Interactive Brokers Review.
While Interactive Brokers comes with a $10,000 minimum funding and is not suitable for casual investors, it leads the industry in international trading and low-cost commissions desired by professional traders.
By Blain Reinkensmeyer / February 21st, 2017 / Updated: December 18th, 2017.
Review Sections:
Founded nearly 40 years ago, 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 100 market centers in 24 different countries, and deal in stocks, options, ETFs, futures, forex, bonds, and CFDs, Interactive Brokers has something to offer any seasoned trader who has at least $10,000 ($100,000 for margin accounts).
Commissions & Fees.
With its core clientele being professional traders and institutions, providing the lowest commissions schedule available is critical for Interactive Brokers. In our rigorous assessment, they deliver without question.
First, it is important to note that Interactive Brokers does not accept payment for order flow, a key element in providing quality order execution. In our assessment of order execution for the 2017 Review, the broker came second behind Fidelity. For more, see our guide to order execution.
Overall, Interactive Brokers unquestionably reigns supreme in the category of commissions and fees.
Interactive Brokers also leads the industry with the lowest margin rates, which vary from 1.91% down to a staggering 1.41% for clients who hold more than $1 million with the brokerage.
Speaking of equity trades, rates start at $.005 per share with the fixed-rate structure ($1 minimum). Alternatively, the tiered-rate structure, which starts at $.0035 per share, can be used, but routing is factored in, which can add or reduce the cost, depending on whether the client is removing or adding liquidity. Some math will reveal that 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.
Options are $.70 per contract with no minimums, and active options traders will enjoy the fact that exercise and assignments are practically free. Like tiered equity trades, per contract fees tier down as total shares traded increases.
New and casual investors should be aware of the miscellaneous fees and minimums charged by Interactive Brokers. Put simply, spend at least $30 in commissions each month and you are in the clear; otherwise, charges for inactivity can reach up to $20 per month. While far lower than the minimum spend required at say Lightspeed, it is still something to keep in mind. A full breakdown can be found on the Commissions & Fees notes further down the page.
Overall, Interactive Brokers unquestionably reigns supreme in the category of commissions and fees.
Platforms & Tools.
The flagship platform Interactive Brokers offers is its Trader Workstation (TWS). The platform is set up to trade everything under the sun, including global assets, and is designed to be used by traders with ample market experience. The default experience is called Mosaic, while clients also have access to view what is called Classic TWS (the original version of the platform).
Because Interactive Brokers supports so many asset classes, it had to rethink its position and watch list management. What they came up with, which takes some getting used to, is extremely efficient. Type in any stock symbol and you will see a summary of available securities. Watch lists can include anything from equities to individual options contracts, futures, forex, warrants, you name it. I preferred the Mosaic view, although I know many long-term clients prefer the Classic view.
Watch lists can have up to 338 different columns, and to say they are fully customizable is truly an understatement. No broker offers an experience like TWS. Beyond learning how to effectively build watch lists, I found only 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 a slew of possible matches, which can be overwhelming for non-professionals.
Turning to charting, technical traders will find nearly everything they need. One hundred and twenty four different studies are available to be added to any chart, and customizations cover every possible option. Note though, while 124 option indicators are impressive, TWS still trails the 270 and 370 offered by TradeStation and TD Ameritrade thinkorswim, respectively. Out of all the tools on TWS, I found the charts to have the most user-friendly interface.
Considering the depth of functionality, I was surprised to find only eight tools for mark ups. While the basics are present – trendlines, notes, zooming, Fibonacci, etc. – important tools such as support and resistance lines, channels, and the like are missing. Pickiness aside, the charts on TWS have all the core functionality required to succeed: viewing historical trades, alerts, trading off charts, comparisons, and index overlays, to name several.
There is no question TWS is built for professional trading as there are, for example, a staggering 63 different order types available for clients to use, by far the most in the industry.
Alongside charts, TWS is also home to a variety of other tools not covered in this review. 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. There is no question TWS is built for professional trading as there are, for example, a staggering 63 different order types available for clients to use, by far the most in the industry.
