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Updated on Wednesday, January 22, 2020
Interactive Brokers has a reputation as a comprehensive trading platform designed for experienced investors and investment professionals. Some of the features that distinguish this broker from its competitors are its extensive range of investment offerings, sophisticated trading platforms and minimal fees for margin trades.
More recently, Interactive Brokers has launched IBKR Lite, a service tailored to the needs of less-experienced or more casual investors. IBKR Lite offers commission-free trading of U.S. stocks and ETFs, plus more approachable versions of their well-regarded tools.
Who should consider Interactive Brokers
Interactive Brokers’ IBKR Pro account is designed for active traders and investment professionals who need a platform for professional trading. The platform’s fee structure is flexible enough to accommodate different trading volumes, while keeping costs to a minimum.
The addition of IBKR Lite to Interactive Brokers’ product line-up gives beginning investors and more casual users with fee-free options for trading ETFs and U.S. stocks. It also lets them trade more complicated asset classes, like forex and fixed income, with different pricing options available.
Both account types offer margin trading, and both support a wide range of investments, giving you opportunities to build a portfolio beyond stocks or bonds with instruments like options, futures and forex.
Interactive Brokers fees and features
|Stock trading fees|
|Option trading fees|
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Mobile app||iOS, Android|
|Customer support||Phone, Chat, Email|
Interactive Brokers fees and commissions
Interactive Brokers features a more complicated pricing scheme than many other brokers. You may choose either IBKR Pro for a full-featured investing experience, with fixed or tiered pricing. The IBKR Lite account has a user-friendly platform with both fee-free and commission fee trading options.
IBKR Lite fees
IBKR Lite allows for commission-free trading of U.S. exchange-listed stocks and exchange-traded funds. There is no minimum balance required for an IBKR Lite account and no monthly maintenance fee. In addition, IBKR Lite users can trade option, forex, fixed income and mutual funds, with commissions.
|Investment type||Pricing structure|
|U.S. exchange-listed stocks/ETFs||Commission-free|
|Other stocks/ETFs||Fixed fees|
|Options and Futures||Fixed fees|
|Fixed Income||Tiered fees|
|Mutual Funds||Fixed fees|
IBKR Pro fees
With IBKR Pro, there is no commission-free trading. All trades are subject to either fixed or tiered pricing. IBKR Pro accounts have no minimum balance requirement but there is a monthly maintenance fee. That fee is up to $10 per month, less any commission fees paid for the month.
|Investment type||Pricing structure|
|U.S. exchange-listed stocks/ETFs||Fixed or tiered fees|
|Other stocks/ETFs||Fixed or tiered fees|
|Options and futures||Fixed or tiered fees|
|Fixed income||Tiered fees|
|Mutual funds||Fixed or tiered fees|
Fixed pricing vs. tiered pricing
With Interactive Brokers’ fixed-fee pricing, investors pay just $0.005 per share, with a minimum order of $1. The maximum fee per order tops out at 1% of the trade’s total value. Using a $25 share price, trading 100 shares would result in a fee of $1. Trading 1,000 shares would increase the fee to just $5.
With tiered pricing, the commission fee is determined by monthly trading volume. At the lowest end, the fee amounts to $0.0005 per share and at the highest end, it comes to $0.0035 per share. This chart illustrates how tiered pricing breaks down:
|Monthly volume||U.S. stocks, ETFs, ETPs and warrants||Minimum per order||Maximum per order|
<= 300,000 shares
|$0.0035||$0.35||1.0% of trade value|
300,001 - 3,000,000 Shares
|$0.002||$0.35||1.0% of trade value|
3,000,001 - 20,000,000 shares
|$0.0015||$0.35||1.0% of trade value|
20,000,001 - 100,000,000 shares
|$0.001||$0.35||1.0% of trade value|
> 100,000,000 shares
|$0.0005||$0.35||1.0% of trade value|
A key difference to note between the tiered and fixed pricing is that tiered commissions don’t include regulatory, exchange and clearing fees. The fixed pricing factors those fees in.
Trading platform and tools
Interactive Brokers offers different trading platforms for IBKR Lite and IBKR Pro users. At the IBKR Lite account level, investors manage their accounts through the Client Portal or the IBKR mobile app. This level of access offers these capabilities:
- Execute trades and monitor account activity from an iOS or Android device
- Check stock quotes
- Review portfolio performance via monthly return charts
- Examine key metrics, such as rate of return, profit and loss and buying power in real time
- Review portfolio allocation and cash balances
- Research individual securities and get the latest stock market news
The IBot chat feature is also available through the Client Portal and the IBKR mobile app. This feature allows you to trade stocks, options, futures, forex and bonds, get detailed quotes and account information and get answers to common trading questions quickly and easily. It can also be used with Facebook messenger and Alexa so you can access it virtually anywhere you are.
At the IBKR Pro level, investors have access to the Trader Workstation, which is considered a gold standard platform for professional traders. With this tool, you can trade stocks, options, futures, forex, bonds and funds on over 100 markets. Some of the key features of Trader Workstation include:
- Real-time stock market monitoring
- Up-to-date research and news
- Advanced trading tools, such as algorithms simulators, market scanners and real-time charting and rebalancing
There’s also IBKR WebTrader, which is an HTML-based trading platform. WebTrader offers a more scaled-down range of features for traders who want a streamlined approach or for those who trade from behind a firewall.
