Interactive Brokers ranks in our top five overall in our 2019 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, on your desktop or on a mobile device. Though IB has been adding features to attract more assets and help newer investors, including its own robo-advisory, we recommend that newcomers to trading start somewhere else, and grow into the extensive capabilities of IB's Traders Workstation (TWS).
Interactive Brokers currently ranks in the following categories:
Interactive Brokers launched a commission-free offering, called IBKR Lite, in October 2019. This new service offers clients unlimited, commission-free trading on US listed stocks and ETFs, with IB's regular pricing on other products. The catch? You can only use the firm's mobile apps or their web-based platform, Client Portal. If you'd like to switch to a regular IB account so you can utilize the powerful analytical tools on TWS, you will be subject to the usual commission charges, which are on the low side, and may well pay for themselves in price improvement.
Pricing is at the low end of the range, especially margin rates
IBKR Lite allows commission-free trading on the firm's Client Portal
IB’s clients can trade on 120 markets in 31 countries, using 23 currencies
Traders Workstation is geared for extremely active traders
Traders WorkStation, IB’s downloadable platform, can be difficult to use for a new investor
IB does not support education accounts (529s) or 401(k)s
Very small or inactive accounts may be subject to maintenance fees or data charges
The Traders Workstation is IB’s flagship platform, but you can also log into the web-based Client Portal to access portfolio analysis, a forum for clients, the Market Overview tool and other tools including trading. Several high-end analytical tools have been added to Client Portal, including scanners, global data, and customizable watchlists. There is streaming data everywhere on all platforms, though you can only have data updating on one device at a time. You can also enter orders from a graph, or from the matrix display in TWS.
You can access any market venue from TWS, and place large orders using built-in algorithms. IB’s order execution engine has what could be the smartest order router in the business, as 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. The order router 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 standard Interactive Brokers clients.
IB recently launched a new order type called midprice order, that 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.
IBKR Lite customers can only use the Client Portal and IB's mobile apps, which do not offer advanced order types. The order router for Lite customers prioritizes payment for order flow, which is not shared with the customer.
The Client Portal is a great step forward in making IB’s tools more accessible and easier to find, as is IBot, an AI-powered digital assistant. TWS has had some creature comforts added, 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.
Mobile and Emerging Tech
Options trading on the mobile app is very simple. You tap on tiles representing the strikes and expiry dates you want to trade to build a spread. You can compare two potential trades with the Performance Profile tool. There’s a persistent Trade button letting you send orders to market quickly. IBot is built into the mobile app as well, helping you find advanced order types and analytical tools on the app.
Range of Offerings
There is no other broker with as wide a range of offerings as Interactive Brokers. Besides the direct access to 120 global exchanges, IB has added a huge inventory of fixed income products, including many European corporate bonds and Euro-denominated government bonds. Though they offer more than 11,000 mutual funds, you can use their mutual fund replicator to find lower-cost exchange-traded funds. IB also has a low-cost robo-advisory service called Interactive Advisors.
News and Research
Options traders will appreciate the many tools built into TWS, such as Probability Lab, which lets you compare your market outlook to current conditions, suggesting strategies you can trade. IB offers its clients free research from nearly 100 providers including Alexandria Social Sentiment, Market Realist, Zacks, TipRanks, ValuEngine, Dow Jones, and many more. ESG ratings are available from Thomson Reuters, letting you compare and rank companies based on factors that matter to you. You can also buy discounted subscriptions to premium research.
Portfolio Analysis and Reports
The Risk Navigator lets you stress-test your portfolio by seeing how a certain change in market conditions would affect your holdings. What would happen if there was a 10% drop? This tool is part of IB’s portfolio margining service, but can be used separately as well.
Their Portfolio Analyst service, which can be used by anyone, not just account holders, lets you pull all of your financial accounts in for some intensive analysis. The Performance Attribution feature helps you understand which market sectors contributed to the changes in your portfolio value. You can also create custom benchmarks, such as a combination of the Dow Jones index and the Nikkei, or compare your returns against more than 230 benchmarks. This is a very powerful tool that is worth checking out whether you are an IB client or not.
Customer Service and Help
IBot has gone a long way towards helping clients figure out where to find the platform features they need. You can talk to IBot on a mobile device to save wear on your fingertips. Though they have vastly improved their telephone support system, average account holders can still get stuck in a long queue.
The Traders Academy offers free online courses on a wide array of topics, ranging from TWS for Beginners up to in-depth explanations of various trading algorithms you can use. Traders Academy is accessible from all platforms, including mobile. IB holds approximately 250 live webinars a year, and they have an archive with nearly 900 previously recorded webinars. The Traders’ Insight blog includes educational content on retirement and tax topics, along with outlooks for US, Asia-Pacific, Europe, and various market sectors. The IBKR Quant Blog is there for clients who want to model the financial markets and write their own trading algorithms.
In a word: Low. Clients can choose from a fixed rate plan or a tiered plan, depending on trading volume. The fixed rate plan is best for occasional traders who favor market orders, while the tiered model minimizes trading costs for frequent traders who factor exchange rebates into their strategies. We used the fixed rate plan for our calculations, which is $.005 per share with a minimum of $1 per trade. There is no per-leg fee for options trades; commissions range from a maximum of $0.70 per contract to $0.15 per contract depending on volume. Margin rates were the lowest in our survey, and you can borrow against your assets for any reason – not just trading. Plus, IB pays 1.7% on idle cash over $10,000.
IBKR Lite clients pay no commission on U.S.-based equities, but they are restricted to the web-based Client Portal and IB's mobile apps. The usual commission schedule applies to all other trades. IB has not charged a base fee for options contracts; infrequent traders will pay $0.70 per contract.
What You Need to Know
Interactive Brokers has made a great effort to make their technology more appealing to the mass market, but the overwhelming wealth of tools could intimidate a new investor. This wealth of tools make the platform most appropriate for day traders or more advanced investors. Their robo-advisory service is a low-cost way to get introduced to the platform. Frequent traders will be pleased with the wide variety of order types, global asset classes, and trading algorithms offered by IB. If you’re outgrowing what your current broker offers, check out Interactive Brokers.
Compare Interactive Brokers
As one of our top ranking brokers, Interactive Brokers is a perfect option for a variety of investing styles. See how they compare against other online brokers we reviewed.
Interactive Brokers Review 2019
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