After assessing TWS across 58 individual variables, the platform easily ranked among the best in the industry. Certain tools, such as charting, lack depth compared to those the top-ranked platforms use; however, overall, TWS delivers.
Lastly, for clients traveling without access to their desktops, or for clients looking to simply monitor their portfolio, place trades, and view watch lists, IB WebTrader is a good solution. After loading WebTrader, I found a detailed summary of my portfolio balances and margin requirements alongside a full spectrum order ticket. When I say full spectrum, I mean trading for all asset classes is supported. The only limitations are algo orders and other advanced order types.
Pulling quotes will provide only a basic high-level summary, an extremely rudimentary chart I recommend be avoided altogether, and an option chain. Basic stock screening is also present alongside a high-level international market summary tab, Market Pulse. Customizations are essentially non-existent throughout, although streaming real-time quotes are found throughout, which is essential.
Bottom line, the focus of WebTrader is to monitor portfolios and manage orders; it is not designed to be used as a standalone. It accomplishes these functions well.
Being a professional trader-focused brokerage, Interactive Brokers is not known for its research offering. Bundled with the platform clients will find what they need to conduct mostly thorough research for stocks, decent research for ETFs, and little to no research for Mutual Funds.
That said, Interactive Brokers does offer a variety of third-party provider feeds a la carte, including Morningstar, which are available for a monthly fee.
Mobile Trading.
Mobile trading with Interactive Brokers is mostly an enjoyable experience. All devices are supported including iPhone, iPad, Apple Watch, Android smartphone, and Android tablets.
When testing the iPhone app, I found the app had everything I needed to trade effectively.
When testing the iPhone app, I found the app had everything I needed to trade effectively. From lightning quick streaming data to full-featured order entry and portfolio management, all the main criteria were quickly checked off.
The drawbacks with the experience center around usability. For example, the charts have 68 different optional studies, which is great, but the charts are not flexible. If you set the settings to view a daily chart of the past six months, that’s the only view you will get until you adjust the settings; there is no panning. Also, two-factor login with Touch ID is supported, but you have-to use a secondary IB Key app instead of simply Touch ID logging into the actual app as you load it.
Other drawbacks include a lack of stock and/or index comparisons in charting, no customizable home screen, no streaming live TV or videos on demand, no Level II quotes, and only being able to set basic stock alerts without push notifications support. You also cannot perform ACH account transfers within the app.
Cons aside, I found the app had a handful of nice features not often found across the industry, including custom screening /scanning and after-hours charting.
As stated previously, 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.
Other Notes.
One notable weak spot in Interactive Brokers’ offering is its customer service. During testing for our 2017 Review, we found support to be consistently poor regardless of the channel being used: phone, , live chat. The broker placed 15th out of 16 brokers we tested.
While Interactive Brokers does not cover advisor services and institutional asset management, the company is unique in that it offers what it calls the Investor’s Marketplace. The tagline of the service is to “Find the right service provider for your trading needs.” For example, I presented myself as “an individual investor seeking an advisor” and a list of several hundred advisors popped up. Hedge funds, research and technology providers, administrative service providers, and the like are all included.
Final Thoughts.
With industry-leading 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 a robust trade platform suitable for any professional, Interactive Brokers is a great choice for investors who fit into its target mold.
Methodology.
For our 2017 Stock Broker Review we assessed, rated, and ranked sixteen different online brokers over a period of six months. In total, we conducted 349 customer service tests, collected 5,277 data points, and produced over 40,000 words of research. How we test.
Interactive Brokers.
Trading & Account Fees.
Interactive Brokers differs from many other online brokerages by offering a trading fee structure based on the number of shares traded; other brokerages usually have a flat fee amount. Interactive Brokers charges $0.0050 USD / share traded. This is advantageous depending on the volume you intend to trade. Very high volume traders may gain more benefit from selecting a flat fee brokerage.
For a transaction of 1000 shares, Interactive Brokers will charge you $5.00. As with any decision, make sure to review the offerings for the suggested brokerages to see if they are in line with your expectations. In addition consider the requirements for opening and maintaining an account.