The most advanced traders can take advantage of IBKR APIs. This allows you to build your own trading application or software.
Note, you’re not limited to choosing one platform over another. You can use one or all of the various trading tools at your disposal within your IBKR Pro account.
Interactive Brokers is well-known for offering an extensive range of tradable assets. The types of securities you can trade through the platform include:
- Futures and futures options
- Precious metals
- Fixed income
- Exchange-traded funds
- Mutual funds
- Hedge funds
Both IBKR Lite and IBKR Pro members can trade on margin, and Interactive Brokers charges some of the lowest rates on margin loans of any brokerage. The platform uses a blended rate, based on margin balance.
As of writing in October 31, 2019, a $10,000 margin loan for an IBKR Lite account was subject to a blended APR of 4.07%. A $100,000 balance in an IBKR Pro account, on the other hand, was subject to a blended APR of 3.07%. Interactive Brokers offers a simple calculator to help traders estimate their blended rate for margin trading.
Research and education tools
Interactive Brokers offers an impressive number of educational resources for traders. Traders’ Academy, for instance, features complimentary courses on a variety of topics, including asset classes, foreign currencies and how to use the Trader Workstation to maximum advantage.
The IBKR education hub also includes both live and pre-recorded webinars, visual tutorials, calculators, widgets and a trader’s glossary. IBKR Trader’s Insight offers up-to-date discussion of the latest market trends and news while the IBKR Quant Blog features posts on advanced investing topics. Inside TWS Mosaic, Pro users can also get updates and analysis from platforms such as Reuters, Dow Jones, Morningstar and Zacks.
Strengths of Interactive Brokers
- Trading platforms: The broker offers its standard trading platform as well as a professional-grade platform for active traders. For beginners and those submitting the occasional trade, the WebTrader standard platform works well enough. A basic page lists your holdings, account value, and a trade ticket, where you can enter orders one by one. It’s a no-frills package that does exactly what it promises with a minimal amount of fanfare. Advanced and active traders will appreciate the broker’s Trader Workstation, a fully featured platform that offers a range of tools. If you’re looking to give the platform a spin with a virtual trading account, Interactive Brokers offers a free trial.
- Low trading costs: Interactive Brokers is obsessively focused on costs, and that’s most obvious in its stock commission. Customers won’t benefit just on stocks, though. Options have no base commission rate and are charged $0.15 to $0.65 per contract, based on trading volume, with a $1 minimum total. Mutual fund investors can access more than 4,200 funds without a transaction fee, and nearly 70% of those are no-load funds. This focus on low cost is a great boon to investors.
- Access to global markets: Customers can invest in what feels like almost any global market, including those across Europe and the major markets of Asia-Pacific. Interactive Brokers also allows trading in foreign exchange, metals and fixed-income products for even more comprehensive diversification.
- Margin rates: Interactive Brokers offers not only low trading costs but also low margin costs, about as close to the bottom as they can get and well below what other full-service brokers offer. At the lowest end, margin rates start at 2.20% (as of October 31, 2019), putting Interactive Brokers well below many of its competitors, which have minimum rates approaching the double-digit range.
Drawbacks of Interactive Brokers
- Monthly account fees: If you’re an investor with a low account balance, the IBKR Pro account is probably not for you, especially if you’re not making many trades per month. That’s because it charges a $10 fee for IBKR Pro accounts of less than $100,000, unless you generate $10 in commissions each month. The fee is slightly higher – $20 – for accounts of less than $2,000. The good news is, IBKR Lite investors are not subject to any monthly fee if you trade less frequently.
- Potentially overwhelming for newer investors: Interactive Brokers is like the Ferrari of brokers, in that it offers a premium range of investment options and tools. That being said, this platform may be a bit intimidating or overwhelming to use for the investing novice. While there’s a wealth of education and learning resources available on the platform, figuring out how to use them requires an investment of time. If you’re a newer investor who’s just looking to make some quick trades, another platform might be a better fit for your needs.
Is Interactive Brokers safe?
Interactive Brokers is trusted by many professional investors, and it’s their go-to broker. The company is focused on protecting your account and uses two-factor authentication when signing you in to prevent unauthorized access. Plus, accounts are protected by the Securities Investor Protection Corporation (SIPC), which guarantees accounts up to $500,000, including a cash-only limit of $250,000, in the event the broker cannot return the assets. Interactive Brokers goes a step further, though, for additional coverage of up to $30 million with Lloyd’s of London, with a cash sublimit of $900,000. These guarantees don’t protect you against losing money in the market, of course.
Interactive Brokers brings a lot to the table, especially in terms of low costs. That extends to not only trading stocks but also options and the very attractive margin rates. For pros and active traders who know what they’re doing, Interactive Brokers is a great choice, especially now that account minimums have been eliminated. The option to trade U.S. exchange-listed stocks and ETFs in the IBKR Lite account allows it to maintain pace with its commission-free brokerage competitors.
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