Interactive Brokers rating

Interactive Brokers Review


Interactive Brokers Pricing and Minimum Deposit


ProductPrice
Stocks and ETFs $0.005 per share with $1 minimum, 0.5% of trade value maximum for SMART routed orders
Options $0.70 per contract if premium => $0.10; $0.50 per contract if $0.05 =< premium < USD 0.10; $0.25 per contract if premium < $0.05 + exchange fees. Minimum $1 per order.
Mutual funds $14.95 (minimum size on initial fund order is $3,000, subsequent minimum order size is $100)
Corporate and municipal bonds0.1%* face value (10 bps) if <= $10,000 face value; 0.025%* face value (2.5 bps) if > $10,000 face value
Treasuries (bills, notes, bonds)0.02%* face value (2 bps) if <= $1,000,000 face value; 0.002%* face value (0.2 bps) if > $1,000,000 face value; $5 minimum
Metals0.15 basis point * trade value; minimum $2; storage cost 0.10% per annum
US-future and future options$0.85 per contract
Forex0.20 basis point * trade value if <= $1,000,000,000; minimum $2

Investments stocks, options, mutual funds, ETFs, bonds, futures, currency transactions, US SSFs, EFPs, metals
IB minimum deposit to open account $0 for cash account, $2,000 for margin account
FeesInteractive Brokers fees
Promotion linkInteractive Brokers promotions


Overview of Interactive Brokers


Interactive Brokers (member of SIPC) is the largest electronic broker in the United States when measured by average daily revenue trades (939,000). It also has the distinction of being one of the best brokers for global investors (it offers trading in 120 markets, 26 countries, and 22 currencies). It does come with some notable disadvantages, however. In this 2018 review of Interactive Brokers we're going to examine the company from top to bottom and let you know how the brokerage firm compares to some of its major rivals.


Customer Support


Interactive Brokers Customer Rating

Interactive Brokers emphasizes global investing. As such, it has several customer service departments for a variety of nationalities. The phone number for US-based customers is live from 7:00 am until 7:00 pm during the week. The time zone is Central Standard Time. On Sunday, the hours are noon until 6 pm. IB is closed all day Saturday.

In case you're traveling outside the U.S., Interactive Brokers has phone numbers for Canada, Europe, Russia, Hong Kong, Australia, India, China, and Japan. Or you can just go to the IB website where there is a helpful chatbot, aptly named iBot. It answered our questions with links to pages that did a sufficient job of providing relevant information.

Besides chatbots and phone service, IB also provides an on-line chat feature. It is up and running 24 hours a day Monday through Friday. It's down on Saturday but comes back online on Sunday at noon, CST.

We also liked the ability to contact the broker-dealer with a user-friendly message system on its website. Service tickets can be submitted through the IB website as well.

Although a lot of these features are certainly advantageous, we didn't care for the lack of branch locations, which some of IB's competitors do offer.


Banking Features


Interactive Brokers Banking Rating

Interactive Brokers is one of the few day-trading and active-trading specialists that offers a debit card. It's a Mastercard, and it functions with Apple Pay, Samsung Pay, and Android Pay. It comes with price protection, extended warranty, travel services, and emergency card replacement.

Free cash balances in an IB account currently earn 1.4% for balances above $10,000. Below that level, the broker doesn't pay any interest.


Mutual Funds


Interactive Brokers Mutual Funds Rating

Despite IB's focus on stock and option trading, the broker-dealer does offer mutual funds. In fact, it offers more than 10,000 of them. Nearly 9,000 carry zero load. Over 4,100 funds have no transaction fee. Some of the no-transaction-fee funds carry loads.

There are many fund families on the IB platform. These include Allianz, Invesco, Wells Fargo, BlackRock, and Fidelity.

Interactive Brokers customers do have to pay the lesser of $14.95 or 3% of trade value for funds that aren't on the NTF list. There is also a $3,000 minimum investment amount per fund with a $100 minimum subsequent amount.


ETF's


Interactive Brokers ETF Rating

A small list of commission-free ETF's can be found at Interactive Brokers. Currently, there are 45 funds. This is rather small by today's standards; although, as we'll see shortly, IB's commission schedule is pretty generous. Some of the available fund families on the free-trade list include Global X, O'Shares, and Eaton Vance.

Besides the commission-free funds, IB also has an ETF screener and ETF research materials. We didn't find any ETF learning materials, however.


Other Investment Vehicles


Interactive Brokers Investments Rating

Now we come to a category where Interactive Brokers is going to really outperform the competition. IB specializes in offering a variety of markets, and that includes not only geographic markets but also multiple asset classes.

We found stocks, ETF's, warrants, options, futures, options on futures, IPO's, forex, precious metals, bonds, contracts for differences, single stock futures, structured products, inter-commodity spreads, and EFP's. Can't get much better than that.


