May 3, 2018

Interactive Brokers Review: Is It Good?

Read more about Interactive Brokers
This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

Do you have $10,000 and plenty of trading knowledge? Interactive Brokers may provide you with a solid trading platform. With their competitive fees and robust trading options, they are a common choice for the experienced trader.

Overall Score

4.3

Stock Trading

5.0

Options Trading

5.0

Mutual Fund Trading

4.0

Online Platform

5.0

Banking

4.0

Mobile App

5.0

Commissions and Fees

3.5

Ease of Use

3.0

Research

4.0
5-point scale (the higher, the better)

Pros and Cons

  • Large number of investments, including options, futures, and forex
  • Customize trading platform
  • Tools and opportunities for research
  • $10,000 minimum to open an account.
  • Platform can be too much for a beginner to understand
  • Inactivity fees if you don't meet the trade commission requirements.

Bottom Line

Good discount broker for experienced, high volume traders.

Interactive Brokers started as a platform strictly for professionals, but has since been offered to individual investors as well. The platform itself is still geared towards the experienced investor with a desire to trade more than ETFs and to trade frequently, though.

Keep reading to learn who benefits the most from the services Interactive Brokers offers.

What Does Interactive Brokers Offer?

Interactive Brokers offers a robust selection of investments. You'll find your standard stocks, bonds, and mutual funds. But you'll also find ETFs, options, futures, and forex selections as well.

Interactive Brokers also offers a variety of different account types, including cash, margin, and portfolio accounts, helping to lure in many different types of investors.

Who Benefits from Interactive Brokers?

Interactive Brokers is a platform for the advanced trader. For starters, you need at least $10,000 to open an account. You also need a solid understanding of the market and how to trade investments. We feel it's best suited for advanced and active traders, including day and penny stock traders, as well as those interested in options and futures.

Because it's geared towards the advanced trader, Interactive Brokers requires:

  • Proof of making at least 100 trades or 100 "pretend" trades in IB's demo (more on that below)

  • Proof of knowledge of how the market works

  • Proof you have the $10,000 to open the account

What We Like About Interactive Brokers

© CreditDonkey

  • They offer competitive pricing. If you are looking for a discount broker, cost is probably an important factor. IB's pricing runs along the same lines as many of the larger discount brokers available today. They offer both fixed-rate and tiered pricing to keep the rates even lower for frequent traders.

  • They offer a demo account. You can download the demo without signing up for an account. All you have to supply is your email address and you can start executing pretend trades based on 10-15-minute delayed data. You can try out different strategies and even test IB's research tools within the demo. If you decide to open an account, you'll use the same username and password to create the "real" account.

  • The trading platform is a robust trading tool. Once you sign up and fund an account, you'll have access to Trader Workstation, the real trading platform. You can trade any investment with this platform, including global investments. You can set up watch lists and customize the data screens to suit your needs. Trades typically execute quickly with this system. You can also program your customized strategies into the platform for automation down the road.

  • There is plenty of research available for stocks and ETFs. Investors receive free research with the TWS platform. This free research offers plenty of insight for trading stocks and ETFs. If you want to trade mutual funds or bonds, though, you may want to look to a third-party for this information.

  • You can integrate third-party software into the Trader Workstation. If you prefer the use of a third-party application for your trades, it may integrate with the Trader Workstation. You'll have to understand the application programming interface, though, which may exclude certain investors.

  • You can reach a customer service representative 24 hours a day during weekdays. Whether you prefer phone contact or chatting online, IB's customer service representatives are available around the clock, Monday through Friday. You can call a Client Service Center or chat online. IB also encourages clients to search their Knowledge Base for answers to frequently asked questions.

  • You can have a debit card tied to your investment account. Interactive Brokers provides a debit card with all standard accounts (not IRA accounts). This allows you to charge against your cash balance or even your margin account if you meet the margin requirements.

  • You can take courses through Trader's University. The university is great for beginning and experienced traders. It offers webinars, videos, and articles on topics like options trading, charting, order types, short sales, and understanding margins. There are literally hundreds of topics you can search through on their website.

  • You can assess the risk of a potential trade. Interactive Brokers offers a Risk Navigator that helps you better assess the risk of trades before you execute them. You can create reports based on different aspects to help you choose appropriate trades for your risk level.

  • You can make trades on-the-go. Interactive Brokers offers the same trading tools you have at your desktop on their app. You can create option spreads, enter orders, and access quotes and research, all on the app.

