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