...and the stock I am referring to has decent liquidity ...although a small cap for London. Why would an International Broker do this? I note the other International broker also has the same issue. They are both unworthy until they offer a more complete list of equities.
  RiverMonster   2016/10/04 14:30    
Once you learn the platform via their webinars IB offer a great service.
  OriginalOptionsTrader   2016/10/04 14:30    
One of the heavily advertised key advanatges of IB is their "generous" margin policy both in terms of level & interest rates. However as many customers found out in September/October IB can change policy suddenly removing margin completely on 100s of "small cap" stocks and ETCs that had previously required only 15% maintenace margin. Initially they were also going to remove margin on many ETFs and preferred stocks but have...we hope ...changed their mind. Trading on margin one of course expects to make margin calls due to the market movements but NOT due to seismic and sudden changes in the brokers own margin policy !! Better not to offer margin in the first place rather have a volatile policy.
  wildpigeon   2016/10/04 14:30    
I'm a system futures trader and trade a variety of futures around the world. IB happens to be connected to so many exchanges BUT doesn't provide us any decent list of futures from each exchange to trade. For instance, IB is connected to Korea Futures Exchange and give us... only the Kospi 200 Futures. IB is connected to Sidney Futures Exchange, and give us... only the ASX 200. Come on IB, are you serious? We don't need another CFD-like-bucket-shop competitor, we need a SERIOUS professional CTA services. Sooner or later I'll have to change broker, not because IB isn't good overall, but just like Nokia these days, they're sleeping on the job.
  andreveloso   2016/10/04 14:30    
Critical features like OneCancelAll, not available for option spreads / combos. eg could be in a spread at 1.00 debit, and want to sell at 2.00 and simultaneously set a stop at 1.50, so whichever executes first, it cancels the other. Critical for anyone who cant be at his computer screen 24/7. OCA feature, available for single legs only. Anyone with even a little experience in trading options, would trade spreads / combos, rather than single legs. Suggesting only inexperienced option traders use IB. IB only allow one option chain to be opened at a time rather than multiple. RAM hogging software, even with nothing extra open and can take ~+10mins to open after log in details entered. Commissions should always be leg, esp considering there are expensive cancellation fees ~>$1 per leg for single leg trades, lack of available features and facilities to trader. This is not criticsim for the sake of criticism, but we want IB to be one of the top brokers for option traders. Currently, its average at best.
  TITANIMUM   2016/10/04 14:30    
I have been with IB since 1992. Most of the time I am not happy about this company. Then why do I still stay with IB? Because I use 4 brokers, IB is one of them. I use IB for scalping because of the low commission. Pros: 1. Fast execution. 2. Low commission. 3. Customizable hot keys/mouse. 4. Security device or pass code protection. Cons: 1. Lousy, unfriendly, arrogant CS staffs. 2. Over packed, confusing software TWS. 3. Very poor, related TWS documentation. 4. Cannot find help anywhere either from TWS software or web help. 5. TWS takes too long to start. 6. No one in IB cares about customers.
  doji123   2016/10/04 14:30    
I have been using IB for about 4 months now and I think they are very very good value for money. Opening an account can seem a bit long winded initally but once you have overcome that the actual dealing service is very good. The telephone customer support is based in Switzerland and I think they have a much more formal approach to people than we have and it can seem unfriendly but I have found them perfectly helpful. The TWS platform can be run from the web or as a stand alone (downloadable) interface and it is very easy to use. Execution is very fast and there is very little slippage (at least on the STOXX).
  Helenqu   2016/10/04 14:34    
Excellent platform, highly customisable, fast executions (1 second), slippage negligable, in fact I often get a better price than the one on the screen. Feeds can be linked to Sierra or Quote-tracker charts. I've only used the US customer service number once and got a recorded message "you are in a queue at least 10 minutes long". I decided not to bother! In fairness there was an "press * button now for an automatic $30 deduction from your account if you wish to close a position" option which might have been quicker. I used the Swiss number (unavailable during the evening) once when setting up the account and that was OK. Website help very good. Setting up the account was a very long process including passing 2 on-line exams! Allow maybe 4+ hours for a 'universal account' with permissions for futures and everything. But maybe all US brokers would take as long, no experience. Comms of £1.70 a side or less for future trades are highly competitive.
  peto   2016/10/04 14:34    
Account opening procedure a bit longwinded as you have to answer a load of questions to ensure you understand that IB aren't liable for anything that could possibly go wrong with your cash! But it can all be done inside a day, and the transfer of funds takes another couple after that. Good Points : - Trading software is very flexible, even if a little unfriendly. If you're technically minded, you can write your own front-end and make it look much nicer. - Commissions are very low indeed. - Excellent execution times, leading to virtually no slippage. - Everybody uses them, so you can usually get an answer to any questions, even though their own support people wont be able to help - Excellent product range, all the major exchanges and instruments are covered. - Can plug their price feed into Sierra for instant cheap charts. Not So Good : - Laughable "support". Forget the helpline and head to their bulletin board! - It costs to close a position over the phone if things go wrong technically (but you can place auto-stops with orders so that may not be an issue) Overall, a happy customer :)
  Henry   2016/10/04 14:34    
I've used these guys for pretty much everything and its all 'decent'. Having one broker over multiple asset classes is why I use them. I've traded equities, futures, and forex with them and the costs are relatively comparable to their competitors. The two things they need to improve would be customer service (bleh) and they try to stick you with filtered data for futures which is totally unacceptable IMO for a professional to use. You can get the data through a 3rd party provider for futures, so its not that big of a deal, it just bothers me that they nickel and dime their clients like that. They are also one of the best places for Canadian accounts since the rules changed earlier this year. I would recommend this to someone who wants to trade different asset classes because you WILL pay a small premium for that convenience.
  Julian   2016/12/14 14:54