Interactive Brokers (IBKR) ranks very close to the top in our 2020 review due to its wealth of tools for sophisticated investors who are interested in tracking global investing trends. The firm makes a point of connecting to any electronic exchange globally, so you can trade equities, options, and futures around the world and around the clock.
Interactive Brokers introduced a Lite pricing plan in fall 2019, which offers no-commission equity trades on most of the available platforms. Interactive Brokers still charges a small fee for its IBKR Pro customers. We'll look at how Interactive Brokers stacks up in terms of features, costs, and resources to help you decide if it is the right fit for your investing needs. Aside from this Interactive Brokers review, we've also reviewed the Interactive Advisors robo-advisor service.
- Rated our best broker for international trading, best for day trading, and best for low margin rates.
- Wide array of asset classes (including stocks, options, futures, and bonds) in 125 markets in 31 countries, using 22 currencies.
- Has offered fractional share trading for several years.
- Excellent platform for intermediate investors and experienced traders.
Who Interactive Brokers Is For
Interactive Brokers primarily serves institutional investors and sophisticated, active traders around the globe. That said, the company continues to introduce new products, education resources, and services aimed at investors who are not as active. Making the experience less intimidating for newer or less active investors is still a work in progress for the firm. In terms of serving its core market of active investors and experienced traders, however, Interactive Brokers is incredibly competitive. In addition to unparalleled market access, IBKR has layered on a staggering array of tools that can meet almost every conceivable trading need.
Extremely smart order router
Wide range of offerings around the world and across asset classes
Mutual Fund Replicator finds less expensive ETFs
Streaming data runs on a single device at a time
IBKR Lite customers cannot use the smart order router
Small or inactive accounts generate substantial fees
- Interactive Brokers' order execution engine has what could be the smartest order router in the business. It stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate.
- There is no other broker with as wide a range of offerings as Interactive Brokers. Besides the direct access to global exchanges, IBKR has added a huge inventory of fixed income products, including many European corporate bonds and Euro-denominated government bonds.
- Interactive Brokers' mutual fund replicator helps you find lower-cost exchange-traded funds that are essentially identical to more expensive mutual funds. But if you prefer mutual funds, IBKR has nearly 12,500 mutual funds on offer.
- You can only have streaming data on one device at a time. If you log into your mobile app while still logged onto the TWS, you’ll be prompted to turn off streaming data on one of the devices.
- The IBKR Lite order router prioritizes payment for order flow, which is not shared with the customer. IBKR Lite clients cannot use the Mobile Web platform or use any of the APIs that connect to Interactive Brokers' trading engine.
- Small or inactive IBKR Pro accounts may be subject to maintenance fees or data charges, and interest is not paid on cash unless you have a substantial balance.
Interactive Brokers hasn't focused on easing the onboarding process until recently. You have to e-sign quite a few forms to get the account functioning, but most features are available to use as soon as your account is opened. You can open an account without making a deposit, but it will be closed if you don't fund it within 90 days of opening.
Once you are set up, the Client Portal is a great step forward in making IBKR's tools more accessible and easier to find. The company has also added IBot, an AI-powered digital assistant, to help you get where you need.
Everything about Interactive Brokers centers around Traders Workstation (TWS). TWS is a powerful and extensively customizable downloadable platform, and it is gradually gaining some creature comforts, such as a list titled "For You" that maintains links to your most frequently-used tools. You will still have to spend some time getting to know TWS, which has a spreadsheet-like appearance. The Mosaic interface built into TWS is much more aesthetically pleasing and it lets you arrange the tools like building blocks to form a workspace. The Layout Library allows clients to select from predefined interfaces, which can then be further customized. You can also create your own Mosaic layouts and save them for future use. In short, you will need to put time in to get the exact experience you are looking for, but the design tools that you'll need are all there.
Interactive Brokers' mobile app has almost all of the functionality of the web platform, though it is not nearly as extensive as TWS desktop platform. All the available asset classes can be traded on the mobile app. Any mobile watchlists you create are shared with the web and desktop platforms, and data streams in real-time. Streaming news on mobile includes Bloomberg TV, Real Vision, and IBKR Traders Insight. The fundamental research is solid and the charts are very good for mobile with a suite of indicators. It is worth noting that there are no drawing tools on the mobile app.
Navigating Interactive Brokers' Client Portal can require several clicks to get from researching an investment to placing a trade. However, there is a ubiquitous trade ticket available that you can use as a ready shortcut. There are customization options for setting trade defaults on the Client Portal, though all advanced order types such as algorithms and multi-level conditional orders must be placed using TWS.
