IB Rating: 
Overview of Interactive Brokers
For advanced trading, Interactive Brokers delivers pro-level software and a large list of tradable assets. And it now offers more than just self-directed trading. This investment firm is definitely worth checking out.
Investment Docket
Interactive Brokers offers self-directed trading in the following asset classes:
- Equities
- Options
- Precious metals
- Fixed-income assets
- Warrants
- Funds (exchange-traded, closed-end, and mutual)
- Cryptocurrencies
- Forex
- Futures (including event contracts)
- Options on futures
Although the above list is quite impressive on its own, it’s actually much larger than it looks because Interactive Brokers provides access to many foreign exchanges.
Because Interactive Brokers caters to experienced traders, it offers many account types. These include non-professional accounts like IRAs and joint accounts and professional accounts for groups like hedge funds and introducing brokers.
Robo accounts are available through Interactive Brokers’ sister company Interactive Advisors. This automated service trades ETFs with low expense ratios. There are many portfolios and fund families to choose from.
Securities (but not other asset classes) held in IBKR accounts are protected by SIPC up to $500,000 per separate capacity. Interactive Brokers has an excess insurance policy with Lloyd’s of London that has an aggregate limit of $150 million.
IBKR Pricing and Minimums
A robo account with Interactive Advisors requires a $100 deposit to open (although some portfolios
require more than this). Because this is a managed account, there is a management fee. It ranges
from 10 to 70 basis points, depending on the portfolio chosen.
Self-directed accounts with Interactive Brokers have no minimum deposit requirements and no management fees. There are commissions in some cases, although the company’s IBKR Lite pricing plan comes with zero commissions on trades of stocks and ETFs on the major U.S. exchanges. Trades of other investment products will carry commissions, although these are typically quite small. Here are a few examples:
- Futures from 5¢ to $5.00, depending on the exact commission plan chosen and the exact contract traded
- Cryptocurrencies as low as 0.12% of trade value with a $1.75 minimum
- Spot gold as low as 0.007% of trade value with a $2.00 minimum
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Margin Accounts
Interactive Brokers offers both cash and margin trading. It’s easy to upgrade a cash account to a margin account on the firm’s website, which we’ll look at here in just a minute. Margin details on individual securities are available on multiple trading platforms. Specific data points include initial and maintenance margin numbers for both long and short positions.
Every margin debit will come at a cost, of course. Currently, IBKR Lite clients pay a flat
7.33% across all debit levels on U.S.-dollar balances. IKBR
Pro customers pay 6.33% interest.
Brokerage accounts with IBKR can be denominated in a wide range of currencies, and these will have their own margin-rate schedules. These range from 20% to 0.75%, depending on the currency and the amount borrowed.
Website Trading
Interactive Brokers calls its website the client portal. Whatever name you wish to give it, the software does have some really good trading tools. The order ticket, for example, has on-close orders, which are hard to find elsewhere. There are several duration choices. There is a price management algorithm check box that will use IBKR’s smart-routing technology to try to find better fill prices. Take-profit and stop-loss orders have toggle switches to easily add and delete them from a trade.
Charts on the client portal borrow software from TradingView. As a result, there are some really good features, including a full-full-screen mode that will strip off all axes and display a chart completely in the monitor. There are many drawing tools, indicators, and other gadgets.
Mobile App
Moving onto the company’s mobile app, we find another really useful platform. Charts come with no less than 13 plot styles. These include some really esoteric ones like baseline and point & figure. There are technical studies and trade buttons displayed on top of a graph. The one downside is that a recent software update has removed horizontal charting. Another deletion is the old wheel-order entry system, which populated a horizontal trade ticket with selectable values.
The app’s remaining trade ticket has a tab on the right-hand side that can be swiped to the left to produce a graph of the entered ticker. The order form itself has several trade types, including relative, market on close, and trailing limit. Bracket orders are really easy to attach.
Other highlights on the app that we really like are mobile check deposit, an Artificial Intelligence named iBot, and an economic calendar. Live video news is missing.
