Interactive Brokers Review 2018

By Alan Farley  | January 8, 2018

Interactive Brokers' sophisticated trading technology and worldwide coverage make it a top choice for both market professionals and at-home traders.

You should always independently verify and/or seek information from your legal, finance, or tax advisor as to whether a specific broker is right for you. Please note that not all brokers reviewed by Investopedia offer services in your geographic region. Additionally, Investopedia may receive compensation from certain broker-dealers referral programs when you click on links to their services, and/or submit an application or get approved for a brokerage account.

Overall Rating

4.2/
5.0
Products & Fees
3.5
Trust
4.4
Special Features
4.0
Desktop Experience
3.5
Mobile Experience
5.0
Customer Support
3.8
Research & Insights
4.3
Education
5.0

Interactive Brokers Fast Facts

Interactive Brokers (IB) offers comprehensive broker-dealer services through a robust trading platform and highly regarded back-end support. It provides access to multiple world markets, exchanges, and security products through seven corporate entities in North America, Europe, India, Asia, and Australia. Industry-leading low commissions attract a broad spectrum of customers, from private equity, forex, and futures traders to master account holders and fund managers. A proprietary trading platform offers lightning-fast and accurate executions but requires a relatively steep learning curve. IB SmartRouting technology seeks the best available pricing across multiple markets, while sophisticated order types and a flexible API let clients create their own algorithm-based trading strategies. The company offers low U.S. margin rates compared to segment competitors, including E-Trade, Fidelity, and Scottrade, according to a 2017 Barron's survey, ranging from 2.66% down to 1.78%, depending on account size. Highly competitive forex commissions and sub pip spreads on the most liquid pairs provide an appealing alternative to forex-only broker-dealers.

pros

  • Trading Technology
    Highly regarded proprietary trading technology with smart routing capability
  • Sophisticated Order Types
    Comprehensive menu includes more than 60 order types and algos
  • Powerful Portability
    Trade anywhere, with platforms to access accounts and execute trades across PCs, web pages, and mobile devices
  • Low Commissions/Spreads
    Ultra-low commissions and spreads in major markets, including stocks, bonds, forex, CFDs, futures, and options
  • Research, Reporting, and Education
    Access to webinars, detailed performance and tax reports, as well as a comprehensive menu of third-party services

cons

  • Steep Learning Curve
    Proprietary trading platform doesn't use common Windows or iOS conventions
  • Customer Services
    24/5 chat and phone support plus Sunday afternoon phone support, but no 24/7 support
  • Weak Technical Charting
    Trading platform charts and indicators don't meet modern standards
$121.6 Billion
Client Assets
26
Countries
474,000
Active Accounts

Products & Fees

3.5

Interactive Brokers offers ultra-low fees and tight spreads on stocks, options, futures, forex, bonds, CFDs, ETFs, mutual funds, and metals. Customers can choose between fixed and tiered pricing, depending on trading volume. Fixed pricing offers fixed-rate commission or percentage of trade value while tiered pricing offers volume discounts and partial or full rebate payback in exchanges that provide liquidity rebates.

  • Stock & ETFs*
    $0.005 per share
  • Options
    $0.25 to $0.70 per contract
  • Mutual Funds**
    Free
  • Mutual Funds***
    Lesser of 3% trade value or $14.95
  • Treasuries
    0.002% to 0.02% face value
  • Bonds (Corporate, CDs, Municipal)
    0.025% to 0.1% face value
  • Forex
    0.08 to 0.20 basis point trade value
  • CFDs (shares)
    $0.005 to $0.003 per share
  • CFDs (index)
    0.005% to 0.010% per trade
  • Futures & FOPS
    $0.85 per contract ($0.50 Globex E-Mini Forex)
  • Metals
    0.15 basis point trade value

Trust

4.4

Interactive Brokers is publically traded on the Nasdaq exchange under the IBKR ticker. As a result, it submits regular corporate statements to the SEC and discloses earnings, income, and client metrics on a quarterly basis. Customer funds are protected up to $30 million, including up to $1 million for cash. The first $500,000 is provided through the SIPC in the U.S. while Lloyd's of London provides $29.5 million umbrella coverage. The Financial Conduct Authority (FCA) authorizes and regulates United Kingdom customers through Interactive Brokers (U.K.) Limited, under FCA register number 208159. The Financial Services Compensation Scheme (FSCS) provides U.K. investment protection up to GBP 50,000 and cash protection up to GBP 85,000. IB is highly regarded on Wall Street and in the trading and investment communities. Not surprisingly, reports of bad executions, shady dealings, or cash mismanagement are exceptionally rare. Fat finger forex executions, which plague many smaller brokers, can happen, but odds are very low because IB does not make markets against its customers.