Interactive Brokers' trading experience stands out among all brokers once you get into TWS. TWS lets you set order defaults for every possible asset class, as well as define hotkeys for rapid order transmission. Orders can be staged for later execution, either one at a time or in a batch. You can set a date and time for an order to be transmitted, or set up a complex conditional order that is activated after specific conditions are met, such as a prior order executed or an index reaching a certain value. The ways an order can be entered are practically unlimited. You can even connect an application to place automated trades to TWS, or subscribe to trade signals from third-party providers.
Mobile Trade Experience
On the mobile app, the workflow is intuitive and flows easily from one step to the next. Data streams in real-time, but on only one platform at a time. This one-at-a-time approach could be an issue for traders who have a multi-device approach to their trading workflow, but it isn't an issue for the traditional trading session on a single interface. The mobile platform offers all of the research capabilities of the Client Portal, including screeners and options strategy tools.
Range of Offerings
There is no other broker with as wide a range of offerings as Interactive Brokers. The firm adds new products based on customer demand and links to new electronic exchanges as soon as technically possible. In April 2020, IBKR expanded its mutual fund marketplace, offering nearly 26,000 funds from more than 285 fund families that includes funds from global sources.
That said, it is worth noting that IBKR does not offer cryptocurrency trading aside from Bitcoin futures. You can trade every asset class on Mosaic and TWS; Client Portal users will have to switch over to TWS to place international trades. With the exception of cryptocurrencies, investors can trade the following:
- Stocks long and short (23,000 available to borrow. IBKR assembles a list based on true borrow availability.)
- OTCBB (penny stocks)
- Mutual funds (world's largest mutual fund marketplace with nearly 26,000 funds available. 8,300 no-load funds, and over 25,000 low or no-cost funds)
- Bonds: corporate, municipal, treasury, CDs, international
- Single leg and multi-leg options, up to 8 legs
- Futures and futures options
- Robo-advisory, Interactive Advisors, integrated into the website and mobile app
- International (125 exchanges connected, trading stocks, options, futures, forex, bonds, funds, and contracts for differences)
- Forex (23 currencies, 115 trading pairs)
- Fractional share trading of U.S. stocks listed on NYSE, AMEX, NASDAQ, ARCA, or BATS, as well as OTC Pink U.S. penny stocks with average daily volume above $10 million and market cap above $400 million. Non-U.S. stocks are not available for fractional shares trading at this time.
- IPOs, warrants, and single stock futures
Interactive Brokers allows a flexible array of order types on the TWS, Client Portal and the mobile apps, including conditional orders such as one-cancels-another and one-triggers-another. TWS enables conditional orders based on price, volume, daily P&L, margin cushion, number of shortable shares available, rebate available from the trading venue, and other factors.
Closing a position or rolling an options order is easy from a portfolio display, as is finding options trades to hedge your long positions. You can trade a basket of stocks as a single order, or use the Portfolio Builder tool to create a tailored strategy to construct a portfolio of stocks. Portfolio Builder lets you know when it’s time to rebalance based on market changes.
You can trade share lots or dollar lots for any asset class. Additionally, for an options order, a customer may opt to enter Deliverable Value, specifying the dollar value of the stock that the customer would be assigned if the option expired in the money. This is a unique feature.
If you've been buying into a particular stock over time, you can select the tax lot when closing part of the position, or set an account-wide default for the tax lot choice (such as average cost, last-in-first-out, etc.). The Tax Optimizer tool allows a client to match specific lots on a trade-by-trade basis and maximize tax efficiency by previewing the profit and loss of each available scenario. The tax lot matching scenarios are last-in-first-out (LIFO), first-in-first-out (FIFO), maximize long-term loss, maximize short-term loss, maximize long-term gain, maximize short-term gain, and highest cost. You can also set an account-wide default for dividend reinvestment.
Interactive Brokers' order execution engine stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate. The order routing algorithms seek out a speedy execution and can access hidden institutional order flows (dark pools) to execute large block orders. For multi-leg options orders, the router seeks out the best place to execute each leg of a spread, or clients can choose to route for rebates. Any payment for order flow is given back to the client for IBKR Pro clients but not those using the Lite pricing plan.
