Interactive Brokers Review

Interactive Brokers Review

Interactive Brokers (IBKR) is known primarily for two key aspects: international investing and highly competitive commission rates. While there are some catches to its competitive commissions offering, which will be broken down in the review below, the broker is worth a close consideration.

On the whole, having the ability to trade on more than 100 market centers in 30 different countries, and trade stocks, options, etfs, futures and forex alongside bonds, Interactive Brokers has something to offer any seasoned investor that has at least $10,000.

Commissions & Fees

Every investor wants competitive commissions, and active traders are no exception. At Interactive Brokers, appealing to both hyperactive traders and institutions is critical, so keeping commissions low is their No. 1 priority.

Starting with margin rates, Interactive Brokers offers the lowest rates in the industry. Rates vary from 1.66% down to a staggering .66% for clients who hold more than $1 million with the brokerage.

New clients should be aware of the miscellaneous fees and minimums with Interactive Brokers. In a nutshell, spend at least $30 in commissions and you are in the clear — otherwise, charges for inactivity can reach up to $20 or more. A full breakdown can be found on the Commissions & Fees tab in the navigation menu above this review.

Stock trades run $.005 per share with the flat-rate structure ($1 minimum). Alternatively, the Cost Plus structure can be used, which starts at $.0035 per share, but does not cover exchange, regulatory, clearing and transaction costs. 

Options are $.70 per contract with no minimums, and active options traders will enjoy that exercise and assignments are practically free.

	Interactive Brokers	Lightspeed Trading	TradeStation	OptionsHouse	Cobra Trading
Stock Trades	N/A	$2.25	$9.99	$3.95	$5.00
Equity Trade Fee (per share)	$0.0050	$0.0045	$0.0100	N/A	$0.0100
Options Base	$0.00	$0.00	$0.00	$8.50	$5.00
Per Contract	$0.70	$0.60	$1.00	$0.15	$0.95
Commissions, Fees

The only x-factor when trading through Interactive Brokers is that they do receive payment for order flow, and they do self-clear. While routing and rebates can be controlled under Cost-Plus pricing, the site claims their smart-order routing consistently achieves aggressive price improvement — however, we do not have enough data to say one way or another. 

Customer Service

If there is one noticeable weak spot in the Interactive Brokers offering, it is customer service. During our testing, we found support to be an inconsistent experience, sometimes being near perfect and other times being less-than-desirable. 

During phone testing, we once sat on hold for 20 minutes, while another time we were connected in a matter of seconds. Overall, we found we waited, on average, two to three minutes to get connected to a rep. Once connected, the experiences were often enjoyable, as reps were courteous and usually nice. 

When it came to email support, the experience was, once again, inconsistent. All of our email tests were responded to in less than eight hours, which was great; however, the responses themselves were either well written, organized and supplemented with links to further information, or the opposite: short and direct. 

One last point to make, 24/7 support does not apply in the way one would think. When we tried calling on a Saturday afternoon, we were greeted by an interactive voice message, informing us their offices were closed. Upon closer inspection of the site's help area, we discovered that phone support is not available on Saturdays. After digging further, we discovered the broker has its own page dedicated to "Tips for best service," which is extremely lengthy and confusing. Needless to say, there is room for improvement.

Platforms & Tools

The flagship platform offered by Interactive Brokers is its Trader Workstation (TWS). The platform is set up to trade everything under the sun, including global assets, and to be used by those with ample experience in the markets. New traders beware: This platform is not built for you. Instead we recommend using the HTML browser-based IB WebTrader or Mosaic within TWS.

Because Interactive Brokers supports so many investment types and international currencies, the broker had to rethink order and watch list management. What they came up with, which by no means is easy to adjust to, is truly a work of art. The best way to describe it is to think of an Excel workbook. Columns are optional data fields (171 to be exact), and rows can be any security imaginable. Everything streams seamlessly and trades can be made straight from it.

There is one usability disadvantage that comes from supporting so many investment types, and that is pulling up quotes or trading securities. Even typing in AAPL for Apple yields dozens of possible matches, which can easily be overwhelming for the unseasoned investor.

Speaking of unseasoned investors, clients have access to Mosaic within TWS, a workstation set-up that acts as its own separate platform. From here, clients can conduct basic research, place simple trades, view charts, have a watch list and the like. The add-on is built specifically with less technical traders in mind, and while it serves its purpose, having it built within TWS does not make sense. The tool is better suited as a standalone product, which would make it far easier for us to recommend for newer investors.

There are a variety of other TWS tools that are not covered within this review. Algo trading, OptionTrader, scanners, trader chat rooms and charting, to name a few, are all available within TWS. While TWS is no thinkorswim by TD Ameritrade or TradeStation, the platform is impressive in its own right.

Other Notes

Interactive Brokers offers little-to-no research. The broker does offer a decent variety of education, but overall we found it to be just okay.

Mobile trading with Interactive Brokers is a mostly enjoyable experience. On the iPhone app, we did not like that there were no technical study options available for charting beyond volume. We also did not care for the Ladder trading (BookTrader tool) capabilities, as the screen was simply too small. We did, however, greatly appreciate the streaming real-time data, which seems to move quickly.

Final Thoughts
With highly competitive commission rates, more than 50 different order types, staggering low margin rates, support for every investment imaginable, trading in more than 100 international markets and an adaptive trade platform suitable for any pro, Interactive Brokers has quite the offering for investors who fit into its target mold.