Interactive Brokers Review
While Interactive Brokers is not well known for its casual investor offering, it leads the industry with low-cost trading for professionals. Through the Trader Workstation (TWS) platform, Interactive Brokers offers excellent tools and an extensive selection of tradable securities.
Top Takeaways for 2019
After spending six months testing 16 online brokers for our ninth annual stock broker review, here are our top findings on Interactive Brokers:
- Founded in 1977, Interactive Brokers (IBKR) is best known for its universal portal through which clients can trade on more than 120 market centers in 31 countries, and deal in stocks, options, ETFs, futures, forex, and bonds.
- In our assessment, Interactive Brokers finished No. 1 for its industry-leading commissions schedule, which includes the lowest margin rates and unique perks such as earning interest on idle cash beyond $10,000. Casual investors can also trade for free.
- An extensively diverse selection of investment options, including uncontested support for international trading, are two other highlights of the Interactive Brokers offering. For example, Interactive Brokers offers a staggering 65 different order types.
- After spending hundreds of hours testing, as far as active trading goes, including day trading and professional trading, Interactive Brokers is the undisputed champion.
- Interactive Brokers also finished Best in Class (top 5) for Platforms & Tools, Mobile Trading, and Options Trading. No question, the Trader Workstation (TWS) platform delivers.
- In our nationwide testing, Interactive Brokers left us unimpressed with inconsistent and overall underwhelming phone service.
- Like its other active-trader focused competitors, Interactive Brokers underperforms in the areas of market research, ease of use, and education, making it a poor choice for beginners.
- New clients that open an account today receive a special margin rate Open Account
|Commissions & Fees|
|Offering of Investments|
|Platforms & Tools|
|Ease of Use|
Commissions & Fees
As of October 1st, 2019, Interactive Brokers offers two primary pricing plans: IBKR Pro (professionals) and IBKR Lite (casual investors). Because Interactive Brokers’ core clientele are professional traders and institutions, it is critical for the company to provide the lowest commissions schedule available. In our rigorous assessment, there is no question they deliver.
IBKR Pro 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. For small order sizes, i.e., several hundred shares, Interactive Brokers is a fantastic deal. Trade several thousand shares or more though, and Interactive Brokers quickly becomes pricey. For example, Interactive Brokers is not a great choice for trading penny stocks.
IBKR Pro Options trades: 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.
IBKR Pro Other benefits: Interactive Brokers does not accept payment for order flow, a key element in providing quality order execution. Interactive Brokers leads the industry with the lowest margin rates, which vary from 3.68% down to a staggering 2.68% for clients who hold more than $1 million with the brokerage.
IBKR Pro Misc Fees: New and casual investors should be aware of the miscellaneous fees and minimums charged by Interactive Brokers. Put simply, maintain a $100,000 balance or spend at least $30 in commissions each month and you will be in the clear; otherwise, charges for inactivity can reach up to $20 per month. For everyday investors, we recommend exploring our list of the best discount brokers.
IBKR Lite: With IBKR Lite, there are no inactivity fees or data fees. All US stock and ETF trades are $0, while options trades follow the same IBKR Pro pricing. The main caveats to this new program (launched October 1st, 2019) are lower quality order executions, slightly higher margin rates than IBKR Pro, and no access to the Trader Workstation (TWS) platform. Instead, all trades must be made through the mobile app or Client Portal (website).
For a full pricing breakdown, see our detailed commissions notes
Interactive Brokers pricing summary:
|Stock Trade Fee (per trade)||N/A|
|ETF Trade Fee||$0.005|
|Options Base Fee||$0.00|
|Options Per Contract Fee||$0.70|
|Mutual Fund Trade Fee||$14.95|
|Broker Assisted Trades Fee||$30.00|
Platforms & Tools
The flagship platform Interactive Brokers offers is its Trader Workstation (TWS), which supports trading everything under the sun, including global assets. While TWS is not designed for new investors, it easily ranks among the best trading platforms in the industry. Watch lists can include anything from equities to individual options contracts, futures, forex, warrants – you name it. A staggering 453 data points are available for column customization.
Professional tools galore: Trading tools within TWS designed for seasoned traders are widespread: Algo trading, Options Strategy Lab, Volatility Lab, Risk Navigator, Market Scanner, Strategy Builder, and Portfolio Builder, to name a few, are all available within TWS. IBot, also available in TWS mobile, uses a foundation of artificial intelligence to quickly service customer requests via chat (or voice in the IB TWS iPhone app). Portfolio information, orders, quotes, and more are all supported. Think, "What’s the last price of GOOG?" or, "Chart AAPL vs. MSFT" or, "Buy 100 shares of FB."