$500 Million
SIPC Insurance Coverage
$29.5 Million
Lloyd's of London Umbrella Coverage

What you need to know

Interactive Brokers CEO Thomas Peterffy is considered an industry pioneer, bringing standalone computerized trading into the 21st century, while making IB a top choice for at-home and small office professional traders, as well as fund and money managers. The Trader Workstation (TWS) trading platform is a highly mature software product, constantly updated, providing an industrial strength interface for the risky business of market speculation.

Special Features

4.0
Special Features

IB's Risk Navigator provides a comprehensive portfolio risk management platform that allows easy identification of hidden exposures. Multiple reports using real-time data present a risk summary from different perspectives, allowing customers to drill down from the portfolio's top-line results into successive detail layers. A video tour of this special feature's capabilities gets users up and running quickly, so they can create illuminating risk reports.

IB Risk Navigator
"What-If" analysis, using real-time data
Trader's University
Library of webinars, apps, and glossaries
Probability Lab
TWS or mobile-based application deciphering options markets

What you need to know

Interactive Brokers offers a variety of tools for education, analysis, and trade planning. However, finding these resources can be a daunting task because they're deeply embedded in the TWS platform, often requiring several menu drill downs. Information on applying these tools is scattered across the IB website, contributing to a sense of disorganization, although the tools themselves offer great value.

Desktop Experience

3.5
Desktop Platform Experience

The standalone Trader Workstation (TWS) offers a powerful proprietary trading platform that has benefited from more than a decade of upgrades and enhancements. However, be forewarned that the learning curve is steep because the software's Java core is text-based, requiring deep drilling into menus to configure trading and data screens for different requirements. Once mastered, the interface can perform powerful and sophisticated trading and analysis functions, in line with the needs of professionals and serious-minded trader-hobbyists.

Pros

Navigating between market venues and instruments is easy and intuitive once you've mastered the software. Trade execution is lightning fast but unforgiving, so check twice before loading in market orders and hitting the entry button. Most trading categories can open into secondary screens that offer more comprehensive data and execution capabilities. For example, FX Trader presents a more traditional view of currency pairs, with boxed pairs highlighting pip changes in multiple colors. Meanwhile, FX Matrix provides a snapshot of the most popular pairs in an easy to read format that quickly identifies emerging opportunities.

Cons

Charting capabilities are unusually weak and incomplete compared to many brokerage systems, a drawback compounded by the sophistication of other platform features. The platform lacks long look-back periods, industrial strength indicators, or easily managed chart views. IB has made improvements over the years in reaction to customer complaints, but many users will need to tap other sources to meet their technical analysis requirements.

Mobile Experience

5.0
Mobile Platform Experience

IB TWS for Android and iOS offer slimmed-down versions of the desktop software in a clear and easy to read format. The interface uses IB Key technology, requiring that you input a PIN or swipe as an additional authorization layer.

Pros

The apps support watchlists, orders, trades, scanners, alerts, notifications, portfolio news, and market briefs. Configuration is much simpler than the desktop experience, offering adequate access to positions while away from the trading desk. Balances, margins, funds, and market values are easily obtained, without menu drilling. Ironically, charting is better than on the desktop version, with a variety of indicators and a clean interface.

Cons

Mobile TWS may be inadequate if you trade actively, place sophisticated order types, or incur large capital risk. It provides no access to more complex tools or venue-specific interfaces like FX Trader or FX Matrix. Logging into the mobile version also shuts down the desktop automatically, even if accessed from the same I.P. address. This can be frustrating for at-home traders wanting to follow the market and trade positions when running downstairs to make lunch or sitting on the patio to take a break.

Customer Support

3.8

Interactive Brokers offers several support options, including phone and live chat. Security issues, such as resets or security tokens, must be handled by phone. A comprehensive knowledge base is also provided, with excellent look-up facilities. Common tasks, like fund transfers, account changes, and tax reporting, can be handled through the web-based account management interface.

What you need to know

IB's 24-hour phone access is available during market days but shifts to foreign venues overnight, making contact more difficult. The chat function can generate unusual wait times, especially during infrequent outages. Fees are usually waived for trades placed by phone during outages. Chat room personnel are extremely knowledgeable about TWS software and can guide new users through inevitable roadblocks.

Research & Insights

4.3

Research and insight can be accessed through TWS functionality, broker website, and web-based account management. Some options require an additional payment for subscriptions.