IBKR offers an order type that it calls MidPrice order, which can be routed to a number of venues including IEX. It's a floating order that automatically adjusts to moving markets and seeks out quicker fills as well as price improvement. Clients can choose a particular venue to execute an order from TWS. Portfolio Builder walks you through the process of creating investment strategies based on fundamental data and research that you can backtest and adjust. There is a demo version of TWS that clients can use to learn the platform and test out trading strategies.
IBKR Lite customers can use any platform or mobile apps, except IBKR Mobile Web, to enter free orders. The order router for Lite customers prioritizes payment for order flow, which is not shared with the customer.
With most of the large brokers cutting their equity commissions to $0, Interactive Brokers has gone from being one of the lowest cost brokers to being comparatively expensive for their Pro offering when it comes to trading. Interactive Brokers’ fee structure is rather complex. There are three types of commissions for U.S. equities.
- Fixed per-share pricing of $0.005 (one-half cent) per share traded with a minimum of $1 and a maximum of 1% of trade value. Includes all exchange and most regulatory fees.
- Tiered per-share pricing based on monthly order activity ranging from a high of $0.035 per share for under 300,000 shares per month to $0.0005 per share for over 100,000,000 shares per month, with a minimum of $0.35 per trade. It does not include exchange and regulatory fees. Traders may get a rebate on maker-taker fees assessed by some trading venues.
- IBKR Lite program, which offers free trades for U.S. listed equities. Trades are routed to generate payment for order flow, which is not shared with the client.
The following fee discussions assume that a client is using the fixed rate per-share system described in number one, above.
- A transaction for one share or less (for those trading fractional shares) generates the lesser of 1% of total trade value or a minimum charge of $1. Trading 1,000 shares is $5.00. (Free for IBKR Lite clients.)
- The same fees are charged for OTCBB (penny) stocks, though clients must have a minimum of $5,000,000 in their accounts to trade this asset class.
- There is no per-leg fee for trading options. You'll pay $0.65 per contract for options trades with a minimum commission of $1. Low value contract fees drop to $0.50 (premium $0.05–$0.10) or $0.25 (premium under $0.05).
- Trading a single contract is $1. Trading 50 contracts costs $32.50.
- Covered call trade of 500 shares plus 5 contracts costs $5.75.
- Mutual fund fees are $14.95 for funds not on the no-transaction-fee list. 4.95 Euros for international funds.
- Margin interest for Pro customers is 1.55% for balances up to $100,000 and 2.55% for Lite customers. These are the lowest interest rates among the brokers surveyed. Margin interest for Lite customers is 1% higher than the Pro rate.
- IBKR Pro clients with less than $100,000 in their accounts must generate $10 or more per month in commissions to avoid an inactivity fee. You pay the difference between $10 and any commissions generated in your Pro account. There are no inactivity fees for Lite customers.
- No fees to close or transfer an account.
- No fee for exercise and assignment or for voluntary reorganizations
- Clients may send one wire per month at no charge; there is a fee of $10 for each subsequent wire sent. No fee for receiving a wire.
- Clients may send one paper check per month at no charge; there is a fee of $4 for each subsequent check sent.
- Futures trades are $0.85 per contract.
- 96 ETFs can be traded with no commission for clients on the fixed or tiered commission plans.
- Broker-assisted equity trades are $30 and are limited to closing trades. Clients can place trades through a live broker for large block orders and for fixed income transactions; fees vary.
How This Broker Makes Money From You and for You
The fees and commissions listed above are visible to customers, but there are other ways that brokers make money that you cannot see.
- Interest on cash: Like most brokers, Interactive Brokers generates interest income from the difference between what you are paid on your idle cash and what they can earn on customer cash balances. The first $10,000 cash for U.S.-based clients does not earn any interest at all. Interest paid on other currencies and values varies and is listed on the Interest and Financing schedule.
- Interest on cash: As of April 2020, IBKR clients earn no interest on any cash balance.
- Payment for order flow: Quite a few brokers generate income by accepting payment from market makers for directing their customer's equity and options orders to those trading venues. This is called payment for order flow. Interactive Brokers received an average of less than 0.001 cents per share in payment for order flow on orders in U.S. exchange-listed equities during the third quarter of 2019, substantially all of which was passed through to customers in the form of commission discounts. For options, IBKR received an average of $0.10 per contract, substantially lower than most brokers.
- Stock loan programs: Stock loan programs generate revenue for brokers when the stock held in your account is loaned to another trader or hedge fund, usually for the purposes of selling that stock short. Interactive Brokers shares the revenue from its stock loan program 50/50 with the client who loaned the stock. This includes Canadian stocks as of 2019.
