Founded in 1977, Interactive Brokers is currently headquartered in Greenwich, Connecticut. Interactive Brokers has grown to become one of the largest U.S. electronic investment trading services, and it’s ideal for professional and novice traders who want direct market access. Investors can select from a variety of securities, including stocks, bonds, options, futures and mutual funds. Other Interactive Brokers’ products include ETFs, EFPs, metals and forex.
Interactive Broker’s Trader Workstation software is available for professional traders. A simplified version, WebTrader, is available for novices and new traders. Key selling points include low commissions, low margin rates and only $1 per trade up to 200 shares.
Interactive Brokers at a glance
|Broker||Account Minimum||Stocks and ETFs per trade||Bonds||Mutual Funds||Key Benefit|
|Interactive Brokers||$0||$0.005 for each share with a $1 minimum||0.1% face value for municipal and corporate bonds
0.02% face value for Treasury bills, bonds and notes
What we like about it
Interactive Brokers is a reputable brokerage firm that offers low commissions and low-cost trades for $1 per trade and $0.70 per options trade. New and beginning traders can benefit from WebTrader, their no-frills software. The flagship platform, Trader Workstation (TWS), is a global trading system for professional traders that gives them access to over 120 markets in 31 countries.
Traders have access to real-time monitoring, customizable charts, streaming news and analytics. The mobile app includes the same features as TWS and WebTrader. Investors have access to low-cost margin loans for advanced trading opportunities. Lower-tiered pricing is another benefit for high-volume traders.
Things to consider
One concern is that the site’s account management area needs to be simplified to cater to new traders. Other concerns are fee-related. With the $1 trade fees, investors who turn over larger share blocks — over 200 shares — should explore low-tiered pricing.
Accounts under $100,000 can incur $120 inactivity fees annually. Traders need to generate $10 monthly in commissions to avoid fees, since balances under $2,000 can incur $20 in fees. Balances over $2,000 and under $100,000 require $10 commissions monthly or inactivity fees will accrue. However, balances over $100,000 don’t have fees or commission requirements.
Interactive Brokers stock and ETF trading
Interactive Brokers charges fixed pricing at $0.005 a share for U.S. stock trades, with a minimum of $1 and a maximum total of 0.05% of the total trade value. The headline rate of $1 per trade for stocks and exchange-traded funds (ETFs) looks ideal. However, for high-volume traders and anyone trading penny stocks, that rate can quickly add up.
The $1 trades are typically best for trading smaller numbers of shares. For higher volumes, traders should consider switching to lower-tiered pricing. Interactive Brokers offers special pricing for active traders, the bulk of whom make up its core clientele.
Interactive Brokers bond trading
Interactive Brokers makes it easy for investors who want to trade Treasury, corporate and municipal bonds. Bond trading through the Trader Workstation platform is fitting for financial advisors. It’s also available to institutional, market and individual traders. To trade bonds, traders will need to upgrade their trading permissions to include fixed-income assets.
For multiple liquidity sources, Interactive Brokers connects traders to bond alternative trading systems. These can include NYSE Bonds, Tradeweb, KCG BondPoint or IB ATS. To access relevant bond data, traders can set up subscriptions to U.S. Bond Real-Time Data and Moody’s Ratings for municipal bonds.
Interactive Brokers options and futures trading
With options trading, Interactive Brokers caters to professional and high-volume traders and offers some of the cheapest prices with commissions. Instead of a base commission price and a $0.70-per-contract fee, they charge $0.15 per contract for traders who have over 100,000 contracts in any given month. This is for smart-routed orders, where the set fee is $0.65 for each contract.
With futures, Interactive Brokers has some of the lowest futures-trading fees among brokers. They are about 51% cheaper than their competitors, and traders can select from fixed-rate or volume-tiered pricing.
Interactive Brokers trading platform
Interactive Brokers’ flagship platform, Trader Workstation (TWS), is available for active investors. With a vast array of customizing options, it ranks as one of the best online platforms for investors. Watch lists can include futures, contracts, equities, warrants, forex and other choices.
An array of tools include Market Scanner, Portfolio Builder, Risk Navigator and Volatility Lab. The TWS mobile app includes an IBot artificial intelligence (A.I.) tool to assist with investor questions through chat or voice. For example, you can ask things like, “What’s the latest price for AAPL?” or “Chart WMT vs. AMZN” or even “Buy 100 shares of GOOG.”
Interactive Brokers mobile app
MobileTrader is the mobile version of WebTrader and it offers simplified trading features. For professional traders, mobile TWS is the condensed version of the Trader Workstation. It includes advanced options, shortcuts and spread templates, and has more than 50 data columns.
Margins, market values and balances are easy to access. Traders can create order presets to help fill order tickets faster. However, the charts aren’t that flexible, despite having about 68 optional studies. Users can access Interactive Brokers with a PIN or swipe and two-factor login. The app supports Touch IDs as the interface uses key technology, but secondary key apps may be necessary.
Interactive Brokers research and resources
Interactive Brokers Information System (IBIS) includes research, market data and real-time news. It’s a research platform with about 33 different options. Examples include Seeking Alpha, Thomson Reuters and Zachs. However, the additional 100 research providers require a surcharge and premium subscription.
Investors can also explore resource categories by individual topics like Chinese market research, ETF analysis or investment analysis. Bundled services are another cost-saving feature for both professional and non-professional data bundles. An example is Dow Jones, Briefing.com, The Fly, Central Trading and MT NewsWires, which can be bundled as a package for a low monthly fee.
The bottom line
Interactive Brokers is a great choice for traders. Benefits include low commissions, low margin rates and $1-per-trade fees, but high-volume and penny stock traders should switch to low-tiered pricing. Additionally, traders who carry balances under $100,000 must meet certain commission requirements.
Fundamental research and real-time data are not included in trading fees, though, and the educational tools and support are a bit lacking. Despite this, Interactive Brokers offers exceptional services for professional traders. However, the array of TWS platform tools might be overwhelming for novice traders, who may benefit from switching to the user-friendly IBKR WebTrader.