Interactive Brokers Review

Interactive Brokers Products

In terms of product offerings, Interactive Brokers offer a wide range of products covering several asset classes such as forex, stocks, bonds, ETFs, CFDs, futures, options and mutual funds. Overall, there are more than 80 different currency pairs and 4000 plus CFDs offered for trading by Interactive Brokers. 

Interactive Brokers Trading Conditions

Studies conducted by the independent Transaction Auditing Group, Inc., (TAG) has demonstrated that the cost of trading stocks on Interactive Brokers’ platform is about 0.35 of cent lower than the industry average. In addition, trade execution is also 6x faster that the industry average, 0.9 seconds vs. 5.6 seconds. As for the leverage offered by Interactive Brokers, the maximum leverage ratio is 1:40.

Interactive Brokers Account Types

Interactive Brokers offers several types of accounts depending on the client’s investment objectives. They are categorized into 2 main categories, Trader/Investor accounts and Institution accounts.

Trader/Investor Accounts

• Classified into 4 types, Individual trader/Investors, Small business, Family office and friends and family advisor
• Minimum deposit of $10,000 (cash or stocks)
• Must completed a minimum of 100 trades on the demo platform to demonstrate product familiarity

Institution Accounts

Classified into 6 types:

• Registered Investment Advisor
• Hedge/Mutual Fund
• Money Manager
• Introducing Broker
• Incentive Plan Admin
• Proprietary Trading Group

Broker Commissions & Fees

In terms of trading fees, Interactive Brokers is said to offer one of the lowest fees in the industry. This is because the broker is a true ECN broker. You have the option to choose between fixed pricing or tiered pricing. With fixed pricing, the commissions are fixed or are percentage based on the volume traded. For tiered pricing, you get volume discount and rebates instead. The following list below shows the applicable fees on the different types of instruments traded.

•  Stock & ETFs* = $0.005 per share
• Options = $0.25 to $0.70 per contract
• Mutual Funds** = Free
• Mutual Funds*** = Lesser of 3% trade value or $14.95
• Treasuries = 0.002% to 0.02% face value
• Bonds (Corporate, CDs, Municipal) = 0.025% to 0.1% face value
• Forex = 0.08 to 0.20 basis point trade value
• CFDs (shares) = $0.005 to $0.003 per share
• CFDs (index) = 0.005% to 0.010% per trade
• Futures & FOPS = $0.85 per contract ($0.50 Globex E-Mini Forex)
• Metals = 0.15 basis point trade value

*Excludes commission-free ETFs 
** No transaction fee funds 
*** IB transaction fee funds

Broker Platforms and Tools

Interactive Brokers flagship platform is the proprietary Trader Workstation (TWS). It was first introduced in 1995 and over the years has been greatly improved and enhanced. However it should be noted that the platform was designed for professionals and requires new users to have a steep learning curve. Nevertheless once you have mastered how to navigate around the platform, you will be able to execute sophisticated analysis and trading strategies. Its key strength is its speed which is near instantaneous. However a major drawback of the trading platform is the charting capabilities. It lacks the ability to perform long look back periods. While Interactive Brokers have continuously improve on the platform based on the feedbacks provided by its clients, the TWS still lack some of the key functions which the MetaTrader 4 are able to perform. 

Is Interactive Brokers Mobile Friendly?

To cater to an ever-increasing mobile capable trading community, Interactive Brokers launched the mobile verson of its TWS called iTWS in 2009. The app is based on the main desktop platform and can be downloaded from Apple App Store. The app lets you make trades, scan the markets and keep yourself updated with alerts and news fed through the app. You can also monitor your account statues and manage your funds without having to drill down the menu list. Overall, it helps you informed of the market situations while you are away from your main trading station. 

Interactive Brokers Promotions

As a dedicated brokerage firm, Interactive Brokers focuses on providing its clients with high quality services and low trading costs. As such, the broker does not have any kind of bonus offer to attract its clientele. 

Interactive Brokers Deposits & Withdrawals

Unlike other brokers in the industry, deposits and withdrawals at Interactive Brokers are only conducted by means of bank wire transfer, bank transfer, checks, BPAY, Online Bill Payment, ACH (U.S clients), SEPA (EU clients) and internal transfer. As such, it takes about 3 business days for funds deposited to be utilized. For withdrawals, the methods used are the same as for making a deposit. Interactive Brokers does not specify any fees for making a deposit or withdrawal. Nevertheless, you should expect to incur the typical banking charges when making a wire transfer from your bank account to Interactive Brokers and vice versa. 

Interactive Brokers Research and Education

In terms of research and trader’s education, Interactive Brokers does provide a fairly comprehensive library of resources. However access to these resources will require some digging as they are embedded deeply in the website. While the information provided are high quality but because of the way they are distributed across the website, the website seems highly disorganized. 

Interactive Broker Noteworthy Points

One point about Interactive Brokers that is worth mentioning is the tools that the broker has provided to its traders. For example with the Risk Navigator tool, you have a comprehensive overview of your portfolio risks. It allows you to easily identify any hidden exposures hence enabling you to take remedial steps earlier. 

Another noteworthy point about the Broker is the fact that it is one of the very few Brokers we have seen that actually pays Clients an interest rate for idle money in their Account. Specifically 1.41%. Please make sure you read the Terms & Conditions around this.

Interactive Brokers Conclusion

Overall, we can conclude that Interactive Brokers is not for the average part time trader. You will note a lot of differences between what this broker is offering when compared to other brokers in the industry. One thing for certain, you will never find Interactive Brokers taking an opposite position against you as the broker is a true ECN broker. What you have is actually a broker that prefers you to succeed as the brokerage firm revenue stream is derived from the commissions paid for executing the trades rather than the spreads.