Interactive Brokers vs. Robinhood Introduction
Although Robinhood was the first broker-dealer to charge $0 commissions on stock and ETF trades,
it’s not the only one to do so now. Interactive Brokers has reduced its trading fee on equity
trades all the way to zero. Plus, it has a lot of features that Robinhood lacks. Has Robinhood met its match? Let’s have a look.
Fees
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
IB
|
$0
|
$14.95
|
$0.70 per contract
|
$0
|
$30
|
|
Robinhood
|
$0
|
na
|
$0 per contract
|
$0
|
$0
|
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
|
IB
|
|
|
|
|
|
|
|
Robinhood
|
|
|
|
|
|
|
Promotion Links
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
Robinhood: 1% IRA match and up to $200 FREE stock at Robinhood.
Category #1: Available Investments
Interactive Brokers:
Interactive Brokers, although based in the United States, is really a global brokerage firm. It opens accounts for clients outside the United States and offers trading on a lot of foreign exchanges. Asset classes include:
- Precious metals
- Funds (mutual, exchange-traded, and closed-end)
- Warrants
- Futures
- Options
- Forex
- Cryptocurrencies
- Stocks
- Bonds
Exchanges include:
- Toronto Stock Exchange
- Frankfurt Stock Exchange
- Budapest Stock Exchange
- Euronext
- Hong Kong Stock Exchange
- Tokyo Stock Exchange
Robinhood:
The situation over at Robinhood is vastly different. Right off the bat, the company only accepts
applications from legal U.S. residents. Those legal U.S. residents can only trade assets on American exchanges because that’s all the broker offers. And the list of tradable instruments is much smaller than Interactive Brokers’. You can take off precious metals, mutual and closed-end funds, warrants, futures, forex, and bonds.
The one advantage that Robinhood has over its rival in this category is more digital currencies. Currently, Robinhood offers eleven coins for trading, while Interactive Brokers has just four.
Neither brokerage house in this contest offers investment advice or any type of managed account.
Winner: Interactive Brokers
Category #2: Margin Trading
Interactive Brokers:
Margin borrowing is consistently inexpensive at Interactive Brokers. Currently, the broker charges
a flat 7.33% for loans across all balance tiers. Customers
who sign up for IBKR Pro get even better rates. The tiered scale ranges from 6.33% to 5.33%.
Another great advantage of margin trading at Interactive Brokers is margin information that the broker provides on its software. Its desktop platform and mobile app deliver data points like short maintenance margin and initial long margin requirements.
Robinhood:
Robinhood’s software does not display such information. The broker currently charges
6.25% for margin balances under $50K and it goes down from there.
Winner: Robinhood
Category #3: Websites
Interactive Brokers:
Client portal is the term Interactive Brokers uses for its website. This portal is definitely a gateway to a great trading experience. There is a messaging center, an artificial intelligence named iBot, an advanced trading ticket, and very good charting (courtesy of TradingView).
Charts have eleven plot styles. Possibilities include point & figure, baseline, and Renko. We counted around a hundred technical indicators, and there are lots of ways to customize a chart.
The order ticket on the client portal has six trade types and integrated bracket orders (take profit and stop loss).
Robinhood:
Robinhood’s site doesn’t come with any special name, and this is perhaps appropriate as it doesn’t provide a gateway to the same level of trading. Charts have just two plot styles (line and candlestick), and there are only four technical studies.
As for order entry, Robinhood’s ticket has six trade types but no bracket orders. There are two duration options (IB offers three).
Besides charting and order entry, Robinhood’s site also has fewer resources on it. For example, there is no AI. Although there is a watchlist, there are no alerts. Interactive Brokers’ client portal, by contrast, does have alerts.
Winner: Interactive Brokers
Category #4: Other Software
Interactive Brokers:
Trader Workstation is IB’s very good desktop platform. It has tons of professional-level trading tools. These include excellent charting in full-screen mode, a very sophisticated order ticket, and fantastic option tools. Examples include a volatility lab, a strategy builder, and a probability lab. To top it all off, Bloomberg Business News streams free of charge.
