Interactive Brokers Review

Broker Review

 

Likes - Best of class access to international markets; quality trade executions often yield positive price improvements.

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

Bottom Line - 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.

Interactive Brokers is a global online broker and electronic market maker. Known for its proprietary software and providing direct market access for its investors, they offer stock, option, future, forex, and bond trading. Interactive Brokers is continuously improving and updating their trading systems to maximize the overall platform functionality for its traders.

Our Interactive Brokers review provides trade platform screenshots, detailed commissions information, and online broker ratings. Also discover how Interactive Brokers placed in the most recent StockBrokers.com 2011 Review of Online Brokers as well as the 2011 Barron’s Review of Online Brokers**.

Commission Notes

To open an account with Interactive Brokers there is a $10,000 minimum. 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 $30 in commissions is spent. Lastly, Interactive Brokers currently does not pay interest on any positive (free) cash balances for US ($) clients.

Stock Trades - Interactive Brokers is a well known broker amongst active traders and those seeking a varied rate commissions structure. Standard US stock trades run $.005 per share with a minimum of $1.00 and a maximum of .5% of trade value. Several examples of how this commission structure is calculated are seen below:
  • 100 shares of a $50 per share stock = $1.00 total (this trade meets the minimum of $1.00)
  • 1,000 shares of a $50 per share stock = $5.00 total (this trade price is the cost of 1,000 shares *.005 per share)
  • 1,000 Shares @ USD 0.50 Share Price = $2.50 total (this trade meets the maximum commission of .5% of total trade value, or .5% x $500)
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.

Interactive Brokers was reviewed by StockBrokers.com on 2012-01-25 with an overall rating of 4 Stars.

Trading Platform

Interactive Brokers MobileTrader iPhone App

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