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Interactive Brokers Review

Published by Usman Ahmed, MBA (Researcher)

Reviewed by Bowen Khong, ACCA

Interactive brokers offer professional trading services to millions of traders and investors worldwide. The broker is an industry leader in its wide array of assets, market research and education, and trading tools. This article covers the assets available, the numerous reasons traders should consider trading with the broker, and why the broker has been regarded as safe to trade with by many.

Overview 

Interactive brokers is a multinational brokerage firm that operates the largest electronic trading platform in the U.S. by the number of daily average revenue trades. The brokerage firm was founded in 1978 and has its headquarters in the United States; the company presently has 24 offices in 14 different countries, and it also has worldwide coverage. The company was founded by Thomas Peterffy and has Milan Galik as its present C.E.O. [1]

It is safe to trade with interactive brokers. The company is regulated by the US SEC and CFTC; it is alone a member of the SPIC compensation scheme. The broker is also authorized and regulated by the F.C.A.; the UK FSCS also covers the regulated products. 

Interactive brokers offer online brokerage services and direct access trading. The broker has many financial assets like stocks/ETFs, options, Futures, F.O.P.s, Spot Currencies, U.S. Spot Gold, Bonds, Mutual Funds, Hedge Funds, making it attract many types of traders and investors. 

ProsCons
Wide research and educational tools
Wide range of assets to choose from
Accommodates retail traders and institutional traders 
Over 40 years of professional services 
IBKR Pro attracts inactivity fee
The website is not easy-to-use
No referral bonus 
No deposit bonus 

Who are interactive brokers for?

The broker is suitable for day traders and long-term traders, either they are beginner or advanced traders. One who is interested in doing research or gathering market data will also find the broker resourceful. 

With the market news, research tools, and professional platform, I can conclude that the broker is suitable for fundamental and technical analysis, and you can always make your analysis without issues.

The interactive broker also provides institutional traders with provisions of institutional brokerage services like IBClear, IBPrime, IBExecution. These services give institutional traders the flexibility to execute trades on its platform or with numerous third-party brokers.

Rating: 4.5/5

Is Interactive Brokers Safe?

The broker is safe to trade with and is also regulated across different countries. They include: 

  • United States: Interactive brokers LLC is available in the U.S. The broker is an NYSE FINRA SIPC, and it is also regulated in Australia by ASIC.
  • Canada: Interactive broker Canada is a member of the Investment Industry Regulatory Organization of Canada (IIROC), and it is also a member of the Canadian Investor Protection Fund 
  • United Kingdom: The interactive broker (U.K.) is authorized and regulated by the Financial Conduct Authority. The UK FSCS also covers its products in limited circumstances. [2]

The broker is regulated across different countries like Luxembourg, Ireland, Central Europe, Australia, Asia, and Singapore.

A company that goes this far at getting these licenses must mean business and care about flying business legally.

Rating: 4.5/5

Year founded:1978
Publicly traded: Yes
Licenses: US SEC, FCA, ASIC, IIROC, CSSF, and more
Backlist: No

Offering of Investments

Interactive brokers offer a wide array of investment products like stocks, options, futures/FOP, spot currencies, U.S. spot gold, bonds, mutual funds, hedge funds. These products make the broker attractive to different types of traders and various trading forms.

Rating: 4/5

Forex: Spot TradingYes
Currency Pairs (Total Forex pairs)Yes (100+)
Social Trading / Copy-TradingYes
Productsstocks, options, futures, F.O.P.s, spot currencies, U.S. spot gold, bonds, mutual funds, hedge funds, etc.

Commissions & Fees

The commissions charged are in three forms; the tiered, the fixed, and the free. The fees are generally very low.

  • The tiered charges are decreasing commissions depending on volume and some other fees like an exchange, regulatory, and clearing fees.
  • The fixed, as the name implies, has fixed-rate pricing. It charges a low rate commission per share of trade value.
  • The free has zero commissions for US-listed stocks and ETFs. It does not all have an account minimum and also does not attract inactivity fees.

The fees and spreads start from 0.03% to 0.07%, and the spread starts from 0.0pips. The broker also does not charge withdrawal and deposit fees.

Rating: 4/5

Minimum Initial Deposit$100
Average Spread EUR/USD – Standard0.2 pips
All-in Cost EUR/USD – Active0.2 pips
Minimum withdrawal 

Platforms & Tools 

The platform comes in different forms, and they are:

  • Client portal – which is a web trading application.
  • trader workstation – which is the desktop platform designed for traders.
  • IBKR mobile – designed for on-the-go trading on IOS and android devices.
  • IBKR APIs – which is an easy-to-use excel API. 

All these platforms work well, and they have proper trading tools that can be used to make technical and fundamental analysis. A demo account is also available for all the platforms. 

Website ease of use: the broker has so much information on the website that it somewhat comprises its users experience. It could be said the site is ‘noisy’ and finding the information one wants is not easy. 

Some aspects of the website are for institutional and proprietary trading accounts, which might not be clear to someone who is new to the website.

The platforms are also not displayed using the common trading terms, and this might pose a little difficulty to traders.

