Who's it for?
For Advanced Traders:
To be frank, Interactive Brokers is really only for advanced traders and institutions. Interactive Brokers’ most advanced and complex trading platform is not for the faint of heart; it’s called Trader Workstation (TWS) and is one of the best platforms in the industry. There’s no doubt, traders have to know their stuff in order to use it. In addition, serious traders need only apply to IB, as Interactive Brokers charges inactivity fees and a complex pricing scheme, which means traders shouldn’t just trade sporadically. Beginner (and even intermediate) traders, steer clear.
Interactive Brokers’ product selection options are vast; IB offers the following investment products:
- Futures options
- Structured products
- Single stock futures
- Precious metals
- Mutual funds
Quick note: Interactive Brokers recently began requiring assets of $10 million or more for leveraged Forex positions. Interactive Brokers also made Benzinga’s list of Best Online Brokers for Futures Trading.
Commissions and Fees
Interactive Broker’s comprehensive commissions and fees are listed below:
|Stocks and ETFs||$0.005 per share with $1 minimum and maximum 0.5% of trade value; volume discount available|
|Options||$0.70 per contract; $1 minimum order; volume discount available|
|Mutual funds||$14.95 (minimum size on initial fund order is $3,000, subsequent minimum order size is $100)|
|U.S. future and future options||$0.85 per contract|
|Forex||0.20 basis point * trade value if <= $1,000,000; minimum $2|
|Metals||0.15 basis point * trade value; minimum $2; storage cost 0.10% per annum|
|Bonds||0.1% * face value (10 bps) if <= $10,000 face value; 0.025% * face value (2.5 bps) if > $10,000 face value|
Minimum deposit for Interactive Brokers: Non-IRA account deposit minimum is $10,000; $5,000 for a non-IRA account, $3,000 for anyone 25 years or younger.
Interactive Brokers touts the absolute lowest margin rates in the industry. Here are the breakdowns, straight from the website:
|Margin amount||Margin rate|
|$0 – $100,000||2.66%|
|$100,000.0 – $1,000,000||2.16%|
|$1,000,000.01 – $3,000,000||1.66%|
|$3,000,000.01 – $200,000,000 +||1.41%|
For comparison’s sake, Vanguard has the second-lowest margin rate at $7.75% for $0 – $4,999. That’s a far cry from Interactive Brokers’ low margin rates.
Interactive Brokers never offers promotions for customers in the United States. However, current customers can send invitations to others they know in exchange for a bonus of up to $200. There is no limit to the number of referral bonuses current customers can receive.
Platform and Tools
If successfully navigating Trader Workstation (TWS) isn’t the same as accomplishing the pilgrimage to Mecca, then we’re not sure what else to compare it to.
Trader Workstation equals a module-based desktop platform that looks like the console for flying a commercial airliner, with a spread of alerts, watchlists a mile long and customizable account dashboards. Its charting offers historical trades, alerts, trading off charts, comparisons and index overlays. It offers research options (not nearly as robust as some platforms offer, however) as well as risk management tools. Both TWS’ complexity and possibilities offer more than enough gusto for a seasoned professional trader.
Interactive Brokers has more tricks up its sleeve, as TWS isn’t its only option. QuickTrade and WebTrader are two more platforms which are, happily for some, less complicated. These are both great options for new-to-the-website traders who are just trying to get used to swimming in the ocean.
Interactive Brokers' TWS offers 124 option indicators.
TWS is best for frequent traders with a thirst for different order types (63 are available).
Whether investors/traders choose to use an Apple device or Android, Interactive Brokers’ mobile trading is high-quality and offers a lot of different options for both types of device. The main screen for mobile offers cards for notifications, several news feed, accounts, watch lists, slick trading options and more. It’s simple, clean and intuitive, and possibly the best of all, it’s bug-free.
Unique offerings on Interactive Brokers’ mobile devices include custom screening and after-hours charting.
Interactive Brokers offers customer service via regional customer service centers located throughout America, Europe and Asia. Interactive Brokers has a drop down of time zones to determine which IB location is open and ready for client calls. In addition, a series of Quick Tips attempts to answer clients’ questions without having to call the customer service number. Quick Tips range from “How to Deposit Funds Via a Wire Transfer” to “An Introduction to Forex.”
Phone support is available Monday through Friday from 8 a.m. to 8 p.m., Sunday from 1-7 p.m. Eastern time. Customer support is not available on Saturdays. Live chat and email support is also available.
Interactive Brokers’ website also encourages clients to find answers more quickly through its website and Knowledge Base (a repository of glossary terms, how-to articles, troubleshooting tips and guidelines designed to assist with account management). The Knowledge Base also supports streaming news and helpful videos. The videos primarily showcase how to operate Trader Workstation, WebTrader and Account Management applications.
Another note on customer service: Any Google search will result in “more stuffy than friendly” customer service from IB. Again, Interactive Brokers is clearly geared toward advanced traders, and it’s evidently obvious in the type of customer service clients receive as well. A search might even lead you to believe that IB offers poor customer service.
Ease of Use
This has been touched on earlier, and as always, “ease of use” depends on an individual’s perspective, experience and comfort level with advanced platforms. One person’s claim that Trader Workstation is “a breeze” to operate may have a completely different person pulling his or her hair out. However, it can be argued that whatever individuals have to do to get to the point where he/she makes a trade, there’s no question, TWS features quick trade execution.
$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available
- Day traders
- Penny stock traders
- Forex traders
Interactive Brokers’ loyal advanced, active trader customer base will likely find nothing wrong with its offerings, particularly because of those featured low commissions. However, those who aren’t in love with Interactive Brokers could easily find ways to pick it apart, citing exorbitant inactivity fees, too-high account minimums, non-customer oriented customer service as well as website and platforms that err on the side of non-smooth.
However, for the right person, Interactive Brokers’ low margin rates and top-notch trading platform will be second to none. Also, for the right person, (key words!) Interactive Brokers’ low commissions, especially for high-volume traders, mean it’s a no-brainer not to invest or trade with IB.