Interactive Brokers Review
Interactive Brokers is a top choice for active and experienced traders who want to trade any investment product for the lowest costs and fees in the industry. The trading platforms generally suit the needs of experienced investors who don't require the additional resources offered by the major brokers.
Top broker for active trading
Interactive Brokers’ trading technology is so good that you could actually get by as a professional day trader using their platforms (and many people do). The company tries to guide you as much as possible to make the steep learning curve much easier. IB offers a web-based trading platform called WebTrader and a more advanced downloadable platform, Trader Workstation, that may take you a few days to learn. Both platforms are included for Interactive Brokers clients at no additional cost. Most traders tend to gravitate to the Trader Workstation as it offers more features than WebTrader.
Lowest trading costs in the industry
When it comes to pure trading, there’s none better in the industry than Interactive Brokers. You can trade the most products at the lowest prices and no competitor even comes close. Sure, the minimum required deposit of $10,000 is quite steep, but each stock trade will only cost you $0.005 per share.
Superior account security
Some new investors are worried about account security. If you’re one of them, this is the place to be. Interactive Brokers offers a number of physical security devices, one of which is a calculator-like security device which you enter a code into while logging in. It may take you a bit longer to log in to your account as a result, but such is the trade-off one makes for peace of mind. And, of course, you don’t have to use these features if you don’t want to.
Straightforward, customizable interface
Interactive Brokers offers a completely different type of user experience compared to other brokers. First, you should know that their web-based trading software is simply a place to execute trades. You can do some research, but it’s very bare bones. You can access your portfolio information, view current trading positions, and quickly make trades from the Market View. A major plus, however, is that everything on this page is completely customizable so you can add, remove, and rearrange whatever you like.
Great mobile app with plenty of play money
Interactive Brokers has a mobile app called mobileTWS that’s available for all of the popular devices. They even offer it in a Java ME format so you can use it with your Nokia smartphone. You can make trades and get stock quotes, although the app is a little slow because it briefly loads during navigation. Once you get a quote, you can watch the bid and ask prices change right before your eyes in real time. Yet the best feature of the mobile app is its full demo. Trying out mobileTWS with $500,000 of play money in your account will stave off any fears you might have with trusting your mobile device to execute your trades. You can place trades, monitor your progress, and basically have the exact same capabilities you would have with an account funded by your own money.
Serious fines for rules violations
Interactive Brokers has been in the news several times for violating reporting rules and failing to supervise their accounts. Interactive Brokers failed to compute customer funds in accounts at the end of each day from 2008-2011. Interactive Brokers also used different currencies to maximize earnings, which was not requested by their customers. The Commodity Futures Trading Commission (CFTC) said that Interactive Brokers did not retain enough dollars to meet their obligations to commodity customers. They were ordered to pay a $225,000 fine in April of 2013 and a $700,000 fine in July of 2012.
Account history and statements displayed separately
The frustration of the web-based platform sets in when you want to access the rest of your account information, such as reports or statements. You have to go into a separate account management section under the login portion of the website. Interactive Brokers’ setup keeps everything separate, while most companies provide you with everything you need in one location, which might make sense when you think about who Interactive Brokers targets as their clients. The platform is simplified for trading only, but there’s definitely an easier way to simplify things without keeping it all completely separate.
High initial learning curve
Overall, Interactive Brokers is difficult for anyone to navigate the first time around. It lacks many of the standard features that you would see from other brokers, but then again, Interactive Brokers is not like any of the other brokers. They exist for the active and professional trader, and their reputation shows that they know what they’re doing. Traders who are interested in the top technology and lowest prices will certainly benefit in the long run even if the initial learning curve is a bit painful. Additionally, Interactive Brokers offers an extensive user guide with plenty of screenshots to guide you through the process.
Poor customer service reputation
Based on the customer support features available, Interactive Brokers scores fairly well because they offer live chat and support on social media outlets. However, there is plenty of chatter across the web and other message boards that have various complaints about the customer service for Interactive Brokers, or the lack thereof.
Trading Costs and Fees
- Broker Assisted Trades: $0
- Futures Contract Fee: $0.85
- Maintenance Fees: Minimum of $10/month in commissions
- Margin Rates: 1.07-1.57%
- Minimum Account Balance Fee: $20/month (account below $2,000)
- Mutual Funds Fee - Load: Not offered
- Mutual Funds Fee - No-Load: $14.95
- Options Contract Price: $0.15-$0.70
- Options Flat Fee: $0
- Stock Flat Fee: $0.005/share
- ACH/EFT Withdrawal: $1
- Bounced Check: $25
- Check Withdrawal: $4
- Domestic Wire Withdrawal: $10
- Forced Margin Sellout: Unknown
- Full Account Transfer: $0
- IRA Annual Fee: $30
- Partial Account Transfer: $0
- Stop Payment on Check: $50
- Telephone Orders: $30