Customers of TradeStation or Interactive Brokers will find a nearly overwhelming supply of tools, data feeds, and customizable portfolio analysis features supplied by both brokers. Both have extensive connections to third-party apps, enabling more in-depth technical analysis and automated trading strategies. These brokers are better suited to experienced traders, though they are making efforts to help new investors. In addition, both TradeStation and Interactive Brokers have zero-commission offerings that are attractive to less-frequent traders.
- Account Minimum: $2,000 for TS Select, $0 for TSgo
- Fees: $0 stocks and ETFs, $0.60/contract and $0/trade options on TS Select, $0.50/contract and $0/trade
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
TradeStation's focus on high-quality market data and trade executions makes them an excellent choice for the active trader. They are also committed to superior customer service. Their systems are stable and remain available during market surges. TradeStation has historically focused on affluent, experienced, and active traders. The company's goal going forward is to broaden its appeal and reach with pricing changes and new services. TradeStation had a busy 2019, acquiring and relaunching a firm dedicated to education and community called YouCanTrade as well as launching a cryptocurrency brokerage called TradeStation Crypto Inc. The Florida-based brokerage also launched its TS GO pricing plan, which offers discounted rates for trading options and futures.
Interactive Brokers ranks highly in our 2020 reviews due to its wealth of tools for sophisticated international investors. The firm makes a point of connecting to as many electronic exchanges as possible. You can trade equities, options, and futures around the world and around the clock. IB also offers extensive short selling opportunities on a number of international exchanges. Interactive Brokers introduced a Lite pricing plan in the fall of 2019, which offers no-commission equity trades on most of the available platforms. Interactive Brokers was Investopedia’s pick for advanced trading and international trading.
We'll look at how these two brokers match up against each other overall.
TradeStation's usability has been improving over time. During 2019, TradeStation refreshed its account opening process and streamlined it as much as is legally possible—six steps—with your progress clearly illustrated. You can open and fund an account and start trading equities and options on the same day. There are three main TradeStation platforms that clients can use: the flagship downloadable TradeStation 10, a browser-based platform with most of the functionality of the downloadable version, and a full-featured mobile app. Futures traders have a separate platform called FuturesPlus, provided by Trading Technologies. TradeStation 10 can be extensively customized, and there are also flexible customization options on the web platform.
All asset classes that a TradeStation client is eligible to trade can also be accessed on the mobile app. Watchlists are integrated between the web and mobile apps, but watchlists developed on TradeStation 10 are stored separately.
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 the 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 they data-stream in real-time.
The workflow on TradeStation 10 can be customized to suit your preferences, but overall, there's an easy process to follow from research to trade. Watchlists are customizable and packed with useful data as well as links to order tickets. All platforms allow conditional orders and bracket orders, while the desktop platform offers additional advanced order types, including trading algorithms that seek out liquidity for equities and options. TradeStation offers connectivity to about 40 equities, options, and futures market centers, though some data requires an additional subscription fee.
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.
Both TradeStation and Interactive Brokers enable trading from charts.
Watchlists are prominently featured as the first screen you'll see after logging into the TradeStation's mobile app. Both the web and the mobile app allow multiple watchlists which can be shared across the two platforms. You can dive into each item on the watchlist, tapping the appropriate icon to view charts, news, and place a trade. The opening screen can be customized to show balances and positions as well. Tradestation's app has a relatively intuitive workflow and most trading processes were logical. Trading options is quite easy on the mobile app; reversing or rolling an options strategy can be done with a couple of taps.
On Interactive Brokers’ 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
TradeStation offers a large range of assets, including some less traditional ones like cryptocurrencies. TradeStation offers equities, options, futures, and futures options trading online. Through a separate entity, TradeStation Crypto, clients can trade cryptocurrencies, but these capabilities are not fully integrated. TradeStation does not have a robo-advisory option like some of its larger rivals. The broker also lacks forex trading and fractional share trading.
