Interactive Brokers Review



Interactive brokers are not the best known brokerage house; they don’t run major advertising campaigns or have much of a web presence.  The reason being they’re not really interested in what you might call mainstream investors.

No, this is a broker for serious investors only, beginners need not apply. For a start their minimum opening balance is $10,000 which should put most rookies off.

That’s not to say they’re a bad broker, but it’s good to know what kind of trader/investor a brokerage house is aimed at while you compile a short list of potential partners.

So if you’re an advanced trader with at least $10,000 to invest, are Interactive Brokers the right broker for you? We’ve reviewed their platform and service levels to find out.

 

Fees & Commissions

  • Stocks and ETFs: $0.005 per share with $1 minimum per trade for SMART routed orders
  • Options: $0.70 per contract plus exchange fees
  • Mutual funds: $14.95 per transaction
  • Investment products: stocks, options, ETFs, bonds, futures, currency transactions
  • Minimum to open account: $10,000

 

Website & Sign-up

Interactive Brokers website is a little on the confusing side and not all that aesthetically pleasing, It’s both unpleasant to look at and difficult to use. Some of the features are somewhat amateurish and look like they were designed by the CEO’s nephew. I know looks are subjective and you shouldn’t judge a book by its cover so lets create an account.

Opening an account with Interactive brokers is a four step process, these days most brokers have got this down to a fine art and you can complete the sign-up process in a matter of minutes.

Not so with Interactive brokers, opening an account will take you two or three days at best, once you’ve confirmed the small amounts that are deposited into your account.

I know this is for security reasons but I really don’t think it’s necessary, and it turns what should otherwise be a fairly simple process into a time consuming chore, I really think they do this deliberately to discourage casual traders from joining.

 

Trading Tools

Interactive brokers Trader Workstation is as you might expect a fully loaded professional style platform, if you’re a professional trader past or present you’ll feel right at home with this platform.

One neat thing it does is enable you to input multiple orders even if you don’t have the money in your account to cover them. If some of your orders are filled and you don’t have enough money in your account to cover the rest of them, your remaining orders are automatically cancelled.

 

In addition to the trading platform you can also subscribe to IBIS (Interactive Brokers Information System). This is a comprehensive and customizable market information workspace which gives you real-time quotes, time and sales, stock scanners, charts and alerts, risk analytics for your stock portfolio, and Interactive Brokers daily Options Brief.

Subscription to IBIS costs from $69 a month in the first year; you can also add a number of other news feeds from the a la carte menu. Optional services include Reuters Fundamentals, Reuters StreetEvents Calendars, Dow Jones Real Time News, Reuters Global Newswire and Dow Jones News Service.

Interactive-Brokers-Platform

Pros

  • Low stock commissions for orders lower than 600 shares
  • Professional trading platform
  • Competitive margin rates

Cons

  • $10,000 minimum to open account
  • $10/month minimum monthly commission requirement
  • $10/month for IB market data feed (waived if trade commissions are more than $30/month)
  • Fees on modified or cancelled orders
  • Trader Workstation is designed for professional traders, is not intuitive and difficult to learn
  • Expensive to make trades with over 1,500 shares
  • $1.20 fee to modify or cancel an option order
  • Merciless margin tightening and margin calls – IB doesn’t care if customers get completely wiped out

Summary

In summary Interactive brokers are a specialist broker that will appeal only to a small section of potential traders, usually professionals with a sizable amount of capital to invest and years of experience.

If that’s you then you’ll find them an excellent broker with a good professional style platform and toolset.

If on the other hand you’re more of an intermediate trader, to whom trading is more of a hobby or you’re merely looking to manage your IRA, you’re going to find Interactive Brokers platform both expensive and difficult to use.

Intermediate traders will be better suited using a broker like TD Ameritrade or optionsHouse. Both these companies have excellent platforms and world class customer service.

If you’re a beginner it would be foolish to join Interactive Brokers, they’re simply not set up to service rookies. They have neither a suitable platform nor the training and education required to support you as you learn to trade.

As a beginner you’d be much better off joining either TradeKing or Zecco both of whom are excellent brokers for rookies, offering easy to use intuitive platforms and easy to follow training manuals along with renowned trading communities for you to learn from.




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