  • You only need $5,000 to open an IRA account. If you want to open an IRA account rather than, or in addition to, a trading account, you only need $5,000 (or $3,000 if you are under the age of 25) to open the account.

Reasons You May Want to Look Elsewhere

  • You are a beginning trader. The Trader Workstation is robust and overwhelming for the new trader. The fact that you have to have proof of 100 previous trades before using their platform gives you an idea of the complexity of the system and the knowledge you'll need before using it.

  • You don't trade frequently. Interactive Brokers charges inactivity fees, which when combined with the high minimum opening balance can make trading rather costly for infrequent traders.

  • They only offer around 45 commission-free ETFs. If your main investment strategy is commission-free ETFs, Interactive Brokers probably isn't the best option as there are other discount brokers with a wider selection and lower account minimums.

Platforms and Tools - Are They Good?

© CreditDonkey

The Interactive Broker's platform, Trader Workstation, works on many devices, including PCs and Macs. The system itself is relatively fast and includes the features many investors find crucial, including:

  • Real-time quotes
  • The ability to set up alerts
  • Customizable watch lists
  • The ability to program the dashboard to suit your needs
  • Help with creating and comparing options strategy before executing them

The trading platform includes features, such as the OptionTrader and Profitability Lab, FXtrader (for forex), and the Mutual Fund/ETF Replicator.

Mobile App - Is It Worth It?

The Interactive Brokers mobile app provides a suitable experience for trading on-the-go. While you have some limited capabilities, as would be expected on a mobile app, they do a great job of providing many of the features you have on the desktop program.

The app works on all devices, including Apple and Android devices. You can execute basic stock trades or complex forex trades and everything in-between with the app. You can even access robust research right on the app, giving you flexibility while you are away from your computer.

How They Compare

© CreditDonkey

E*TRADE: If you are a low volume or beginning investor, E*TRADE may appeal to you more with their lower account minimums and easier to use platform. E*TRADE does offer a similar platform as Interactive Brokers, but it's only for traders who execute at least 30 trades per quarter.

 

Interactive Brokers

E*TRADE

 

Benefits and Features

Stock TradingFixed pricing: $0.005 per share (min $1 per order, max 1.0% of trade value). Tiered pricing: Starts at $0.0035 per share for less than 300,000 shares (min $0.35 per order, max 1% of trade value)$6.95 per trade
$4.95 per trade if you make 30+ trades a quarter
Options Trading$.70 per contract ($1 minimum per order)$6.95 + $0.75 per contract
$4.95 + $0.50 per contract if you make 30+ trades a quarter
Minimum Deposit$10,000 for individual accounts; $5,000 for IRAs; $3,000 for clients 25 and under$500 for brokerage accounts
No account minimum for retirement accounts
Mutual Fund Trading$0 for no-transaction-fee funds. For transaction-fee funds, 3% trade value OR $14.95, per transaction, whichever is less, for transaction-fee funds$0 for no-load, no-transaction-fee funds
$19.99 for transaction-fee funds
Commission Free ETFs
45
200+ including ETFs from WisdomTree, Global X Funds, and db-X Deutsche Bank
Penny Stocks 
Broker Assisted Trades
$30
$25 + Regular Commission
Customer ServiceUnited States: Monday-Friday 8am - 10pm ET; Sunday 1pm - 7pm ET (24/7 Weekday service available in other countries)
(650) 599-0125
Inactivity Fee$10/month for accounts under $100,000; $20/month for accounts under $2,000; $3/month for clients 25 and younger
$0
Maintenance FeeWaived if account value is at least $100,000 OR if monthly commission requirements are met. If not met, the activity fee is the difference. For accounts less than $100,000: the commission requirement is $10/month. For accounts less than $2,000: the commission requirement is $20/month. For clients 25 and younger: the commission requirement is $3/month.
$0
Banking
No
Checking account offers no minimum balance requirements, free online bill pay, and unlimited debit card and check transactions.
Mobile App
Yes
Desktop App
Yes
E*TRADE Pro (requires you execute at least 30 trades during a calendar quarter or maintain brokerage account balance of at least $250,000)
Forex TradingAvailable for qualified customers 
Futures Trading
Yes
Locations
No
30
Online Community
Yes
ETrade Community lets you exchange trading and investing ideas with other ETrade customers.
Seminars
Yes
Live events and educational seminars at local branches.
Virtual Trading
Yes
 
Stock Trading
Options Trading
Mutual Fund Trading
Online Platform
Banking
Mobile App
Commissions and Fees
Ease of Use
Research
Online Community
Trading Platform

Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.