- Price improvement: IBKR’s smart order router seeks out price improvement and attains an average of $0.43 per 100 shares traded.
- Portfolio margining: IBKR clients who qualify can apply for portfolio margining, which can lower the amount of margin needed based on the overall risk calculated. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.
- Qualified clients can apply for portfolio margining.
- Interactive Brokers shares the revenue from its stock loan program 50/50 with the client who loaned the stock.
- There are some hoops to jump through to earn interest on idle cash. The first $10,000 in any account earns no interest. U.S.-based IB Pro clients with over $100,000 in their accounts are paid 0.63% on their uninvested cash over $10,000. Idle cash over $100,000 earns 1.05% interest. Clients with smaller accounts receive interest at rates proportional to the size of the account, so a $50,000 account would get half of that rate. IBKR Lite clients earn just 0.05% on their cash balances over $10,000.
- Interest is automatically paid on qualifying cash balances.
- Clients can set an account-wide default for reinvestment of dividends on qualifying stocks.
Interactive Brokers’ wide range of tools and research resources provides a wealth of information for traders and investors. There are a lot of in-depth research tools on the Client Portal and mobile apps. Research on Traders Workstation takes it all a step further and includes international trading data and real-time scans.
Using the Mosaic interface on TWS, there's a market scanner that lets you scan on hundreds of criteria for global equities and options. You can use a predefined scanner or set up a custom scan. The Fundamentals Explorer, on both TWS and Client Portal, digs down deep into hundreds of data points and includes analyst ratings from TipRanks. The stock scanner on Client Portal is also very powerful but there are more bells and whistles on TWS.
The market scanner on Mosaic lets you specify ETFs as an asset class. You can use a predefined scanner or set up a custom scan. All the capabilities of the Fundamental Explorer can be used to examine ETFs. The Mutual Fund Replicator identifies ETFs that are essentially identical to a specific mutual fund, but more liquid and lower cost. Additionally, clients have access to AltaVista's proprietary Hedge Finder and ETF Alternative tools to find ETFs that hold a specific stock or similar ETFs, respectively.
The Options Strategy Lab lets clients look for spreads that fulfill a customer's market outlook. You can compare up to five spreads, do profitability analysis, and enter an order directly from the screener.
Mutual Fund Screener
The Fund Scanner on TWS allows screening on 170 variables. This tool will be rolling out to Client Portal and mobile platforms in 2020.
Fixed Income Screener
Bond Scanner in TWS explores IBKR's entire fixed-income inventory, which is huge. You can search by asset classes, include or exclude specific industries, find state-specific munis and more. This tool is not available on mobile.
Tools and Calculators
Numerous calculators are available throughout all the platforms, including options-related calculators, margin, order quantity, and interest.
Trading Idea Generator
Capitalise, IBKR Market Signals, Benzinga, and Refinitiv Significant Developments can be used for idea generators. The blogs contain trading ideas as well.
Dozens of real-time news sources available on all platforms that include 24/7 Wall Street, AccessWire, Benzinga Pro News, Benzinga Crypto News, Briefing.com, China Perspective, China Investment Insight, Dow Jones North American Briefing, IBKR Market Signals, IBKR Quant blog, IBKR Traders’ Insight, Insider Insights, Market Realist, MNI Forex and Fixed Income, Morningstar Ownership Equity, Seeking Alpha, StreetInsider.com Top News and Analyst Actions, TalkMarkets, The Motley Fool, Thomson Reuters Global Financial Market News, TipRanks Market News, Refinitiv Brief, and Refinitiv Transactions. Access to premium news feeds at an additional charge.
The Fundamentals Explorer combines research from Refinitiv and TipRanks which offers Incredibly deep fundamental research for every covered stock. You can also search for a particular piece of data. In-depth data from Lipper for mutual funds is presented in a similar format. Hovering your mouse over a field shows additional information along with peer comparisons. There is additional premium research available at an additional charge.
Extensively customizable charting is offered on all platforms that includes hundreds of indicators and real-time streaming data.
Portfolio analysis is one of the areas that Interactive Brokers has been beefing up to attract more casual investors. Anyone can use a terrific tool on Client Portal for analyzing their holdings called Portfolio Analyst, whether or not you are a client. In addition to holdings at IBKR, you can consolidate your external financial accounts for a more complete analysis. Portfolio Analyst lets you check on asset allocation—asset class, geography, sector, industry, and other measures. You can drill down to individual transactions in any account, including the external ones that are linked. A feature called Portfolio Checker lets you assess your portfolio’s health by comparing its performance to one of about 200 global benchmarks and evaluating risk measures. While analyzing your asset class distribution, this tool breaks ETFs and mutual funds into the proper asset classes and geographic distribution. The analytical results are shown in tables and graphs.
