Interactive Brokers

Founded in 1978 in New York City, Interactive Brokers is the largest United States online brokerage firm in terms of the number of daily average revenue trades. Offering direct-access trading services, its operations are worldwide with offices in at least 24 countries. Its brokerage services span Forex, stock, options, futures, and bonds.

Regulation and Safety

Regulation

  • Interactive Brokers is registered with and regulated by the Financial Industry Regulatory Authority (FINRA).

Safety

  • The broker is listed on the New York Stock Exchange (NYSE). There is a negative balance protection policy with this brokerage service provider which ensures that you can never lose more than your deposited amount. Also, it operates a financial coverage policy that protects up to $500,000.

Customer Support Service

  • The broker’s customer support service is offered via email, phone, and live chat. The response time is fast and the agents are reliable.
  • It is available in several languages – English, German, French, Italian, Russian, and Spanish.

Account Types and Account Opening

Account Types

  • Interactive Brokers offers to primary types of account: individual trader’s account and institutional investors’ account.
  • Overall, there are eight types of accounts: individual, joint, trust, Individual Retirement Account (IRA), UGMA, Friends and Family Group, Family Office, and Small Business. The IRA and UTMA types of accounts are available only in the U.S.

Leverage

  • Variable leverage levels.

Account Opening

  • Account opening is digital. To open an account, you have to follow a five-step registration process. First, you supply your personal information such as address and contact information, regulatory information, and general disclosures, and upload required documents. Thereafter, you will be able to fund your account.
  • Those required documents, as usual, are for the verification of identity and residency. You can use your passport, driver’s license, or your national ID for identity verification and bank statement or utility bill for residency verification.
  • However, the process of opening account with this broker is complicated and slow.  Accounts usually take up to two days before they get approved. The process is not user-friendly as multiple confusing messages keep popping up throughout the process.

Minimum Account

  • Interactive Brokers does not have a minimum deposit requirement. However, you might need at least $2,000 to open a margin account.

Charges and Rates

Trading Fees

  • Although it charges commission on Forex trades, Interactive Brokers’ trading fees are generally low and transparent.  In fact, the more you trade, the less commission you pay. That is, the higher your trading volume, the lower the commission. Two commission structures are available: fixed and tiered.
  • However, if you invest in its mutual fund, be expecting reasonably high fees. Also, it charges an annual fee that ranges from 0.08 to 1.5% for its asset management services.

Non-trading Fees

  • The broker charges an inactivity fee. This fee can be as high as $10 per month.
  • However, there are no withdrawal and account fees.

Financing Rates

  • The financing rates are reasonable. They vary with asset class – and with different currency pairs. They are lowest on Forex trades.

Markets, Products, and Investments

Markets

  • Arguably, Interactive Brokers covers the most diverse of markets compared to most other brokers. It offers stock, Exchange Traded Funds (ETF), Forex, bond, options, futures, CFD, and cryptocurrency. Plus, it also provides fund management services.
  • Interactive Brokers makes trading activities possible on over 70 stock markets, one of the highest in the industry.

Products

  • Interactive Brokers offers over 70 stock markets, 20,000 ETFs, 105 currency pairs, 110,000 bonds, options, and futures.

Investments

  • The broker also offers an asset management service which is a combination of robo-advisory and copy trading services. You can choose any portfolio manager of your choice and copy their trades. However, the lowest investment you can make is $5,000.

Trading Platforms, Educational Resources, and Research Tools

Trading Platforms

  • Interactive Brokers provides trading platforms in three versions: web, mobile, and desktop. The web-based platform is offered in two versions: Client Portal and Webtrader. The Client Portal supports many languages – from English to German, Spanish, French, and more. Its functions are simple and easy to use. Also, with its two-step authentication feature, its login system is secure. However, the platform can be difficult to customise.
  • The mobile trading platform is available for both iOs and Android and has many functions including a chatbox. Its fingerprint sensor ensures that it has a more secure login system. Also, its search functions are generally easy to use. It has many exotic order types and they are easy to use.
  • The desktop trading platform has many advanced features and is easily customizable. However, beginner traders may not be able to easily find their way around it. It is not user-friendly and many of its functionalities such as the search function are poor.
  • Both the mobile and desktop platforms have a chatbox which can help to facilitate the fast execution of trades.  You can use this chatbox to make inquiries about important Information. Moreover, it is intelligent enough to produce results on company analysis.

Educational Resources

  • The broker provides a demo account, online courses, and webinars. You can select the courses you want to take based on the levels of your knowledge and experience.
  • Also, it offers platform tutorial videos and trading glossary, among others.

Research Tools

  • Although they can be difficult to use, Interactive Brokers’ research tools are extremely useful for trading. There are recommendations, fundamental data, and advanced charting techniques, with over 100 technical indicators.
  • Its news feed provides daily news and economic calendar.

Methods of Payments

Although many currencies – up to 21 — are available with this broker, both deposits and withdrawals are slow and can take up to 3 days.

Deposit

  • Bank transfer
  • ACH (Automated Clearing House) transfer

Other methods are not supported.

Withdrawal

  • Only bank transfer is available.
  • ACH transfer

The broker does not charge fees on deposit. However, only the first withdrawal is free. Subsequent ones usually attract a fee.

Bonuses, Promotions, and Prospect

Bonuses

  • Sometimes, the broker gives new clients the bonus of special margin rate.

Promotions

  • For clients from the United States, Interactive Brokers offers a promotion whereby you get $200 for a friend you refer after opening your account.

Prospect

  • Interactive Brokers, overall, is a solid choice. It is one of the largest online brokerage firm in the United States and it is publicly listed.

Conclusion

If there is one thing that has endeared Interactive Brokers to many traders, it is its competitive commissions. Interactive Brokers offers frequent, high-volume traders competitive prices and even more reasonable charges on large accounts. From stock and exchange-traded funds (ETFs) to options, Interactive Brokers’s pricing schedule is almost rock-bottom. Add to this its Desktop Trader Workstation and research, charting, and many other tools which advanced traders tremendously benefit from using.

However, it charges inactivity fees. This might affect the bottom-line and profitability if you are a small-capital trader.