IB Commissions, Fees, and Account Requirements


Interactive Brokers Fees Rating

Now we come to a rather complicated section, which is pricing. Because IB caters to investors in a variety of countries, there are multiple commission schedules based on different currencies. We're going to look at the US schedule, which itself isn't the easiest to analyze.

There are two plans available to US-based investors: a tiered plan and a fixed-rate schedule. On the fixed schedule, trades cost 0.5¢ per share with a minimum of $1 and a maximum of 1% of trade value. Exchange and regulatory fees are included in the commission. These commissions are hard to beat but Firstrade with its $0 commission rate manages to do that.

For the tiered plan, stocks, ETF's, and warrants cost 0.35¢ per share. This rate begins dropping after an account reaches 300,000 shares for the month. It hits a low of 0.05¢ per share at 100,000,000 shares in the month. Under the tiered schedule, the minimum commission is 35¢, and the maximum is 1% of trade value. Unlike the fixed-rate schedule, regulatory and exchange fees are passed onto the customer. On the positive side, exchange rebates are also passed to the client.

Both of these schedules are very low, and in return, IB customers must pay at least $10 per month, either in total commissions or as a monthly account fee. The fee increases to $20 per month for accounts with less than $2,000 in assets. There is no minimum to open a regular brokerage account.

The schedule for options is equally complex, with different rates for how orders are routed and how many contracts are traded in a month. On the high end, derivative trades cost $1 per contract, and on the low end, the commission is 25¢ per contract. There is a consistent $1 minimum commission per trade. There are no exercise and assignment fees, a nice bonus.

Interactive Brokers charges for some data packages, and there is a $2,000 account minimum to subscribe. Research and news from Dow Jones, ETFguide, Seeking Alpha, Thomson Reuters, Zacks, and Morningstar are all free. Monthly data from all major countries costs $55 for non-professionals and $155 for pros. TheStreet.com costs $9.98 per month and includes a free trial. Many other data services are available, and the prices vary considerably.


IRAs


Interactive Brokers IRA Rating

A variety of IRA's can be opened at Interactive Brokers. These include Roth, Traditional, Inherited, and SEP account types. We did not find a SIMPLE account, although rolling over an old employer's plan is a possibility. There is a quarterly $7.50 IRA fee at IB.

An IRA at Interactive Brokers can be opened in any currency, although withdrawals are only permitted in US dollars. Futures can be traded in an IB IRA.


Investment Advice


Interactive Brokers Investing Rating

IB does not offer financial advice or portfolio management, and as such it does not have a robo advisor. It does have a large pool of financial advisors who use IB to carry and clear accounts.


Trading Platform


Interactive Brokers Trading Rating

Buying and selling financial instruments takes place on IB's desktop platform Trader Workstation. This software offers a lot of advanced features, and as such, it does take time to learn and master.

In the upper-left corner sits the order ticket. Typing in a ticker symbol produces a drop-down menu with several choices. For example, when we typed in ‘AEP' for American Electric Power, we got selections for stocks, futures, options, CFD's, and bonds. We also saw selections for Atlas Engineered Products and Anglo-Eastern Plantations on the London Stock Exchange.


Interactive Brokers Review


Below the ticker box are buy and sell buttons. Sell is represented by red, although blue is used for buy. The bid-ask spread is shown, and below here sits more trading attributes. Quantity can be specified. The default order type is limit, but this can be changed to a variety of others, such as market, stop, trailing, adaptive, on-close, snap, and a few others.

Time in force can be set to day or GTC. There is also an option for ‘fill outside RTH,' which fills the order outside of regular trading hours. An order can also be set to fill only during the pre-market session.

Below the order ticket sits a brief summary of a ticker symbol's vital data. This includes the day's high-low range and the 52-week range. There is earnings information (specifically EPS and P/E) along with valuation figures.

Equity orders can be routed to specific exchanges or you can use IB's default choice, which is SMART. Some of the specific choices include CBOE, EDGEA, NYSE, and ARCA.

To the right of the summary sits a medium-sized chart. It can be expanded to fill the width of the screen, and this helps immensely to perform technical analysis. There are several studies available; we counted over 100. Some of the available choices include fast stochastics and MA crossover.

We found Trader Workstation’s charting program easy to use and customize. One nice feature is the ability to right-click on a chart and get a menu with several selections, including buy and sell buttons.


Interactive Brokers Trading Review


One feature on Trader Workstation that we really found helpful was the integration of iBot. We were able to issue commands, such as ‘FB chart,' and it would show us a chart of Facebook and give us several time frames to choose from. We could also type in something like ‘account balance,' and it would return the correct figure. This is a helpful feature if you're new to the platform and can't find something.

Speaking of not being able to find anything, we weren't able to find option chains, but eventually found them in the order ticket. In the upper-right corner, there is a selection of choices for the entered ticker symbol. Choosing ‘option chains' produces a pop-out window of open interest.


