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Interactive Brokers Review 2018

Brokers, Investing

WealthfrontInteractive Brokers was created for active or advanced investors. If you fit in these categories, you’re probably going to love the broker’s trading platform, its wide range of securities available for trading (including foreign stocks), its ridiculously good margin rates and its low commissions.

Interactive Brokers isn’t always a great fit for beginners or less-active traders. The broker’s high minimum investment and monthly inactivity fees make it less attractive for smaller investors, and for this set the strong positives may not offset the lack of educational elements and a lower level of customer service.

While Interactive Brokers meets the needs of advanced traders admirably, newer investors may want to check out NerdWallet’s list of the best brokers for beginners.


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Quick facts

  • Commissions: Fixed-rate and volume-tiered pricing, starting at $1
  • Account minimum: $10,000
  • Promotion: Special terms for clients 25 and younger
Get started on Interactive Brokers' secure site
Get started on Interactive Brokers' secure site

Interactive Brokers is best for:

  • Advanced traders
  • Day traders
  • Penny stock traders
  • Margin accounts
  • Options trading
  • Active traders

Interactive Brokers at a glance

CategoryRatingDescription
Overall

Account minimum$10,000; $5,000 for IRAs; $3,000 for clients 25 or younger
Stock trading costs$0.005 per share; minimum $1 and maximum 0.5% of trade value; volume discount available
Options trades70 cents per contract; $1 minimum order; volume discount available
Account fees (annual, transfer, closing, inactivity)$7.50 quarterly fee for IRAs. $10 monthly inactivity fee for accounts less than $100,000, or less than $10 in trading fees.
Commission-free ETFs45 commission-free ETFs
No-fee mutual fundsOver 4,300 no-transaction-fee mutual funds
Tradable securities• Stocks
• Bonds
• Mutual funds
• ETFs
• Options
• Futures
• Forex ($10 million in assets required)
Trading platformExtensive tools for advanced traders in the Trader Workstation platform
Mobile appStrong app and streamlined IB WebTrader browser trading platform
Research and dataYes; additional charges for premium features
Customer support optionsPhone support Monday-Friday 8 a.m.-8 p.m., Sunday 1 p.m.-9 p.m. Eastern time; live chat and email support; no branches; broker-assisted trades $30.
Promotion Lower minimum activity requirements ($3/month) and opening account minimum requirement ($3,000) for clients 25 and younger.

Where Interactive Brokers shines

Low commissions: It’s hard to beat the stock and exchange-traded funds commission structure at Interactive Brokers, which favors frequent, high-volume traders at just 0.5 cent per share. There’s a $1 minimum trade commission and a maximum of 0.5% of the total trade value, and exchange and regulatory fees are included. The broker also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay 0.2 cent or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan. Rates can go even lower for truly high-volume traders.

Options trading, too, is offered at rock-bottom pricing, with just a 70 cent charge per contract and no base (minimum $1 per order), plus discounts for larger volumes.

Trading platform: Interactive Brokers’ Trader Workstation is considered one of the best trading platforms available for advanced traders. The desktop platform is fast and includes standard features such as real-time monitoring, alerts, watchlists and a customizable account dashboard. An options strategy lab lets you create and submit both simple and complex multileg options orders and compare up to five options strategies at one time.

Other tools include a volatility lab, advanced charting, heat maps of sector and stock symbol performance, paper trading and a mutual fund replicator, which helps users identify ETFs that replicate the performance of a selected mutual fund but offer lower fees. A new feature, InteractiveBroker FYIs, offers customized notifications about events that could affect a trader’s investments. Research, news and market data are also available, although in many cases there’s a premium subscription fee.

Novices will likely find Trader Workstation completely overwhelming, to the point of being unusable. But Interactive Brokers also offers a strong mobile trading app and IB WebTrader, a streamlined browser trading platform that is a bit easier to navigate.

Margin rates: Traders looking to use margin will love the rates that Interactive Brokers offers; they’re extremely low. The maximum margin rate is the benchmark rate plus 1.5%. The broker charges a blended rate based on the size of the margin loan. It has a calculator on its website to help investors quickly do the math based on their balance.

Investment selection: Interactive Brokers offers access to a huge selection of products, from standard offerings of stocks, options, ETFs, mutual funds and bonds to precious metals, forex trading and futures. Those wanting to make leveraged forex trades will need assets of $10 million or more.

Where Interactive Brokers falls short

Minimum investment requirement: The $10,000 minimum investment requirement is steeper than at many other online brokers, which brings Interactive Brokers’ rating down a notch. The company does lower its minimum to $5,000 for individual retirement accounts and $3,000 for clients 25 or younger.

Inactivity fees: Here, too, the minimums are high for all but very frequent traders. Accounts with balances under $100,000 must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20. Again, there is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.

Customer experience: Because Interactive Brokers has a variety of commission structures and added fees, it can be hard for investors to quickly identify what their costs will be. The website and trading platforms are clearly geared toward advanced traders.

Is Interactive Brokers right for you?

Interactive Brokers makes a great choice for active traders, especially if they can move into the broker’s cheaper volume-pricing setup. But even modestly active traders or those with a balance over $100,000 should see some savings over more traditional online brokers, since they can sidestep the monthly inactivity fee. This group will also appreciate the broker’s high-quality trading platform and speedy trade execution.

But less-active beginners might be best served somewhere else. The broker’s headline trading commissions probably won’t offset inactivity fees, and the account minimum is a hurdle too high for many newer investors.