All balances, margin, and buying power calculations are in real-time. You can calculate your internal rate of return in real-time as well.
Interactive Brokers’ proprietary Tax Optimizer tool allows a client to set a default matching method that is used automatically, and override that method for a specific symbol if desired. To help a client maximize tax efficiency, the Tax Optimizer provides a "what-if" capability to give the client a preview of P&L for each of the matching methods.
IBKR offers the Trader's Journal in TWS, which is a note-taking feature that lets you record and save trading notes and ideas on any product. Traders’ Journal also provides functionality to save a screenshot of any screen in TWS, including charts, as part of a note. Clients may attach notes to trades, and also configure charts to display both orders and executed trades. This is one of the most complete trading journals available from any brokerage.
Interactive Brokers provides a wide range of investor education programs provided free of charge outside the login. Traders Academy is a structured, rigorous curriculum intended for financial professionals, investors, educators, and students seeking a better understanding of the asset classes, markets, currencies, tools, and functionality available on IBKR's Trader Workstation, TWS for mobile, Account Management and TWS API applications. There are more than 40 courses available, with the number of courses doubling during 2019.
Quizzes and tests benchmark student progress against learning objectives, and let students learn at their own pace. Examples of course offerings include introductions to asset classes such as options, futures, forex, international trading, and bonds, and how to use margin. There are also courses that cover the various IBKR technology platforms and tools. The website includes a trading glossary and FAQ.
Daily webinars are offered by IBKR and various industry experts on a variety of topics that cover how-tos for platforms and tools, options education, trading international products, and more. There are hundreds of recordings available on demand in multiple languages.
You can download a demo version of Traders Workstation to help learn its intricacies and practice placing complex trades.
- 24-hour weekday phone line with callback service
- Online chat with a human agent
- Secure message center
- AI-powered IBot directs customers to online FAQs and resources
Interactive Brokers has a long-lived reputation for their lackluster customer service, but they have worked hard the last few years to improve this perception. One terrific feature that was added a couple of years ago and is expanding constantly is IBKR’s IBot service, powered by an artificial intelligence engine that answers questions asked in plain English. IBot is available throughout the website and trading platforms.
A unique service, The IBKR Securities Class Action Recovery solution, launched in May 2020. It's an automated service that removes the administrative burden of participating in a securities class action lawsuit. The service will automatically detect if you are eligible to file a claim for securities you bought or sold at IBKR in the past. When applicable, the service will submit filings to claims administrators on your behalf and seek to recover funds for compensation. Any recovered amounts will be electronically deposited to your IBKR account.
Because Interactive Brokers has clients from all around the world, it’s been focused on security for a long time and meets or exceeds industry standards. This includes:
- Mobile app users can log in with biometric (face or fingerprint) recognition.
- Multiple forms of two-factor authentication.
- IBKR Mobile Key, its own mobile app for two-factor authentication which supports fingerprint and PIN verification.
- IBKR carries excess SIPC insurance provided by Lloyd's of London. Each account is covered for $150 million. For clients who have received the full SIPC protection, the Lloyd's policy provides up to an additional $30 million (including $900,000 for cash), subject to an aggregate limit of $150 million.
- Interactive Brokers’ Bank Deposit sweep program enables clients to supplement their existing $250,000 SIPC coverage with $2,500,000 of FDIC Insurance on eligible cash balances.
- Through 2019, there were no significant data breaches at any IBKR location reported by the Identity Theft Research Center.
Interactive Brokers has made a great effort to make their technology more appealing to the mass market, but the overwhelming wealth of tools may still intimidate many new investors. Of course, this same wealth of tools makes the platform one of the best choices for day traders and more advanced investors who can benefit from the extensive capabilities and customizations. Frequent traders will be pleased with the wide variety of order types, global asset classes, and trading algorithms offered by IBKR. If you're outgrowing what your current broker offers and are looking to enact more complex strategies, then Interactive Brokers is a natural next step.
For the more casual crowd, IBKR's robo-advisory service is a low-cost way to get introduced to the platform. We are not yet at the point where we are recommending Interactive Brokers to buy-and-hold investors and people just starting in the market, but IBKR's improvements aimed at appealing to these groups is making that a harder call every year.
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