Rating: 3.5/5

Virtual Trading (Demo)Yes
Proprietary PlatformYes
Desktop Platform (Windows)Yes
Web PlatformYes
MetaTrader 4 (MT4)No
MetaTrader 5 (MT5)No
Charting – Indicators / Studies (Total)108
Charting – Drawing Tools (Total)
Charting – Trade From ChartYes
Order Type – Trailing StopYes

Research 

The broker has different research tools and also has a calendar when it lists upcoming events and research-worthy tools. There are different forms of market research, and they include the following:

financial news: There are different financial news that could be read to make fundamental analysis and to also know what is going on in a particular market and what to expect.

Constant markets webinars: The broker delivers free trading webinars organized by leading financial services companies and research providers. You can watch, listen and even ask questions on the live events. This research comes in different forms, and there is a calendar that can be watched to know which webinars are upcoming and the title and short details of the webinar.

IBKR educational resources: which seeks to blend finance or computer science classwork with real-world trading experience and also teaches how to do automated trading.

Traders glossary:  This consists of a list of terms in the trading world and their meaning. The terms are arranged in such a way that it is easy for anyone to trace whatever meaning they want. 

Rating: 4.5/5

Education  

Interactive brokers offer educational platforms to know more about the financial markets and the IBKR’s trading tools. There are free online courses on the concept and tools of financial trading for active traders, investors, educators, and students. The courses are done utilizing award-winning trading tools. The courses also include guides on how to access automated trading systems and API.

There are also various articles and insights on different trading weeks. The educational materials are both in written and video forms.

I am of the opinion that the education provided on this platform is suitable for beginner traders and even more experienced ones. You can click here to check out the traders’ academy.

Rating: 4/5 

Mobile Trading 

The IBKR Mobile app aids on-the-go trading. It has advanced trading shortcuts, more than 400 data columns, option exercises, and spread templates, news scanners, research, and charting. With the mobile trading platform, you can create order presets, which refill order tickets aiding fast entry.

Mobile devices apple, android
Featuresallow making trade, watchlist, charting, alert, etc.

Rating: 4/5

Final Thoughts

The broker has many trading products that are useful for advanced and institutional traders, but beginner traders might need to be guided to find their way around the products and even the website. 

There are many research and educational tools that traders can use to trade. The broker also has more than 40 years of professional services and is also regulated in Canada, United States, and the United Kingdom.

Traders who intend to diversify their portfolio and also seek a reputable platform to trade should try this broker out. Click here to check out the services.

Overall rating : 4.25/5

Frequently Asked Questions

Should I use IBKR Lite or Pro

IBKR lite gives you the most straightforward pricing schedule with free trades as it is designed to deliver that. The pro pricing schedule might also be cheaper if you trade on margin a great deal with many shares.

What happens if Interactive Brokers goes bust?

You should not expect this. But suppose there is a case of bankruptcy, the Securities Investor Protection Corporation (SIPC) protects customer securities accounts by a maximum coverage of $500,000 in securities and cash and up to $250,000 for cash.

How long does it take to open an Ibkr account? 

It takes one to two business days for your account to be approved by Interactive Brokers. If you find your account immediately, it may shorten the process.

How do I deposit money into Interactive Brokers? 

To deposit your money into your Interactive Brokers account, you have to:

  1. Log in to Account Management
  2. Select deposit in the transaction type options 
  3. Choose the currency you wish to use from the currency options. 
  4. Choose your convenient method of deposit, and then you will see how to fund your account. 

How long does it take to get verified on Interactive Brokers? 

Getting verified takes 2 to 3 weeks. This can be faster if you submit the required documents early. 

How do I withdraw from Interactive Brokers? 

To withdraw your money, you first have to complete the withdrawal request on the transfer funds page on the client portal. You have one free withdrawal every month, after which fees will be charged for subsequent withdrawal in that same month. 

How much margin can I borrow on Interactive Brokers? 

By regulation, brokers loan their clients 50% of the value of a position taken and 25% to maintain a current position. This is expected to increase gradually to 67.5% for a new open position and 33.65 for maintenance. 

How do I trade penny stocks on Interactive Brokers? 

To trade penny stocks with Interactive Brokers, you have to add trading permission to your account. To add the permission, you have to first log in to the client portal. Then, select ‘Settings’ and then ‘account settings. Click on the icon and then select United States Penny stocks. 

What do you need to open an account with Interactive Brokers 

  1. Social Security Number (SSN) and for non-US citizens, you need proof of ID Number. 
  2. Your employer’s name, phone number, and address. 
  3. Bank or third-party account number for funding purposes. 

Can you paper trade on Interactive Brokers? 

Paper trading accounts start with 1,000,000 USD of paper trading equity. This allows traders to experiment with a full range of IB trading facilities in a simulated environment that uses real market conditions. To do this, click on ‘Manage account,’ then ‘setting,’ and ‘paper trading.’ 

Usman Ahmed, MBA (Researcher)
Usman Ahmed, MBA (Researcher)
Usman Ahmed is a currency trader and financial market analyst with more than 7 years of active trading experience. Besides holding a Masters degree in Business Administration, he has worked for some of the most renewed companies in the forex industry including FXCM, IQOption, MetaQuotes, Alpari, FXStreet, DailyFX and several others. Usman possesses strong technical analytical skills and is famous for his very own, informative and entertaining, writing style. He believes in naked chart trading analysis that is commonly known as price action trading. He follows global financial news and macro-economic events very closely.
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