Interactive Brokers: Pricing information from published websites as of 4/16/2018

E*TRADE: Pricing information from published website as of 03/13/2017

Fidelity: If your trading strategy focuses on mutual funds and ETFs, Fidelity provides a greater selection of these investments. All other things being equal, Fidelity is a great comparison to IB as they offer a mobile app, banking (checking and savings, not a debit card), and virtual trading.

 

Interactive Brokers

Fidelity

 

Benefits and Features

Stock TradingFixed pricing: $0.005 per share (min $1 per order, max 1.0% of trade value). Tiered pricing: Starts at $0.0035 per share for less than 300,000 shares (min $0.35 per order, max 1% of trade value)
$4.95 per trade
Options Trading$.70 per contract ($1 minimum per order)$4.95 per online trade, plus $0.65 per contract
Minimum Deposit$10,000 for individual accounts; $5,000 for IRAs; $3,000 for clients 25 and under
$0
Mutual Fund Trading$0 for no-transaction-fee funds. For transaction-fee funds, 3% trade value OR $14.95, per transaction, whichever is less, for transaction-fee funds$0 transaction fee for Fidelity funds
$0 on purchase for NTF (no transaction fee) non-Fidelity funds. ($49.95 on redemption if held less than 60 days)
$49.95 on purchase for non-Fidelity funds; $0 on redemption. (Certain funds may have a $75 transaction fee).
Commission Free ETFs
45
265 including 25 Fidelity factor, sector, stock, and bond ETFs and 240 iShares® ETFs
Broker Assisted Trades
$30
$32.95 per trade for representative-assisted trades.
Customer ServiceUnited States: Monday-Friday 8am - 10pm ET; Sunday 1pm - 7pm ET (24/7 Weekday service available in other countries)
(800) 343-3548
Inactivity Fee$10/month for accounts under $100,000; $20/month for accounts under $2,000; $3/month for clients 25 and younger
$0
Maintenance FeeWaived if account value is at least $100,000 OR if monthly commission requirements are met. If not met, the activity fee is the difference. For accounts less than $100,000: the commission requirement is $10/month. For accounts less than $2,000: the commission requirement is $20/month. For clients 25 and younger: the commission requirement is $3/month.
$0 account service fee
Banking
No
Fidelity Cash Management Account includes reimbursed ATM fees, no monthly fee, no minimum balance requirement, FDIC insurance, mobile check deposit, free billpay and free checkwriting.
Mobile App
Yes
Desktop App
Yes
Active Trader Pro (requires you trade 36 times or more in a rolling 12 month period)
Forex TradingAvailable for qualified customers 
Futures Trading
Yes
 
Locations
No
More than 180
Online Community
Yes
 
Seminars
Yes
 
Virtual Trading
Yes
Stock Trading
Options Trading
Mutual Fund Trading
Online Platform
Banking
Mobile App
Commissions and Fees
Ease of Use
Research

Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.

Interactive Brokers: Pricing information from published websites as of 4/16/2018

Fidelity: Pricing information from published website as of 02/28/2017

Lightspeed: With similar account opening minimums and both virtual trading and mobile trading options, Lightspeed and IB are good options for advanced investors only. Lightspeed's platform is as complex as IB's, making it relevant for experienced and frequent traders only.

Bottom Line

If you are a frequent trader with high volume trades, you may enjoy the pricing and benefits provided by Interactive Brokers. With a robust trading platform and quick trade execution, it's a solid platform for the experienced investor.

If you are less experienced or a novice, you may be better off with a broker who will provide a little more hand holding and less frequent trading, at least while you get your feet wet.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

More from CreditDonkey:

How to Invest Money

How to Invest Money


Best Discount Broker


Best Options Broker

More Articles in Reviews


September
19
2018

Moneydance

The days of manually balancing a checkbook are slowly fading away. Today, it's all about automation, which can be good news for those who look at a check register as if it's in a foreign language.

    Best Options Broker

    The best options broker offers great service, low prices, and a user-friendly trading platform. Find the top options brokers to consider.

    Best Discount Broker

    The best online broker offers low fees, great customer service, and smart research tools. Find the best discount brokerage to consider.

    Best Trading Platform

    Successful trading requires quick action and in-depth analysis. Using the wrong platform could leave you in financial ruin. But the right one can enhance your trading efforts.
More Articles in Investing Reviews







About CreditDonkey®
CreditDonkey is a stock broker comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.