Interactive Brokers is a popular investing platform made with the DIY trader in mind. Known for its low trading fees and margin rates and its robust trading tools, Interactive Brokers offers a wide variety of investment choices to its users. Keep reading to learn more about Interactive Brokers.
Pros & Cons
Interactive Brokers Features
|Mutual Funds||17,000+ no-transaction-fee (NTF) mutual funds|
|Investment Types||Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures|
|Broker Assisted Trade||$30|
|Customer Service||Phone: M-F 24 hours; Live Chat: M-F 24 hours; Email|
Who Is Interactive Brokers For?
Interactive Brokers started as a trading platform designed for day traders and DIY investors. And it continues to serve those investors with the IBKR Pro plan. This plan offers robust trading tools and the IB SmartRouting tool, which helps investors time their orders to get the best price. IBKR Pro is also best for margin traders since IBKR Pro users have access to the lowest margin rates.
But Interactive Brokers now offers a second trading tier that's well-suited to more casual investors. With IBKR Lite, inventors get unlimited commission-free trading. However, this plan has higher margin rates and fewer features. So this account tier is best for inventors who don't plan to trade on margin and don't need all the robust trading tools that Interactive Brokers offers.
Both plans provide powerful tools designed for experienced traders. So it may be more intimidating than other popular brokerage firms for beginner investors. As a result, new inventors or those just learning the ropes may find that this isn't the right broker for them.
What Makes Interactive Brokers Great?
Many investors name Interactive Brokers as among their favorites. And it's easy to see why. Below we walk you through some of the features that make Interactive Brokers great.
One of the biggest selling points of Interactive Brokers is the wide variety of investment choices the broker offers. First, the platform offers the investments you'd expect to find with any major broker, including stocks, bonds, exchange-traded funds (ETFs) and mutual funds.
In addition to those basic investments, Interactive Brokers also allows for more advanced trading strategies such as options, futures, forex and even hedge funds. Users also have access to international trading, including 150 exchanges in 33 countries worldwide.
Finally, cryptocurrency investors won't have to find a separate platform. You can buy and sell cryptocurrencies and cryptocurrency futures at lower fees than at many of the most popular crypto exchanges.
One of the major selling points of Interactive Brokers is the trading platforms they offer. Here are the available platforms:
- Client Portal: From the Interactive Brokers web application, you can place trades, check quotes, see your account balance and performance, and more.
- Trader Workstation: This is Interactive Brokers' flagship desktop platform designed for active traders, thanks to the available technical research and analysis tools.
- IBKR Mobile: All Interactive Brokers users can trade and monitor their investors directly from their iOS or Android device.
- IBKR GlobalTrader: This platform allows users to trade global stocks, funds and cryptocurrencies from their mobile device.
- IMPACT: Using this platform, users can find ESG investments and learn which companies and funds share their values.
- IBKR APIs: The Interactive Brokers trading APIs allow users to build custom trading applications, access investments across the globe and use the IB SmartRouting tool.
We've already discussed the various trading tiers available on Interactive Brokers. Still, it's worth mentioning again because the tiers make this broker great for so many investors. Interactive Brokers was designed for DIY investors and day traders who want robust trading tools. And they can still get that with IBKR Pro. But now casual investors can also enjoy the platform thanks to the IBKR Lite account tier.
Commission & Rates
Interactive Brokers is well known for its low trading fees. First, IBKR Lite users get unlimited commission-free trading on all stocks and ETFs listed on U.S. exchanges. And IBKR Pro users will pay just $0.005 (or less) per share on their trades, with a minimum commission of $1 (or less).
Interactive Brokers is also well known for its low margin rates. It's lower than rates at many of the other most popular margin-trading platforms. Margin rates decrease as the size of the margin loan increases. However, IBKR Lite users will pay a slightly higher rate.
What Are Interactive Brokers' Drawbacks?
We've talked about some of the biggest selling points of Interactive Brokers, but it's also important to discuss the features that aren't so great. Below we talk about a few of the major drawbacks of the platform.
There's no denying that Interactive Brokers offers a powerful trading platform. But it isn't exactly a user-friendly one, especially for beginner investors. It can be challenging to find the information and tools you need on the website. And even once you find them, you may not fully understand them unless you're an experienced investor.
For that reason, investors may prefer to start their investing journeys on a more straightforward platform and then pivot to Interactive Brokers when they're well-versed in investment tools.
Lack of Basic-Level Educational Resources
Interactive Brokers offers robust tools and resources for experienced investors and day traders but not so much for beginner investors.
The Traders' Academy is a free education resource for Interactive Brokers users. But newbie investors may find it too advanced and overwhelming. If you're just getting started, you may prefer another broker that tailors to investors who are still learning the ropes.
Compared with other popular brokerage firms, Interactive Brokers falls short in the variety of account types it offers. The platform provides basic individual and joint taxable brokerage accounts. You can also choose between a few different individual retirement accounts (IRAs), including traditional, Roth and SEP. Finally, Interactive Brokers offers both UGMA and UTMA custodial accounts.
However, you may notice that there are some account types missing from this list. For example, Interactive Brokers doesn't offer Solo 401(k)s, even though they're a popular retirement savings tool for self-employed individuals. You also won't have access to a SIMPLE IRA, banking accounts and other popular investment accounts.
Interactive Brokers Pricing & Fees
We've already talked a bit about the pricing and fees on Interactive Brokers, but we dive in a bit further in this section. For stocks and ETFs, Interactive Brokers offers commission-free trading for IBKR Lite users and commission fees of $0.005 (or less) per share — with a minimum of $1 (or less) — for IBKR Pro users. And Interactive Brokers offers an industry-leading list of 17,000+ no-transaction-fee (NFT) mutual funds.
For options contracts, IBKR Lite users will pay $0.65 per contract with a minimum of $1, while IBKR Pro users will pay rates ranging from $0.15 to $0.65 per contract, depending on the monthly volume, also with a minimum of $1.
Finally, Interactive Brokers charges all users the same fees for cryptocurrencies, regardless of account tier. For a monthly trade value below $100,000, you pay 0.18% per trade. For a monthly trade value up to $1 million, you pay 0.15% per trade. Finally, for a monthly trade value of more than $1 million, you pay just 0.12% per trade. All trades have a minimum fee of $1.75.
Read more: Investment Fees Matter… a Lot!
How to Contact Interactive Brokers
Interactive Brokers makes it easy to get help when you need it. You can contact the company via email, phone or live chat. Live chat support is available 24 hours a day, Monday through Friday, with limited support hours on Sundays. Phone support is available Monday through Friday from 8 a.m. to 8 p.m., Eastern Time, and Sundays from 1 p.m. to 7 p.m. U.S. users can call the following numbers for phone support:
- 877-442-2757 (Toll-Free)
- 312-542-6901 (Direct Dial)
It's worth noting that Interactive Brokers is an entirely online company. As a result, there are no physical branches or offices where you can speak to a customer service representative.
Not sure that Interactive Brokers is the right for you? Here are a few similar stock brokers that may be worth exploring:
Want even more options? Check out our full list of the top stock brokers for 2022
Interactive Brokers is one of the most popular brokerage firms for active traders. And it's easy to see why. The company offers low trading fees and robust trading tools — major assets to day traders and other DIY investors. And thanks to the various account tiers, casual investors can also enjoy the platform with an IBKR Lite plan.
However, the Interactive Brokers website is a bit cumbersome to navigate and lacks some of the basic-level educational resources you can find on other broker websites. Thus, it may not be the first choice for beginner investors or those who need a bit more assistance.
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