Interactive Brokers Review [year]

Editor’s Verdict

Overview

Review

Interactive Brokers, founded in 1978, has since become the most prominent online trading platform in the US, based on the number of daily average revenue trades. In 2007, Interactive Brokers listed on the NASDAQ stock market, which was that year’s second-largest IPO. Today, it is a constituent of the S&P 400. Interactive Brokers is closing in on 1,000,000 clients globally, who trade over $1,830,000 per day. The company remains 81.5% privately held and maintains $6 billion in excess regulatory capital. Over the past few years, it adjusted to accommodate all types of retail traders while continuing to cater to professional and institutional traders. Full support for automated trading solutions also exists, and the Investor’s Marketplace is an excellent portal for all sectors of the financial industry. Interactive Brokers has grown into one of the most trusted names in the online brokerage space.

Regulation and Security

The ultimate regulator of Interactive Brokers remains the US Securities and Exchange Commission (SEC). This broker is a member of the New York Stock Exchange (NYSE), the Financial Industry Regulatory Authority (FINRA), the Securities Investor Protection Corporation (SIPC), and the Commodity Futures Trading Commission (CFTC). A total of eight additional regulators provide oversight over operating subsidiaries. As a publicly listed company and a constituent of the S&P 400, Interactive Brokers adheres to strict capital requirements and best business practices. It also holds $6 billion in excess regulatory capital.

Interactive Brokers maintain an excellent track record with nine regulators. It is one of the most transparent and trustworthy brokers in operation, and traders can manage portfolios in full confidence. Segregation of client funds, quarterly earnings releases, full compliance with listing requirements, and third-party audits enhance the secure trading environment provided by Interactive Brokers.

Nine global regulators provide oversight over Interactive Brokers.

Interactive Brokers is one of the most capitalized online brokers.

Fees

The cost structure at Interactive Brokers remains highly complex as this broker covers 135 markets across 33 countries in 23 currencies. Traders have a choice between a fixed commission structure and a tiered one, which is excellent for high-frequency traders. CFDs face a minimum commission of just 0.05%, making them one of the most competitive ones available. Currency pairs commence from 0.2 pips with a minimum commission per order of $2.00. Swap rates on leveraged overnight positions apply, and depending on the individual needs of traders, platform and market data fees may exist. Interactive Brokers passes all corporate actions such as mergers, splits and dividends on to the affected portfolios and maintains a detailed list of all trading fees. Traders must study the structure carefully to determine which costs will apply to their trading account. Overall, Interactive Brokers deploys one of the most trader-friendly cost structures.

While the cost structure is complex, Interactive Brokers displays complete transparency.

Interactive Brokers Trading Hours

What Can I Trade

Interactive Brokers offers equities, options, futures, spot currencies, metals, bonds, ETFs, mutual funds, CFDs, EFPs, hedge funds, and Robo portfolios. Overall, traders have access to 135 markets across 33 countries in 23 currencies, one of the industry's most comprehensive asset selections. Active and passive traders, as well as those who favor automated trading solutions, will find sufficient trading instruments to manage a well-diversified portfolio.

Interactive Brokers maintains one of the broadest asset selections in the industry.

Account Types

Traders have sixteen account types from which to select; three for individual traders, three for retail traders, and ten for institutional investors. Each features a different cost structure and benefits which are well described by Interactive Brokers. Still, given the many choices, and compared to most retail brokers, it will require more time to read through the provided material to ensure the proper account choice and configuration; it is well worth the time to optimize the settings before getting started. Despite the myriad selections, the process remains straightforward and well-explained.

Interactive Brokers supports sixteen account types covering retail traders through retirement accounts to institutional investors.

Traders must also consider the pricing environment with each account type; the first selection consists of a choice between a tiered or fixed commission structure.

Trading Platforms

The proprietary trading platform, Trader Workstation (TWS), represents the core of the trading environment at Interactive Brokers. It is one of the most innovative trading platforms offered by any broker; it features TWS Mosaic for full customization of the workspace and Classic TWS for traders who prefer more advanced features and algorithmic trading. TWS also provides broad research, news, and market data from various sources. Real-time monitoring and more than 100 order types and algorithms enhance the trading experience, while Paper Trading is the demo account option inside TWS.

Interactive Brokers also offers a web-based alternative, which is likely more suitable for most retail traders. While it may be considered a “light” version of TWS, it is equally packed with essential trading features which renders it superior to most competitors. A mobile application is also available. Interactive Brokers also supports third-party developers with three APIs to develop custom trading solutions and automated trading systems. IB SmartRouting ensures the best pricing available, and the overall technology infrastructure remains excellent.

Interactive Brokers developed an excellent proprietary trading platform.

Three APIs support third-party product development and automated trading solutions.

Unique Features

Adding tremendous value to the competitive core trading environment is the Interactive Brokers Investors’ Marketplace. It presently lists 1,835 services across five categories. US bond traders have access to more than 1,000,000 instruments. Over 36,000 mutual funds (including 8,300 without a transaction fee) and ETFs listed on 28 exchanges add to the unique features. The Mutual Fund/ETF Replicators assist traders in finding instruments that have similar performances with lower costs. The Probability Lab supports options traders, while PortfolioAnalyst provides an excellent solution for portfolio optimization. Interactive Advisors is the Robo portfolio unit of Interactive Brokers, which grants traders access to a wide variety of options from just $100.

