Interactive Brokers Review
Interactive Brokers is one of the best brokerages in the world. Yes, this is a fairly bold statement. But the reality is that you would be hard-pressed to find a better brokerage.
Interactive Brokers is:
- based in the United States
- listed on a stock exchange and
- by far the most global brokerage.
Interactive Brokers is a great place to trade. Anyway, there are some limitations, and this brokerage won't be for everyone. It's a global brokerage and you can trade worldwide with one brokerage account, and considered as one of the best online brokers for day trading.
If you have the right account size, and that's quite key here, Interactive Brokers is as professional as it gets. In fact, several larger hedge funds will clear through them, as well as major prop shops. Continue reading the Interactive Brokers review.
Trading Platforms and Tools
Interactive Brokers has a handful of trading platforms that you can access. Desktop TWS, which stands for Traders Work Station, is the standard platform that most traders will use.
It gives you access to the entire world, allows you to trade a multitude of products which we will look into in a moment, offers charting, real-time quotes, and everything you would anticipate.
There is also the IBKR Mobile platform, which is a mobile phone platform that allows you to keep an eye on your market positions while you are out and about.
You can trade and monitor positions, but it has less functionality than a standalone platform does. There is also IBKR WebTrader which is a web-based trading platform that offers very similar functionality to the desktop platform, with a much more straightforward interface.
It works behind a firewall to keep your information safe as well. All things being equal, these platforms have good functionality, but there is a learning curve when it comes to the Desktop TWS.
Especially, as it offers a ton of different order types, which can be a bit tricky for traders that don't have as much experience. Ultimately though, this is a market tool that once you get used to it is extraordinarily flexible and powerful.
Without a doubt, this is where Interactive Brokers shines. You would be hard to find a better place to trade the world than this brokerage. Remember, this brokerage serves a lot of institutional clients and therefore gives you the same type of access to these instruments.
However, one of the things that you will need to be aware of is that you will be trading the actual instrument, so it's not a CFD market. Although the CFD markets are available, those are handled on exchanges, not dark pools of liquidity like most retail traders are used to.
Ultimately, this means that you will be paying data fees, and this is where Interactive Brokers can be a bit of a hindrance for those who have small accounts. For example, data fees can be $10 for US stock markets, assuming that you don't reach a certain amount of volume.
Other stock markets can be much more expensive, for example, the Mexican Derivatives Exchange will cost much more. That being said, the scope of products available through Interactive Brokers is far beyond the scope of this article, but here are a few highlights:
- US stocks
- Pink sheets
- Japanese stocks
- Mexican stocks
- Canadian stocks
- Treasury markets
- Chicago-based futures markets
- Singapore-based futures markets
- Swiss stocks
- Exchange Traded Funds
- Mutual funds
- Options on stocks
- Options on futures
- CFD on Brazilian shares
- CFD on South African shares
- CFD on Singapore shares
- Hong Kong Futures Exchange
- National Stock Exchange of India
- Osaka Exchange
- Korea Stock exchange
- literally hundreds more
As you can see, there are plenty of opportunities out there at Interactive Brokers. For those who are used to CFD markets, you may find that the data transmission costs are a bit expensive.
This is why even though they have dropped the initial deposit requirements, it is still expensive if you choose to trade multiple markets. That being said, if you have a large enough account Interactive Brokers is probably the only place to trade the globe truly.
Commissions and Fees
One thing that you should think about though is that the commissions charged for stocks can be almost invisible as they are institutional grade pricing. That could save you a lot of money, especially if you are a short-term trader.
If you are a day trader, you would be hard-pressed to find a cheaper alternative to Interactive Brokers for day trading. But not only stock traders will appreciate their fast executions and low fees. Also, future contract traders will be amazed by the fee structure.
Futures traders pay as low as $0.25 per futures contract per side if they trade 20,000 futures contracts or more per month. That makes Interactive Brokers one of the best futures brokers based on the commission structure for futures trading. The maximum even for the less active futures trader is $0.85 per contract and side. That's much less than the competition offers.
If you are a longer-term trader, then you have to weigh the math as to whether the commissions saved are worth paying the data feed if you do not have enough to offset the commissions charged for lack of trading.
Education and Research
Interactive Brokers has a huge amount of education on their trading site. That includes the "Traders Academy," webinars, short videos, courses, and tours, focusing on not only learning to trade but also how to use some of the more complicated and professional trading platforms.
Ultimately, they also offer traders insight, market pulse, and much other content like references and informational materials. This is an area that Interactive Brokers have stepped up recently, as it once was the domain of purely institutional traders.
Interactive Brokers has recently made a lot of changes, including dropping the minimum deposit which kept many people out of Interactive Brokers, as the initial deposit used to be $10,000.
Interactive Brokers has excellent support, as they are used to dealing with institutional clients that hold millions of dollars with them. Large Wall Street firms and prop shops won't be bothered with a company that won't take care of them.
By serving the broader hedge fund community, and the fact that Interactive Brokers has been around for decades, they know how to take care of their clients. You can reach out to trading desks, chat, phone, fax/post, phone, and the FAQ section.
Ultimately, this is one of the best brokerages on the planet, but it is not for small accounts. This is only because of the data feeds, so if you are a smaller account holder, you may be better off trading with a CFD broker, building up your account, and then switching over to Interactive Brokers.
If you have a sizable account that can justify the data feeds for trading stock markets around the world as an example, then you will not find a better place than Interactive Brokers. Support is 24 hours a day and handled around the world.
I have spoken to support agents in both India and the United States depending on the time of day, so therefore your questions can almost always be answered rather quickly. I have always found the support staff at Interactive Brokers to be very knowledgeable, and extraordinarily helpful.
Interactive Brokers Review Summary
The bottom line is that if you are truly looking to become a professional trader, this is the penultimate of professional platforms that is accessible for the common person. One mouse click and the scanner Trade Ideas connects to the Interactive Brokers Platform via the API.
Artificial based trading signals are being sent directly to the trading platform, and you can choose between manual trade transmission, semi-automatic and even fully automatic trading.
This is unique, and you should check out the Trade Ideas Review for more information. There are literally hundreds of markets around the world that you can trade. Ultimately though, if you are looking to truly diversify a professional styled portfolio, this is going to be the place to do it.
If you don't do it here, you will more than likely be forced into a professional clearinghouse that will charge much more for your initial deposit. The rates are reasonable, and the data feed costs are something that the broker, unfortunately, doesn't control. They are simply passing on the cost from the exchanges that they offer, which is reasonable.
Some exchanges are going to be more expensive than others; the US exchanges are going to be cheaper than the Australian exchanges, while other exchanges such as Canada may be less expensive than Hong Kong. There are some account maintenance fees for small accounts, typically under $10,000, and less than $10 in commissions.
It simply is $10, just as under $2000 and less than $20 in commission. Beyond that, you should see significant savings if you can trade here. Advisors use this clearinghouse quite often, as the rates are cheap enough to facilitate a profitable trading business.
If you are not looking for somebody to hold your hand, and are confident in what you are doing, this is going to be a great place to trade. If you are beginning trader, then it may be a bit overwhelming which is probably the biggest complaint that newer traders have.
Related: Lightspeed Trading review