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Interactive Brokers Review 2019

Jan. 2, 2019
Brokers, Investing
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Interactive Brokers is geared toward active, advanced traders. If that’s you, you’ll probably like the broker’s per-share pricing, advanced trading platform, unmatched range of tradable securities — including foreign stocks — and ridiculously low margin rates.

Does that mean casual traders should write off Interactive Brokers? Not necessarily. The broker has slowly been making some changes to broaden its appeal, like removing required account minimums and quarterly IRA fees. Interactive Brokers still charges inactivity fees, but investors who can skirt those would be wise to put the broker on their short list. (True novices and those who don’t trade frequently will want to check out our list of the best brokers for beginners instead.)


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Quick facts

  • Commissions: Fixed-rate and volume-tiered pricing, starting at $1.
  • Account minimum: $0.
  • Promotion: None.
Get started on Interactive Brokers' secure site

Interactive Brokers is best for:

  • Advanced traders.
  • Day traders.
  • Penny stock traders.
  • Margin accounts.
  • Options trading.
  • Research and data.

Interactive Brokers at a glance

Overall

5.0 NerdWallet rating
Account minimum

$0
Stock trading costs

$0.005 per share; minimum $1 and maximum 1% of trade value; volume discount available
Options trades

70 cents per contract; $1 minimum order; volume discount available
Account fees (annual, transfer, closing, inactivity)

• $10/month commission minimum for accounts with $100,000 or less.
• $20/month commission minimum for accounts with $2,000 or less.
• $3/month commission minimum if client is 25 or younger.
Number of commission-free ETFs

48 commission-free ETFs
Number of no-fee mutual funds

Over 4,100 no-transaction-fee mutual funds
Tradable securities

• Stocks.
• Bonds.
• Mutual funds.
• ETFs.
• Options.
• Futures.
• Forex.
• Metals.
Trading platform

Extensive tools for advanced traders in the Trader Workstation platform
Mobile app

Advanced features mimic the desktop app
Research and data

33 research and news sources; premium also available for a fee


Customer support options (includes website transparency)

24/7 phone, email and chat support
Promotion

No promotion. Lower minimum activity requirements ($3/month) 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 1% 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, plus discounts for larger volumes. Contracts with premiums at less than 10 cents are charged just 50 cents each; contracts with premiums at less than 5 cents are charged just 25 cents. The minimum options trade commission is $1 per order.

Margin rates: Margin traders will also benefit from the low rates at Interactive Brokers: 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, and has a calculator on its website to help investors quickly do the math based on their balance.

Interactive Brokers recently added an integrated cash management feature, which allows investors to borrow against their accounts with a debit MasterCard, also at low interest rates.

Trading platform: Interactive Brokers’ Desktop Trader Workstation is considered one of the best trading platforms available for advanced traders. The 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. InteractiveBroker FYIs offers customized notifications about events that could affect a trader’s investments.

Novices will likely find Trader Workstation overwhelming. They can get virtual practice by setting up a paper trading account on the broker’s simulated trading platform, but Interactive Brokers also offers IBKR WebTrader, a streamlined browser trading platform that is a bit easier to navigate.

Worth noting: Another broker we review, Zacks Trade, offers its customers access to white-labeled versions of Trader Workstation and IBKR WebTrader. Zacks Trade charges higher trade commissions, but pairs each client with a dedicated support rep. It’s an option worth considering for traders who want the power of Interactive Brokers’ trading platforms alongside a bit more personal support.

Mobile app: The IBKR mobile app is Trader Workstation on the go, with advanced trading shortcuts, over 50 data columns, option exercise and spread templates, news, research, charting — including over 60 technical studies — and scanners. Users can create order presets, which prefill order tickets for fast entry. Presets set up on Trader Workstation are also available from the mobile app.

Research: Interactive Brokers provides access to a huge selection of research providers and news services, many for free: 33 offerings are currently available to all clients, including from providers like Zacks Investment Research, Morningstar Equity Ownership, Market Realist, 24/7 Wall Street and Seeking Alpha. Over 100 additional providers are also available by subscription.

Investment selection: Interactive Brokers offers something for everyone here: Advanced traders will love the huge selection of products, from standard offerings of stocks, options and ETFs to precious metals, forex, warrants and futures. The retirement-investor set will be happy with the broker’s impressive list of no-transaction-fee mutual funds — over 4,100 in all — and respectable selection of 48 commission-free ETFs.

Interactive Brokers also has a robo-advisor offering, which requires a $5,000 minimum investment but charges just 0.08% in management fees. The service offers over 60 portfolio options.

Where Interactive Brokers falls short

Interactive Brokers’ shortcomings are primarily due to the company’s focus on advanced traders:

Inactivity fees: Interactive Brokers caters to active traders, and that focus shows up in its inactivity fees. Accounts with balances of $100,000 or less 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.

There is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.

» Don’t trade that much? View our best online brokers roundup

Website ease-of-use. A section of our rating is based on how easy it is to find key information on a broker’s website, and Interactive Brokers excelled there. That said, the site can be difficult to navigate and the various commission and fee structures can make it hard for investors to quickly identify what their costs will be. Portions of the website are dedicated to institutional, broker and proprietary trading accounts, and that can be confusing.

How Interactive Brokers stacks up

Trade Fee

$0.01

$0.01

Account Minimum

$0

$0

Promotion

None

None

No promotion available at this time

Trade Fee

$6.95

$6.95

Account Minimum

$0

$0

Promotion

500

500

commission-free trades with qualifying deposit

Trade Fee

$4.95

$4.95

Account Minimum

$0

$0

Promotion

Up to $3,500

Up to $3,500

in cash bonus with a qualifying deposit

Is Interactive Brokers right for you?

Interactive Brokers makes a great choice for active traders, especially those who can move into the broker’s cheaper volume-pricing setup. But even modestly active traders should see some savings over more traditional online brokers, as long as your trade volume sidesteps the monthly inactivity fee. And all traders will appreciate the broker’s high-quality trading platform and speedy trade execution.

Beginner investors will be best served somewhere else, as the broker’s headline trading commissions probably won’t offset inactivity fees.