Trader Workstation
The last trading platform we’ll look at is definitely not last in ability. Trader Workstation is IBKR’s very advanced desktop program, and it packs in many professional-level tools. During our test drive of TWS, we really liked the very advanced option widgets, which can be found under the New Window tab in Mosaic layout. (Multiple layouts can be created and saved; they will appear in the bottom-left corner.)
A graph within TWS can be displayed horizontally, and there are all sorts of tools. A right-click menu has a red sell button and blue buy button. Other selections within this window include a crosshair, technical studies, and a text box.
Day Trading
Leverage: Day traders can get up to 4:1 leverage on lots of securities with an IBKR taxable account. An IRA can’t use leverage, per industry regulations, but it can trade with unsettled funds, thanks to limited margin from Interactive Brokers. Portfolio margin is available as well.
Direct Access Routing: Available on Trader Workstation.
Extended Hours: IBKR Lite customers can trade from 7:00 am until 8:00 pm.
Level II Quotes: Market depth is available on Trader Workstation.
Shorting: It’s possible to enter short positions at Interactive Brokers, and the broker’s software shows how many shares are available for shorting.
Routing Fees and Rebates: Available.
PDT Rule: U.S.-based accounts must follow America’s PDT rule. Other accounts are not required to do so. U.S.-based accounts can day trade non-securities like futures, forex, and cryptocurrencies without restrictions.
Bank Products
Although Interactive Brokers does not specialize in cash management, it does offer a Mastercard debit card. Only individual and trust accounts are eligible for the card. It can be used to borrow funds through margin if the account has signed up for margin. There is a $1,000 maximum daily ATM withdrawal limit on the card. Some perks that can now be found at other brokerage firms, like ATM fee refunds and checkwriting, are not offered.
Money market mutual funds are offered. They can easily be found using the broker’s fund screener, which is located under the Research tab on the website. Some of them have no load and no transaction fee.
Customer Service
iBot, Interactive Brokers’ robo chat widget, appears on all three software platforms we have examined. It does a decent, although not spectacular, job of answering questions. Human service can be found under the Help link, which appears in the top-right corner of the website. In the Help section, we found FAQs, user guides for the software platforms, video tutorials, and a secure message center.
Phone service is available for U.S.-based accounts during the week from 7:00 am until 7:00 pm. Sunday hours are from noon until 6:00 pm.
Then there is online chat. It also has limited hours. Many self-help functions can be accomplished through the Welcome link at the top of the site. It sits right next to the Help link.
Customer service reps are nice. But if you have a serious problem, and they have to pass it to
someone inside the organization, your problem will likely not be solved no matter how many times you call.
Extra Services
Stock Yield Enhancement Program: Interactive Brokers pays its customers 50% of a market-based rate when they lend out their fully-paid securities.
DRIP: Stocks, but not exchange-traded funds, can be enrolled in automatic dividend reinvesting.
IPO Service: Not available.
Fractional Shares: Stocks, ETFs, cryptocurrencies, and mutual funds can be purchased in whole dollars.
Periodic Mutual Fund Investing: Not available.
Individual Retirement Accounts: SEP, Roth, and Traditional IRAs are on tap. There are no fees and no minimums.
Our Recommendations
Small Accounts: A self-directed account on the IBKR Lite pricing plan would be excellent for
small investors. Some robo portfolios only require $100, which should be tolerable for most investors.
Stock & ETF Trading: Excellent research tools are available on the website, and the most advanced trading resources are on the desktop system.
Beginners: An automated account with Interactive Advisors is a good way to start.
Long-Term Investors & Retirement Savers: Interactive Brokers does not do a spectacular job
for retirement planning. We would head to
Charles Schwab, where annuities and much more will be found.
Mutual Funds: Interactive Brokers has 11,483 funds on its platform, although some of these
are closed to new investors. Its search wizard is easy to use, but there are no other fund tools.
Firstrade would be a better choice.
Interactive Brokers Review Summary
Interactive Brokers excels in some, but not all, areas. With the roll out of Interactive Advisors,
now beginners have something here, too.
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