Zacks Research
Context-based access to Zacks Research through TWS interface
Social Sentiment
Context-based access to multiple website ticker discussions/commentary
Mosaic Market Scanner
Scans selected markets for user-defined numerical criteria
Portfolio Analyst
Tests accounts against industry benchmarks, including time-based performance
Probability Lab
TWS or mobile-based application to decipher the options markets
Traders' Insight
Daily articles available through email subscription or website access

Pros

Interactive Brokers' Trader Workstation (TWS) trading platform provides a diverse selection of decision-making, analytical, and research tools, including fundamental and technical insight, upgrades/downgrades, market signals, and commentary by the trading community. Secondary account management and web-based research offer portfolio and performance overviews, valuable for analyzing returns and making investment decisions.

Cons

Research and insight tools feel scattered and disorganized, lacking a central access portal. Headline information is often brief, poorly organized, and confusing, making additional data mining more difficult. The right-click context-based access makes it difficult to answer specific inquiries or organize multiple information sources, generating more frustration than information. The overall lack of easy information gathering can be frustrating for clients looking for a one-stop destination for their analytical needs.

Education

5.0

Interactive Brokers provides web-based seminars you can access live or by watching at a later date. Many programs focus on software and broker education, but the growing library of market-focused topics does a good job of building client skills.

Traders' University
Free Webinars, Short Courses, Tours, and Apps
Traders' Academy
Longer Course Material
Traders' Insight
Daily Market Pulse and Performance

What you need to know

IB's educational offerings cover a variety of market topics in detail, but large-scale omissions undermine the user experience. For example, Traders' Academy is intended to provide more detailed course material but has just two programs, TWS for Beginners and an Introduction to Options. Short videos in the Traders' University section offer greater variety, with entries on technical analysis, short selling, CFDs, options, and forex, as well as tutorials on TWS and mobile platforms.

Bottom Line

Interactive Brokers covers 120 markets in 26 countries, offering ultra-low commissions and tight spreads. Its data feed is highly reliable, rarely going offline, while trade executions are accurate and lightning fast due to sophisticated order routing technology. The mature trading platform easily handles complex order entry, while an excellent API supports algorithmic strategies, making this an industrial strength broker-dealer and top choice for professionals and serious-minted hobbyists. Clients coming from other broker-dealers may feel intimidated by the proprietary trading platform, but taking the time to learn the software's quirks pays immediate dividends, opening complex strategies not available at a typical discount house. While Interactive Brokers provides dozens of analytical and research tools, some customers may prefer to use third-party products that better organize the needed information. The same holds true with technical charting, which has been the weakest aspect of the TWS platform since its inception.

Alan Farley
Reviewed by Alan Farley

  • • Author - The Master Swing Trader (McGraw - Hill 2000)
  • • Author - MST Cookbook (McGraw-Hill - 2010)
  • • Author - The Daily Swing Trade newsletter - 16 years and The Swing Shift column - 12 years

Experience

Alan is a best-selling author of The Master Swing Trader and MST Cookbook, long-time writer/contributor to TheStreet.Com and dozens of financial publications. He is also the author of Mastering The Trade, one of the longest-running trading courses on the Internet. Alan is a CNBC and Bloomberg TV contributor as well as the publisher of Hard Right Edge, one of the first trading sites on the Internet. He's also ublisher of numerous DVDs including Predicting Market Trends, Turning Pattern Cycles Into Profits, Targeting Profitable Entry and Exit Points, and Market Patterns For Active Traders.

Education

Alan received his Bachelor's in Psychology from the University of Pittsburgh.

Quote from Alan

"I deeply believe that I can't succeed in life unless I help others to succeed. As a result, I've spent nearly three decades teaching traders and investors about our complex world markets, showing them ways to gain an edge on the competition."

Follow Alan

Twitter

Investopedia and Dotdash

Investopedia helps you understand complex financial concepts, learn and improve your investing skills, and learn how to manage your money. Whether you’re in a classroom, a boardroom or your living room, our editors and network of financial advisors and experts have answered your questions and proudly earned your trust since 1999. Investopedia is part of Dotdash, a collection of some of the web’s largest and most trusted digital media brands.

About Our Broker Review Methodology
Investopedia's mission is to provide online investors with the most unbiased, comprehensive reviews and ratings of self-directed brokers. Vetted by multiple industry experts - including a financial research firm with more than 20 years of experience in broker ratings - Investopedia's Broker Ratings and Reviews embody industry best practices for research design.

Investopedia consulted independent researchers, and financial institutions, and conducted multiple tests, to design a system that rates brokers based on 10 categories and 149 carefully selected variables. Selection of ratings elements was a culmination of 5,498 survey responses, 100+ hours of industry research, and 100 hours of user feedback. Each category encapsulates the key elements needed for thorough evaluation. All have been tested for replicable results with a battery of evaluators. Every review goes through a rigorous verification process to maintain editorial separation and ensure an unbiased ratings result.

Interactive Brokers News