The Interactive Brokers Investors’ Marketplace is an excellent service.

Bond traders have unmatched access to the US market.

An outstanding mutual fund selection supports passive traders.

The Mutual Fund/ETF Replicator is an invaluable tool to find low-cost passive trading opportunities.

The Probability Lab caters to options traders.

Clients can optimize their portfolios with PortfolioAnalyst.

Interactive Advisors adds Robo portfolios to the competitive service portfolio of Interactive Brokers.

Research and Education

While TWS includes research from Morningstar and Zacks, among other providers, and news from the likes of Reuters and Dow Jones, Interactive Brokers also maintains Traders’ Insight and the Quant Blog. Traders will find high-quality market commentary in both, including from third-party sources, together with trading ideas. Relevant videos are equally available in yet another value-added service by Interactive Brokers.

TWS includes numerous quality research and news providers.

Traders’ Insight adds high-value market-related content.

The Quant Blog caters to quantitative finance with excellent content.

Interactive Brokers offers new traders a market-leading educational section. The Interactive Brokers Campus consists of numerous categories to ensure a well-structured program is in place. The Traders’ Academy offers three levels, and provides an excellent start for new traders to begin their education. Webinars offer interactive lessons from industry experts, and an extensive video library features one of the industry’s finest collections of valuable content. The Student Trading Lab allows educators to access material for educational purposes. Overall, Interactive Brokers maintains one of the best services for new traders.

The Interactive Brokers Campus is a must-start for new retail traders.

A well-structured educational program awaits inside the Traders’ Academy.

Webinars enhance the educational content at Interactive Brokers.

Interactive Brokers offers an extensive high-quality video library.

The Student Trading Lab assists educators in creating classes.

Customer Support

Customer Support Methods
Support Hours	24/5 + Sunday 1300 to 1900
Website Languages	EN

Customer support via live chat is available 24/5 and on Sunday’s between 1300 and 1900 EST. Live chat remains the most convenient way to contact a representative, though clients may also send an e-mail or call. The FAQ section answer most questions, and video tutorials explain core products; as such, most traders are unlikely to require further assistance. Interactive Brokers ensures that clients have swift access to customer support, in case of need.

Customer Support is readily available via numerous channels.

Bonuses and Promotions

Neither bonuses nor promotions are available at Interactive Brokers.

Opening an Account

An online application will process new accounts. Given the vast choices, the process may take a bit longer than most competitors; nonetheless, the process remains straightforward and easy to complete. Account verification remains a mandatory final step to satisfy the AML/KYC requirements set out by regulators. A copy of the trader’s ID and one proof of residency document no older than three months usually completes the process. Additional documents may be required, depending on the account type.

The account opening process is comparatively lengthy, but straightforward and simple.

Trading Platform

Deposits and Withdrawals

Regrettably, bank wires remain the only international funding method available at Interactive Brokers. It represents the most expensive form of fund management and is a distinct weakness at this broker. There is no minimum deposit after Interactive Brokers lowered it from a market-leading $10,000. A margin account, and many value-added services, require a balance of $2,000. One free monthly withdrawal is available, but subsequent ones face a fee, depending on the currency. The lack of options is unacceptable, especially from an industry leader like Interactive Brokers.

Funding options are, unfortunately, limited to bank wires only.

Summary

Interactive Brokers embarked on its remarkable growth trajectory in 1978, with the intent to use technology to create a competitive broker. Now publicly listed on the NASDAQ exchange, it has remained true to its mission statement and today is considered one of the most respected brokers in the industry. The technology infrastructure is exceptional, as is its asset selection, which covers 135 markets across 33 countries in 23 currencies, and its proprietary trading platform is considered a market-leading solution.

Besides the industry-leading core trading environment, Interactive Brokers excels with its research capabilities and market commentary, both internally sourced and via third-party partnerships. The educational division offers new retail traders a valuable and well-structured course. Trading costs remain competitive, but additional services may incur additional charges. The sole disappointment at Interactive Brokers remains funding methods, with only bank wires available to international clients. Given the overall product and services portfolio, it thus far remains unchallenged by its competitors, allowing Interactive Brokers to enjoy a top spot in the online broker industry.

FAQs

Is Interactive Brokers good?

With a wealth of sophisticated trading tools, research, education, and competitive pricing across an unmatched asset selection, Interactive Brokers is one of the best online brokers in operation today.

Is Interactive Brokers good for beginners?

Interactive Brokers features one of the best educational programs for new traders with the IBKR Campus. It provides a number of high-quality tools and presents excellent value.

Why is Interactive Brokers so cheap?

Numerous add-on services face additional costs, including market data. Another reason Interactive Brokers is able to keep costs low is the high trading volume, which allows them to earn significantly more revenue from a low pricing environment.

What is the minimum deposit for Interactive Brokers?

Interactive Brokers scrapped its minimum deposit requirement, but a margin account, as well as select services, do require a specific account balance. Besides the margin account, these services include research from third-party providers, all of which are available from $2,000. Interactive Advisors, the Robo advisory division, is available from $100.

Does Interactive Brokers charge a monthly fee?

An account balance of less than $2,000, with a trading commission below $20, faces a fee of $20 minus generated commissions. The same applies to balances above $2,000, though with $10. Various other costs for services may apply, depending on the trader's individual preferences.

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