Find an Online Broker.
Securities Available.
Account Types.
Account Fees.
Click here to view a pre-sorted list of brokers with no maintenance fees >>
Interactive Brokers structures its options trading with a base fee that is charged in conjunction with a fee per options contract. The base trade fee is $1.00 USD, which is fairly low compared to other online brokers, and the fee charged per contract is $0.70 USD. Therefore, the total amount you would be charged for completing a trade of 10 options contracts would be $8.00.
Other Securities.
Interactive Brokers offers a wide range of mutual fund investment choices. In total, investors have 2,700 mutual funds from which they can choose; all of which have no load fee applied.
When applicable, the broker will charge $14.95 USD in network for transactions involving mutual funds. This fee is fairly low when put in context against other brokerages.
Interactive Brokers offers investors the chance to invest in corporate, US treasury, municipal, and certificates of deposit bonds. To invest in these securities, the broker charges a flat rate of $5 USD , which is on average with the rate charged by other online brokers.
Additionally, Interactive Brokers provides 40 ETFs at no commission , meaning they can be traded with no brokerage cost to the trader.
Click here to view a list of Online Brokers offering free mutual fund trades >>
Help Us Improve.
Overview.
Furthermore, the broker develops and maintains a mobile app solution for iOS and Android operating systems.
Charting.
Additional Platform Elements.
Online Brokers can offer a wide variety of platform features. If you haven't found what you're looking for check out the Online Brokers homepage, where you can sort and filter brokers based on multiple unique criteria .
using custom criteria >>
Advanced Tools & Rates.
Interactive Brokers offers its customers the most advanced tools currently available on the market. Among these are the ability to complete complex orders, set up automated investing strategies, and conduct technical chart analysis. On top of this, Interactive Brokers offers a good and diverse selection of investment options .
When placing orders, Interactive Brokers uses a spray routing method . This method is advantageous to active traders, since it masks your order by placing it in multiple markets. This effectively prevents other traders from anticipating your trades. Lastly, a great benefit of trading with Interactive Brokers is the ability to make tax lot selections at the time of a trade.
Advanced Tools.
Click here to sort and filter Online Brokers based on available trading options >>
Margin Rates.
For those with an account balance greater than $25,000 USD, Interactive Brokers provides the ability to set up a margin account. Margin rates collected by the broker range from 1.570% to 0.620%, depending on the account balance at the time of trade.
See the attached chart for further details about the margin rates offered by the broker.
Trading Software.
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Contact Info.
Still searching for the right broker for you? Credio's Online Brokers website contains all 45 brokers, with options to sort and filter by Smart Rating, minimum deposit, trading fee and current promotions. For example, you can click the button below to view online brokers with no minimum deposit , or set the filter for more advanced specific criteria.
Interactive Brokers: A Review for Options Trading.
Here's a review of Interactive Brokers from the perspective of an investor who uses stock options in his or her portfolio.
Stock options are more than just a way companies pay their workers. Investors can buy and sell stock options to hedge their portfolio, generate income from covered calls, and speculate on short-term moves in stock prices to earn higher returns on their investment. As some brokers prioritize options trading over other types of investing, it's important to pay attention to the details before opening a new brokerage account.
Let's review how Interactive Brokers compares for investors who want to use stock options in their portfolio.
Standard trading commissions.
Interactive Brokers uses a variable commission schedule that makes it stand out in the world of stock and options trading. Rather than pay a mostly fixed rate, Interactive Brokers' commissions vary by trade size and the value of each option.
Stocks and ETFs.
$0.005 per share ($1.00 minimum)
Options worth $0.10 or more.
$0.70 per contract ($1.00 minimum)
Options worth more than $0.05 but less than $0.10.
$0.50 per contract ($1.00 minimum)
Options worth less than $0.05.
$0.25 per contract ($1.00 minimum)
Data source: company website.
Importantly, Interactive Brokers also offers a variable commission schedule under which options, stocks, and ETFs can be traded at even lower prices. Commission prices generally decline with volume, which is advantageous for its most active clients. Learn more about special offers for opening a new account, which can add up to thousands of dollars in value in the form of commission-free trades and cash bonuses.
