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Broker Reviews

Interactive Brokers

Published by
On Sunday, December 21st, 2014 .

Overview

Interactive Brokers comes with a $10,000 minimum funding and is not suited for casual investors, but provides fantastic support for international trading and offers active traders a very competitive commissions schedule for low-cost trading.

Dislikes

Steep initial investment to open an account; fees charged for inactive accounts; trading platform comes with heavy learning curve.

Trade on over 100 market centers in 19 countries - Learn More

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 who 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 1.59% down to a staggering .59% 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 BrokersLightspeed TradingTradeStationOptionsHouseSogoTrade
Stock Trade Fee (flat)N/A$4.50$9.99$4.75$3.00
Stock Trade Fee (per share)$0.01$0.01$0.01N/AN/A
Options Base Fee$0.00$0.00$0.00$8.50$5.00
Options Per Contract Fee$0.70$0.60$1.00$0.15$0.50
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 our 2013 Review, 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. In testing for this years 2014 Review, one our email tests was responded to in less than eight hours while another took 18 days for a response.

Additionally, 24-hour support should not be confused with 24/7. Phone support is not available on Saturdays. Furthermore, phone support hours are not 24 hours a day. In fact, upon inspection of the website, we could not figure out what 24-hour actually meant at all. If you are an IB client and wish to enlighten us, please do.

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.

Interactive Brokers watchlist portfolio screen

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.

Since TWS is difficult to master, Interactive Brokers began building out Mosaic, a more user-friendly version of legacy TWS. Both versions run at the same time, which can be confusing if you are not used to the platform; however, once you get the hang of it, it isnt too bad.

Originally, clients could only place simple trades, view charts, have a watch list and perform other basic actions. Over the years, Interactive Brokers has ported many of the legacy features and functionality over to Mosaic, and today it is nearly 100% standalone. Looking ahead, separating the two into their own individual downloads would make the client experience far more efficient, especially for new clients.

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.

Interactive Brokers Mosaic

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 the limited technical study options available for charting. We did, however, greatly appreciate the streaming real-time data throughout the app alongside the extensive order entry capabilities.

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.


Blain Reinkensmeyer

Reviewed by

Blain has been involved in the markets for over 12 years, heading StockBrokers.com equity broker research and reviews. His personal blog, StockTradingToGo.com, provides to-the-point daily market recaps to over 17,000 subscribers.

Commission Notes

To open an account with Interactive Brokers there is a $10,000 minimum ($100,000 min required for margin). If client does not spend atleast $10 in commissions per month they will be charged the difference. Additionally, there is a fee of $10 charged for real-time quotes each month which is waived if atleast $30 in commissions is spent. As of December 1st, 2014, clients are now also required to pay $1.50 per month for NASDAQ, NYSE, and AMEX equities quote data. This $4.50 per month cannot be waived with commission spend. Lastly, Interactive Brokers currently does not pay interest on any positive (free) cash balances for US ($) clients.

Stock Trades - Standard fixed pricing US stock trades run $.005 per share with a minimum of $1.00 and a maximum of 0.5% of trade value. Several examples of how this commission structure is calculated are seen below:

  • 100 shares of a $50 per share stock = 100 x .005 = $1.00 (this trade meets the minimum of $1.00)
  • 1,000 shares of a $50 per share stock = 1000 x .005 = $5.00 (this trade price is the cost of 1,000 shares *.005 per share)
  • 1,000 Shares @ USD 0.50 Share Price = $2.50 (this trade meets the maximum commission of .5% of total trade value, or .5% x $500, and thus does not cost $5.00)

For traders who want are comfortable managing their own routes to minimize exchange costs or maximize exchange rebates, Interactive Brokers also offers a tiered pricing structure. Rates start at $0.0035 per share when trading less than 300,000 shares per month and drop as low as $.0005 per share when trading over 100,000,000 each month.

Broker assisted trades are offered at $.01 per share with a minimum order price of $100. It should also be noted that Interactive Brokers charges inactivity fees if certain commissions thresholds (monthly spend) is not met. For regular accounts if $10 is not spent per month in commissions then the difference will be charged (ie if you spend $5, then $5 would be charged). For those under 25 this minimum is $3 per month. Lastly, for clients with less than $2,000 in portfolio value, the minimum is $20 per month.

Options Trades - For options trades, the standard rates are also tiered. For an investor trading less than 10,000 contract per month having their trades routed using the Interactive Brokers Smart Routed system (default), their are three tiers based on the price of the contract itself. These tiers are broken down below (exchange and regulatory fees may also apply):

  • Contract price less greater than $.10 = $.70 per contract with a $1.00 minimum and no maximum.
  • Contract price less than $.10 but greater than $.05 = $.50 per contract with a $1.00 minimum and no maximum.
  • Contract price less than $.05 = $.25 per contract with a $1.00 minimum and no maximum.

And for options traders who want to directly route their trade options orders, they can do so at a price of $1.00 per contract.

Mutual Funds - Only non-loaded Mutual funds are supported. Each trade costs $14.95. Initial purchase must be atleast $3,000.

Other Investments - Interactive Brokers also offers futures trading (all types), bonds, and forex trading. For more information on these investments please visit the website.

