|
|
Interactive Brokers Review
Low commissions, professional trading platform, $10 monthly fee and terrible customer service
|
Interactive Brokers Review 2011-2012: Commissions, Fees and Investments Offered
- Stocks and ETFs: $0.005 per share with $1 minimum per trade for SMART routed orders
- Options: $0.70 per contract plus exchange fees
- Mutual funds: $14.95 per transaction
- Investment products: stocks, options, ETFs, bonds, futures, currency transactions
- Minimum to open Interactive Brokers account: $10,000 for non-IRA account, $5,000 for IRA account
- All Interactive Brokers fees
Interactive Brokers is one of the direct access
brokers with pay-per-share commissions:
customer pays $0.005 per share, with $1 minimum per order and no maximum. This commission plan makes all orders of less than 600 shares
cheap. But the order with 2,000 shares will cost $10 and order with 5,000 shares will have very steep price tag of $25!
A lot of stocks are much lower now than they were in 2008 and these shares might cost dearly with IB.
Opening an account with IB takes a long time. Application forms are the largest we've seen and tedious. After registering,
users need to verify two deposits Interactive Brokers makes into their bank account.
Once verified, IB sends new customers a letter with codes that need to be entered before user could start trading.
Minimum amount to open account is steep $10,000.
Interactive Brokers Website (InteractiveBrokers.com)/Trading Platform Review
Interactive Brokers Trader Workstation is one of the best professional trading platforms in the industry.
It lets users enter multiple orders even without money to cover all of them: if one
order is executed, and the account doesn't
have enough cash to cover other orders, the rest are automatically canceled. Trader Workstation is a fully customizable
platform, with cutting-edge charting and research services, dynamic streaming quotes, tools for risk management,
and the ability to place orders that go directly to the market.
Users could download Trader Workstation as a stand-alone application or run it from the browser (this
is slower). Both versions require Java to be installed on the computer. Users could also
trade through IB website, but the screens are poorly designed.
Trading through website is handy only when Trader Workstation is not available or Java is not installed on the computer.
The downside of having such a powerful professional trading platform is that it's hard to learn and not intuitive. It will be
especially difficult to master for beginner investors.
Unlike the Trader Workstation trading platform, InteractiveBrokers.com website is badly designed and it is hard to navigate
and find what you are looking for.
Interactive Brokers Pros
-
Low stock commissions for orders with 800 shares or less
- Professional trading platform
- Great margin rates
Interactive Brokers Cons
- $10,000 minimum to open most accounts
- $30/month minimum commission requirement to avoid $10/month fee
- $10/month for IB market data feed (waived if trade commissions are more than $30/month)
- Fees on modified or canceled orders
- Trader Workstation is designed for professional traders, it is not intuitive; difficult to learn
- Expensive to make trades with over 1,500 shares
- A lot of complains about snobby customer service (experienced it ourselves)
- $1.20 fee to modify or cancel an option order
- Merciless margin tightening and margin calls - IB doesn't care if their customers get completely wiped out
Interactive Brokers Review Summary
Interactive Brokers (IB) is targeting as customers experienced, professional investors.
The firm is a good choice for very active traders who trade 600 shares or less on average per trade.
IB delivers excellent trading platform, fast executions and great margin rates.
Interactive Brokers, however, has $30 per month minimum commission requirement to avoid $10 monthly inactivity fee and $10 monthly
market data fee. This means that clients who rarely trade might pay up to $240 per year in fees!
Customers should be extremely careful when using margin: IB liquidates positions almost as soon as they
get into negative territory without giving clients a chance to add funds. The firm tightened margin requirements at the worst possible times in 2008-2009
and many customers who used margin got wiped out. It came without a warning, and it showed that IB does not care
about their clients at all, when its own money could be at risk. We think it was completely unfair to the account
holders.
Interactive Brokers has a well-deserved reputation for very rude and obnoxious customer service.
Because of that and the complexity of their trading platform,
IB is not a brokerage for beginner investors.
And the firm is definitely not the way to go for
those who rarely trade, trade orders of over 1,500 shares, as well as people looking to invest in mutual funds.
Since the company charges monthly fees, we can't recommend Interactive Brokers for an IRA account. For anyone
looking to open retirement account, there are a lot of great
No-Fee IRA Brokerages to choose from.
Investors who are NOT day-traders and looking for cheap trades, often go with
Optionshouse.
The firm offers flat $3.95 per trade for unlimited shares, no monthly fees and great customer service.
Interactive Brokers
Reviewed by Brokerage Review on
.
Rating: 3.5
|
|