Multi-leg options and exercise and assignment fees.
While it's relatively straightforward to buy a call or put option, some strategies require simultaneous orders of different options contracts. The long strangle option strategy requires the simultaneous purchase of a call and a put option, for example. Depending on your broker's commission schedule, these options trades can become costly, and quickly.
Type of Transaction.
Fees and Commissions.
Buy to close fee for low-cost options.
Standard commission schedule.
Data source: company website.
Interactive Brokers' commission and pricing schedule is designed to benefit traders who make use of complex strategies, or who intend to hold their options to exercise or assignment. The broker doesn't charge a fee when options are exercised or assigned, and its commission schedule offers lower prices for low-priced options contracts. It is one of a few brokers that don't charge for this occurrence.
People who use covered calls, for example, would prefer a variable commission schedule like that offered by Interactive Brokers, as commissions decrease with the price of an option. When you write a covered call, you are effectively shorting an options contract. As the options contract declines in price, buying to close the position will incur a smaller commission. For example: You might pay $0.70 per contract to write covered calls worth $1.00 each. Later on, the option price might fall to $0.05 per contract, at which point you'd pay a commission of just $0.25 per contract to buy-to-close the contract.
Similarly, those who want to buy low-priced puts or calls will pay a lower commission to do so, resulting in commissions that make up a lower percentage of the amount invested.
Interactive Brokers' stock option commissions decline with the price of a put or call option. Image source: Getty Images.
Options research tools.
Although discount brokers are known for offering less in the way of research and support, many offer free access to research and trading tools designed to help their investors make better investment decisions. Many of these tools come free just for having an account.
Interactive Brokers' Options Analytics tool allows you to explore an options contract from the perspective of profitability, max gain or loss, and view the "Greeks," which are automatically calculated next to each contract. These tools can be especially useful for investors who use more sophisticated options strategies.
Minimum deposit requirements for options trading.
Interactive Brokers currently requires a $10,000 minimum deposit for most investors, although this minimum is decreased to $5,000 for IRAs, and $3,000 for individuals who are 25 or younger.
After making a minimum deposit, investors will be able to complete basic options trades. More complicated strategies and those that involve higher risk -- selling naked puts or calls -- will typically require a higher equity balance, and minimums are subject to change depending on the brokers' assessment of the risk of each trade.
Keep in mind that Interactive Brokers waives minimums on accounts with a balance of $100,000 or more. However, for those who don't meet the minimum account balance requirement, Interactive Brokers requires that traders generate at least $10 in monthly commissions.
Accounts that don't meet the minimum trading volume requirement will have their monthly commissions automatically rounded up to $10 during that month. For example: A client who spends $5 on commissions in one month will see an extra $5 fee added on during the month to bring that person up to the minimum commission level. This may make it less attractive to people who don't intend to keep a high balance or don't anticipate trading frequently.
Interactive Brokers as an options broker.
Interactive Brokers is designed with the active trader in mind. Its commission schedule favors active options traders, as well as those who hold options until exercise or assignment, as it doesn't charge a fee for either event. That said, its higher minimum deposit requirement as well as inactivity fees ($10 minimum monthly commissions) may not make it cost effective for the infrequent options trader. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. Check out the Fool Broker Center to compare several brokers all on one page and to see if you qualify for extra perks just for opening an account.
Jordan Wathen owns shares of Interactive Brokers. The Motley Fool recommends Interactive Brokers. The Motley Fool has a disclosure policy.
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OptionTrader for Option Trading.
OptionTrader is a robust trading tool that lets you view and trade options on an underlying.
OptionTrader displays market data for the underlying, allows you to create and manage options orders including combination orders,
and provides the most complete view of available option chains, all in a single screen.
TWS OptionTrader offers trader the following benefits:
Configurable format. Quick click order entry. Manage options orders on a single screen. Display Implied Volatility by contract. Calculate fair value of option contracts.