Trade Commissions Breakdown

N/A Stock Trade Fee (flat)*
$0.0050 Stock Trade Fee (per share)*
$0.00 Options Base Fee*
$0.70 Options Per Contract Fee*
$0.00 Options Exercise Fee
$0.00 Options Assignment Fee
$14.95 Mutual Fund Trade Fee
$30.00 Broker Assisted Trades Fee
$10,000.00 Minimum Deposit

Margin Rates

1.60% Under $24,999.99
1.60% $25,000.00 to 49,999.99
1.60% $50,000.00 to $99,999.99
1.30% $100,000.00 to $249,999.99
1.20% $250,000.00 to $499,999.99
1.15% $500,000.00 to $999,999.99
1.15% Above $1,000,000.00

Miscellaneous Fees

$5.00 Bond Trade Fee
$5.00 Treasury Trade Fee
$0.00 CD Trade Fee
$0.00 IVR Trade Fee
$30.00 IRA Annual Fee
$0.00 IRA Closure FEe
$0.00 Forced Margin Sellout Fee
$0.00 Returned ACH Fee
$0.00 Returned Wire Fee
$0.00 Stock Certificate Processing Fee
$0.00 Stock Certificate Delivery Fee
$0.00 Paper Statement Fee
$0.00 Paper Confirmation Fee
$10.00 Domestic Wire Fee
$10.00 International Wire Fee

Example Trades

Broker Ratings

Overall
Commissions & Fees
Ease of Use
Research
Platforms & Tools
Customer Service
Mobile Trading
Offering of Investments
Education

Broker Awards

2014

Interactive Brokers was awarded Best in Class for Commissions & Fees, Platforms & Tools, Active Trading, and Mobile Trading. They also received #1 for International Trading. Read the 2014 Online Broker Review.

2013

Interactive Brokers finished #1 for Commissions & Fees, #2 for Active Trading, and was rated Best for International Trading. Read the 2013 Broker Review.

Offering of Investments

Yes CDs
Self-clearing Clearing Firm
39 Commission Free ETFs
Yes Corporate Bonds
Yes Direct Market Routing - Stocks
Yes DRIPs
5000 # of Easy to Borrow Stocks
Yes Forex Trading
Yes Futures Trading
No Fee IRAs
Yes Mini Options
Yes Municipal Bonds
Yes Mutual Funds
0 Mutual Funds (Load)
2771 Mutual Funds (No Load)
0 Mutual Funds (NTF)
2771 Mutual Funds (Total)
No Inactivity Fees
No Minimum Deposit
Yes Options Trading
Yes Order Type - After Hours
Yes Order Type - Algo
Yes Order Type - Broker Assisted
Yes OTCBB / Pink Sheets
0 Retail Locations
Yes Stock Trading
Yes US Treasury Bonds
Yes Weekly Options

Customer Service

Yes Phone Support
Yes Email Support
Yes Live Chat (prospect clients)
Yes Live Chat (current clients)
24/7 Support

Platforms & Tools

Yes Desktop Platform
Yes Mac Platform
Yes Web Platform
Trader Workstation (TWS) Active Trading Platform
Yes Auto Investing
Yes Ladder Trading
Yes Level 2 Quotes - Stocks
Yes Option Chains - Basic View
Yes Option Chains - Strategy View
Yes Option Analysis - P&L Charts
Yes Streaming Time & Sales
Streaming TV
Yes Trade Hot Keys
Yes Virtual Trading

Research

Yes Research - ETFs
Research - Mutual Funds
Yes Research - Pink Sheets / OTCBB
Research - Fixed Income
Yes Misc - Global Market Overview
Yes Equity Research - News
Yes Equity Research - Chart
Yes Equity Research - Option Chains
Yes Equity Research - Balance Sheet
Yes Equity Research - Cash Flows
Equity Research - SEC Filings
Equity Research - Insider Analysis
0 Equity Research - Research Reports
ETF Research - Top 10 Holdings
ETF Research - 3rd Party Ratings
ETF Research - Research Reports
Mutual Fund Research - Prospectus
Mutual Fund Research - Research Reports
Mutual Fund Research - Fees Breakdown
Mutual Fund Research - Performance Analysis
Mutual Fund Research - Performance Chart
Mutual Fund Research - Top 10 Holdings
Mutual Fund Research - 3rd Party Ratings
Yes Screener - Stocks
Screener - ETFs
Screener - Mutual Funds
Yes Screener - Options
Screener - Bonds

Education

Yes Has Education - Stocks
Has Education - ETFs
Yes Has Education - Options
Has Education - Mutual Funds
Has Education - Bonds
Has Education - Retirement
Yes Investor Dictionary
Yes Client Webinars
Yes Live Seminars
Retirement Calculator
Yes Community Forums

Mobile Trading

Yes iPhone App
Yes iPad App
Yes Android App
Yes Mobile Site
Yes Company Data
Yes Company News
Watch List Syncing
Yes Options Chains Viewable
Yes Market Movers (Top Gainers)
Barcode Lookup
Yes Charting - Multiple Time Frames
Yes Charting - Can Turn Horizontally
Charting - Portfolio Perf vs Indices
Charting - Stock Comparisons
Yes Trading - Stocks
Yes Trading - Simple Options
Withdrawal Balance Available

Banking

Checking Accounts
Savings Accounts
Debit Cards
Credit Cards
Mortgage Loans
Mobile Check Deposit
ATM Fee Reimbursement
No Fee Banking

Active Trading

Yes Internalizes Trades
Yes Receives Payment for Order Flow
Yes Client Liquidity Rebates

Best in Class

Best in Class - Offering of Investments
Yes Best in Class - Commissions & Fees
Yes Best in Class - Platforms & Tools
Best in Class - Research
Best in Class - Customer Service
Best in Class - Ease of Use
Best in Class - Investor Education
Yes Best in Class - Mobile Trading
Yes Best in Class - Active Trading
Best in Class - Options Trading
Best in Class - New Investors

Compare Interactive Brokers:



All pricing data was obtained from a published web site as of 11/01/2014 and is believed to be accurate, but is not guaranteed. The StockBrokers.com staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the top of this page. For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.

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