Interactive Brokers Charting Review


Calls and puts are displayed with bid and ask prices and sizes. Volume is also shown. There is a strategy builder at the bottom that has several multi-leg strategies. We found the tool difficult to use. Instead of an entire iron butterfly being automatically populated, for example, you have to click on each contract. This requires you to have a good knowledge of where the legs should be. There's a small payoff chart displayed next to the legs, and option orders can be sent to specific venues (as with stocks).

In the same menu where we found option chains, there is Market Depth. This is similar to Level II quotes. We found ECN's and market makers with bid and ask sizes at specific bid and ask prices. Horizontal lines are color-coded for easier viewing. Clicking on a bid or ask price within this window creates an order ticket where an order can be quickly submitted.


Interactive Brokers Platform Review


Mobile App


Interactive Brokers App Rating

Interactive Brokers offers a mobile platform that functions on Apple and Android devices. We found a watchlist with profit and loss information, amount of change since market close and number of shares held. Tapping on one of the stocks in the list produces a small chart with high and low figures. Tapping on this section generates a profile page for the stock.


Interactive Brokers Mobile App Review


On the profile page, there is a larger chart. It comes with three display styles (OHLC bars, candlesticks, and area). The maximum time period is 5 years, and the interval can be set anywhere from 1 minute to monthly. There are more than 50 technical studies.

Trading data is displayed on an equity's profile. This information includes dividend, volume, and EPS.

The app's order ticket comes with multiple order types, including market and limit on close, trailing, relative, and market/limit-if-touched orders.

iBot makes another appearance here on the mobile app. There's a microphone icon that allows the user to simply speak commands rather than type them; however, we weren't able to get it to work on iPhone 6s.

Time in force options are the same as on the desktop platform. Unfortunately, direct-access routing isn't available on the mobile app.

The broker's mobile app can be used to trade options but not mutual funds. We did not find a mobile check deposit function or streaming video news.


IB Trading App Review


Shorting Stocks


Interactive Brokers Shorting Rating

With Interactive Brokers' emphasis on active trading, it should come as no surprise that there are good shorting resources on the IB platform. The first thing we noticed when we started using the platform was an indicator below the ticker box that shows whether the security in question is shortable.

The watchlist on the desktop platform includes details on shorting stocks. You may need to add these data points, however, as they are not part of the default setup. To do so, simply click on the wrench icon that appears at the top of the watchlist window and select settings. Here, there are a variety of characteristics that can be added as columns. These include the number of shortable shares, the cost to short the stock, whether the stock is shortable to begin with, and the rebate rate, which is the amount earned for loaning shares.

IB does not allow dual positions in its accounts (you can't hold simultaneous long and short positions in the same security). Thus, there isn't a sell short button on its platform, only a sell button.


Investment Education and Security Research


Interactive Brokers Research Rating

On the mobile platform, news articles from Zacks, Reuters, and the Motley Fool are available, among others. Some of the articles we found were in Chinese. Also on the mobile platform is a stock scanner. It is able to look for US and foreign equities on a variety of issues, such as most active and top gainers. It was possible to trade the foreign stocks right from the app, a really great feature. We didn't find any in-depth research or learning materials, however.

On the website, there are lots of webinars and videos that cover many investment topics. There are also apps for a variety of functions. One, for example, is an options calculator. There's a very long list of educational videos that explain how to perform a variety of functions on the platform.

The platform itself has several security research tools. A stock scanner is able to look for equities based on dividend yield, option volume, and Asian actives. There's also a bond scanner, a volatility lab, and a dividend calendar.


Comparison


Interactive Brokers Comparison

Interactive Brokers has a very robust trading platform with Trader Workstation. However, thinkorswim from TD Ameritrade is also very sophisticated; and TD Ameritrade doesn't have a monthly account fee. TD Ameritrade charges $6.95 per equity trade and does not offer a per-share plan.

A close rival to IB is TradeStation. The latter broker offers a $5 per-trade plan or a per-share plan that starts at 1¢ per share, dropping to 0.6¢ per share. This plan comes with a $1 minimum. Account minimums on the per-share plan are required to avoid software fees.

Anyone looking for the lowest commissions should check out Firstrade that charges $0 commission on stocks, ETF's and mutual funds. There is no catch.


Recommendation


Interactive Brokers specializes in serving professional and advanced traders. Therefore, we don't recommend the firm for beginner investors. The flip side of this is that IB would be ideal for day traders and other active traders. It has great pricing for this group.

Although there is no minimum deposit requirement to open a brokerage account, small investors who don't trade very much will have to pay $120 per year to maintain an account. These traders can find better values elsewhere.

Likewise, there are better brokers out there for IRA's and mutual fund investors.


Awards





Interactive Brokers Review Summary


As you see from this 2018 brokerage review, Interactive Brokers charges little and delivers a lot in many areas. Active traders will be hard pressed to find a better firm.


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Interactive Brokers reviewed by Brokerage-Review.com on . Rating: 4