TWS drawbacks: Tasks such as pulling up a stock to trade are tricky due to the vast array of securities available to trade. For example, typing in “AAPL” for Apple yields a slew of possible matches, which can be overwhelming for non-professionals. Also, automated technical analysis tools (e.g., Recognia) are available only as a paid subscription add-on.
WebTrader platform: For less experienced traders, Interactive Brokers offers the web-based WebTrader platform, which includes only the core features necessary to efficiently trade and manage a portfolio.
IBKR Lite: Trader Workstation (TWS) is not available to IBKR Lite ($0 trading) customers. Instead, they are required to use the web-based Client Portal to place trades and manage their portfolio.
While many features we checked for are present, for example viewing the top-ten holdings for a given ETF, navigating TWS to conduct stocks, ETFs, bonds, and mutual funds research is extremely difficult. That said, TWS includes advanced research tools seasoned traders desire, such as scanning and back-testing.
Good stuff: Research highlights include numerous screeners, extensive back-testing functionality, and portfolio analysis tools, which are all excellent. For traders looking to conduct specific research, Interactive Brokers offers dozens of third-party provider feeds a la carte, including Morningstar, which are available for a monthly fee. Any provider package purchased integrates straight into TWS.
Bad stuff: Performing even basic research on stocks, ETFs, and mutual funds is nothing like a traditional full-service brokerage experience one might find at Fidelity, TD Ameritrade, or Charles Schwab. You have to learn how to navigate TWS to find the information you want; there are no streamlined views. Bottom line, while TWS checks off quite a few boxes for research, the user experience is poor.
PortfolioAnalyst: Stepping away from traditional research, PortfolioAnalyst provides traders hedge fund-level reporting on their portfolio’s performance and makeup. Interactive Brokers also offers a free version for non-customers where you can link all your individual accounts and run reporting. It isn’t as insightful and easy to use as, say, Personal Capital, but it’s a compelling tool for traders with assets spread across numerous institutions.
To score Customer Service, StockBrokers.com partners with customer experience research group Confero to conduct phone tests from locations throughout the United States. For our 2019 Broker Review, 300 customer service tests were conducted over ten weeks.
- Average Connection Time: 1 - 2 minutes
- Average Net Promoter Score: 7.3 / 10
- Average Professionalism Score: 6.4 / 10
- Overall Score: 7.14 / 10
- Ranking: 13 th (16 brokers)
Mobile trading with Interactive Brokers is well supported across all devices and has the core functionality required by traders to go about their business and trade effectively. From lightning-quick streaming data to full-featured order entry and portfolio management, Interactive Brokers includes everything professionals could want from a brokerage.
Considerations: Charting is a mixed bag. Usability has its high points and low points, and some features one would expect are not included, such as stock and/or index comparisons. Other drawbacks include no customizable home screen, no Level II quotes, and only being able to set basic stock alerts without push notifications support.
Offering of Investments
Interactive Brokers provides the most diverse offering in the industry and leads by a wide margin in multiple areas, including international trading (customers can trade across more than 120 international markets in 31 countries), order types (65 total available), and cash management.
Cash management: Any account cash sitting idle beyond $10,000 will earn customers interest. The rate varies depending on the account balance; higher balance accounts earn more interest.
ETFs, futures, forex: Benefits aside, only 48 commission-free ETFs offered. Also, while futures trading is fully supported, retail forex trading is not offered in the United States unless you are designated as an "Eligible Contract Participant," which is broadly defined as an individual or organization with assets of over $10 million.
With industry-leading commission rates, more than 60 different order types, excessively low margin rates, support for every investment imaginable, trading in more than 120 international markets, and a robust trade platform suitable for any professional, Interactive Brokers is an excellent choice for investors who fit into its target mold.
About Interactive Brokers
Founded in 1977, Interactive Brokers (IBKR) is known for its industry-leading commissions schedule, margin rates, and support for international trading.
By presenting one universal portal through which clients can trade on more than 120 market centers in 31 countries, and deal in stocks, options, ETFs, futures, forex, and bonds, Interactive Brokers has something to offer for all seasoned traders.
2019 Review Methodology
For the StockBrokers.com ninth annual best online brokers review published in February 2019, a total of 4,544 data points were collected over six months and used to score brokers. This makes StockBrokers.com home to the largest independent database on the web covering the online broker industry.
Participation is required to be included. Each broker completed an in-depth data profile and provided executive time (live in person or over the web) for an annual update meeting. Our rigorous data validation process yields an error rate of less than .001% each year, providing site visitors quality data they can trust. Learn more about how we test.
About the author: Blain Reinkensmeyer As Head of Research at StockBrokers.com, Blain Reinkensmeyer has 18 years of trading experience with over 1,000 trades placed during that time. Referenced as a leading expert on the US online brokerage industry, Blain has been quoted in the WSJ, The New York Times, Forbes, and the Chicago Tribune, among others.