And then there’s the mobile app. Once again, there are many advanced tools. The software has two order tickets, just in case one isn’t enough. One of these is a horizontal wheel order-entry system that pre-populates fields with scrollable numbers.
Charts on IB’s mobile app can be displayed horizontally, and there are several graphing tools. Examples include technical indicators like the Williams Oscillator and Bollinger Bands.
Other great resources on Interactive Brokers’ app include iBot, global trading, and mobile check deposit.
Robinhood:
Robinhood does not (yet) have a desktop platform. It does have a decent mobile app, although many features we found on IB’s app are missing. Robinhood’s order ticket is borrowed from its website. Order types include limit, trailing stop, and recurring.
Charting on the Robinhood app needs serious improvement. A graph cannot be displayed horizontally, and there are no tools of any kind. The platform’s watchlists are the same ones that show up on the website.
Winner: Interactive Brokers
Category #5: Day Trading
Level II Quotes. Available at both firms (for a fee).
Direct-access Routing. Available only at Interactive Brokers.
Shorting. Robinhood does not permit shorting, but Interactive Brokers does.
Routing Fees and Rebates. Maker-taker fees will be found at Interactive Brokers, but not at Robinhood.
Interactive Brokers:
Trader Workstation displays the number of day trades an account has. The relevant information will be found in the Account Window, which will be found under the Account tab.
An account at Interactive Brokers that has been flagged as a PDT account can be reset. The tool to do this will be found in the messaging center. Click on the Help link at the top of the client portal and then select Secure Message Center. Next, select Trade Issues and then Pattern Day Trader Reset Request.
Robinhood:
Robinhood’s website displays the number of day trades an account has made (look for this feature on the Investing tab under the Account menu). The broker’s website also has a toggle switch for pattern day-trade protection. This feature will prevent an account from placing a trade that would make the account a PDT account. The toggle switch will be found on the Settings tab under the Account menu.
Winner: Interactive Brokers
Category #6: Other Services
Cash Management Features: Both brokerage firms in this competition offer debit Mastercards.
Only Robinhood has round-ups, bonuses, fee-free ATM withdrawals, and the ability to send checks. The broker also pays high
4.5% APY on uninvested cash.
Periodic Mutual Fund Investing: Neither company offers this service.
Initial Public Offerings: Robinhood, but not Interactive Brokers, delivers access to upcoming equity launches.
Fractional Share Trading: Stocks, ETFs, and cryptocurrencies can be purchased with whole dollars at either brokerage firm in this survey.
Individual Retirement Accounts: Interactive Brokers has Roth, Inherited, traditional, and SEP retirement accounts. Robinhood has 1% free match, while IB does not.
Extended Hours: Both investment firms offer pre-market and after-hours trading for stocks and ETFs.
DRIP Service: Robinhood customers can sign up for auto dividend reinvesting for ETFs and stocks. Interactive Brokers has a DRIP for stocks but not for ETFs.
Winner: Robinhood
Our Recommendations
Small Accounts: Both cash and margin accounts will be better off with Robinhood.
Long-Term Investors and Retirement Savers: Because Robinhood offers 1% free match, we'll take it.
ETF & Stock Trading: With its great mobile app and very good desktop software, Interactive Brokers gets our endorsement.
Mutual Fund Trading: Interactive Brokers is the only option.
Beginners: This one is easy. Interactive Brokers is intended only for experienced traders, and this emphasis is reflected pretty much everywhere—its pricing schedule, its software, its educational materials, etc. Robinhood is much better for new traders.
Promotion Links
Interactive Brokers: Use this referral link to get up to $1,000 of IBKR stock for free!
Robinhood: 1% IRA match and up to $200 FREE stock at Robinhood.
Robinhood vs Interactive Brokers Judgment
Zero-dollar commissions are no longer enough. Interactive Brokers has these plus many more features
that won’t be found at Robinhood.
|