View the Greek risk dimensions. See open interest on option chains. Color-coded values for quick glance information. Access Trader Workstation's other integrated options tools with a single click, including IB Risk Navigator, Options Analytics and Model Navigator.
The OptionTrader Combo tab offers a quick, easy and accurate way to create and transmit a multi-leg combo.
order in as few as three mouse clicks. The Combo tab lets Traders:
Monitor price variations of the underlying in the Quote panel. View all available chains or filter for specific contracts. Option chains are organized by strike and expiry, with calls on the left and puts on the right. Use the Statistics panel to view open interest, volatility and volume changes, and other option-related statistics. Configure the data displayed by adding or removing columns for calculated model prices, implied volatilities, open interest and the Greeks. Trade in terms of volatility rather than option premium prices. Submit Delta Neutral trades, for which the required stock position is automatically calculated to hedge an option's delta risk. Create multiple pages for different underlying securities. Add "Display size" to work large orders on an iceberg basis.
Interactive Brokers ®, IB SM , InteractiveBrokers ®, IB Universal Account ®, Interactive Analytics ®, IB Options Analytics SM , IB SmartRouting SM , PortfolioAnalyst ® and IB Trader Workstation SM are service marks and/or trademarks of Interactive Brokers LLC. Supporting documentation for any claims and statistical information will be provided upon request. Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.
The risk of loss in online trading of stocks, options, futures, forex, foreign equities, and bonds can be substantial.
Options involve risk and are not suitable for all investors. Before investing in options, read the "Characteristics and Risks of Standardized Options". For a copy visit theocc/about/publications/character-risks. jsp. Before trading, clients must read the relevant risk disclosure statements on our Warnings and Disclosures page - interactivebrokers/disclosures. Trading on margin is only for sophisticated investors with high risk tolerance. You may lose more than your initial investment. For additional information regarding margin loan rates, see interactivebrokers/interest. Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading security futures, read the Security Futures Risk Disclosure Statement. For a copy visit interactivebrokers/disclosures. There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
INTERACTIVE BROKERS ENTITIES.
is a member NYSE - FINRA - SIPC and regulated by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. Headquarters: One Pickwick Plaza, Greenwich, CT 06830 USA.
Is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Member - Canadian Investor Protection Fund. Know Your Advisor: View the IIROC AdvisorReport. Trading of securities and derivatives may involve a high degree of risk and investors should be prepared for the risk of losing their entire investment and losing further amounts. Interactive Brokers Canada Inc. is an execution-only dealer and does not provide investment advice or recommendations regarding the purchase or sale of any securities or derivatives.
Registered Office: 1800 McGill College Avenue, Suite 2106, Montreal, Quebec, H3A 3J6, Canada.
ABN 98 166 929 568 is licensed and regulated by the Australian Securities and Investments Commission (AFSL: 245574) and is a participant of ASX, ASX 24 and Chi-X Australia. Registered Office: Level 40, Grosvenor Place, 225 George Street, Sydney 2000, New South Wales, Australia.
is authorised and regulated by the Financial Conduct Authority. FCA register entry number 208159. [fsa. gov. uk/register/home. do] Office: Level 20 Heron Tower, 110 Bishopsgate, London EC2N 4AY.
is a member of NSE, BSE [sebi. gov. in]. Regn. No. NSE: INB/F/E 231288037 (CM/F&O/CD); BSE: INB/F/E 011288033 (CM/F&O/CD); NSDL: IN-DP-NSDL-301-2008. CIN-U67120MH2007FTC170004. Registered Office: 502/A, Times Square, Andheri Kurla Road, Andheri East, Mumbai 400059, India. Tel: +91-22-61289888 / Fax: +91-22-61289898.
商号：インタラクティブ・ブローカーズ証券株式会社。 金融商品取引業者：関東財 務局長（金商）第187号。 加入協会：日本証券業協会 一般社団法人金融先物取引業 協会。 お問い合わせ先：カスタマー・サービス（03-4588-9700 平日8：30-17： 30）。 登録所在地: 〒 103-0025 東京都中央区日本橋茅場町三丁目2番10号 鉄鋼 会館4階.
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