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 more than 34,000 funds from more than 285 fund families. Clients can set up automatic investments through IB’s flexible and wide-ranging advisory service, Interactive Advisors.
|TradeStation vs. Interactive Brokers Range of Offerings|
|Mutual Funds||With broker assistance||25,000 Low/no cost|
|Bonds||With broker assistance||Yes, huge inventory|
|International exchanges||No||125 Exchanges|
|OTCBB and Penny Stocks||Yes||Yes|
Both of these brokers allow a wide variety of order types as well as basket trades. Both also let customers adjust the tax lot when closing part of a position.
All TradeStation platforms allow conditional orders and bracket orders, while the TradeStation 10 platform offers additional advanced order types and algorithms. Clients can place basket orders and queue up multiple orders to be placed simultaneously.
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. IB 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. 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.
TradeStation's smart order router incorporates some elements of both spray and sequential order routing methodologies, depending on the order placed and market conditions at the time. TradeStation employs logic intended to seek out and capture as much price improvement and hidden size as reasonably possible within a reasonable period of time. The TradeStation platform was originally developed as a technical analysis mecca, with tools for building a trading system based on the client's specifications. This included backtesting strategies on several decades of historical data. Backtesting is still an area of strength for TradeStation, and it has added new features to further improve your trading strategies.
Customers using Interactive Brokers' Pro pricing system take advantage of the order execution engine that 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. 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. 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.
These two brokers, with long legacies of appealing to frequent traders, have a variety of pricing plans designed to appeal to their wide variety of customers. Both also launched zero-commission plans in 2019 that have some limits.
During the price-cutting flurry of fall 2019, Tradestation introduced two new pricing plans that both feature commission-free equity trades and options transactions with no per-leg fee. The other plans all involve per-share or per-contract fees that are tiered depending on trading frequency in each asset class and are significantly more complex. Very frequent traders should consult TradeStation's pricing page.
Interactive Brokers has three types of commissions for trading 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 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 two brokers generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. As of May 2020, clients of both firms do not earn interest on idle cash. Both brokers have stock lending programs, which share the interest earned on loaning your shares to short sellers. Interactive Brokers 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. TradeStation does not offer portfolio margining.
Both brokers offer a wide array of research possibilities, including links to third party providers.
TradeStation developed its brokerage on top of a top-notch technical analysis and charting platform, so you’ll find features such as automated technical analysis displaying technical patterns on the charts as they form. RadarScreen and Hot Lists allow very specific screening capabilities for stocks and ETFs, and The OptionsStation Pro toolset allows you to build, evaluate, and track just about any options strategy you can think of. Tools are geared to active traders, such as time and sales, market depth, and snapshots that show how your positions are performing.
Interactive Brokers offers an array 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. The market scanner offers up hundreds of criteria for global equities and options. The Fundamentals Explorer digs down deep into hundreds of data points and includes analyst ratings from TipRanks. Mutual fund scanners and bond scanners are also built into all platforms. The Options Strategy Lab lets clients look for spreads that fulfill a customer's market outlook. Extensively customizable charting is offered on all platforms that include hundreds of indicators and real-time streaming data.
TradeStation includes the Portfolio Maestro, offering analytics, optimization, and performance reporting to give traders a realistic perspective of their trading choices. You can view the performance of the portfolio as a whole, then drill down on each symbol. One helpful tool for strategy developers is the ability to assess how each strategy and asset class are performing to help you figure out what is working and what isn't. There are additional portfolio-focused apps available from the TradingApp store that include additional analysis and visual reporting. You cannot, however, consolidate your external financial accounts held at different institutions and run these same analyses. All balances, margin, and buying power calculations are presented in real-time.
Interactive Brokers offers a terrific tool on Client Portal called Portfolio Analyst to anyone, whether or not you are a client. In addition to holdings at IB, 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, and 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. 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.
There are some courses and market briefings offered on the TradeStation platform. TradeStation's Knowledge Center appears to be undergoing a remodel. The articles are not as easy to find as they were a few months ago. TradeStation's frequently-asked questions page leads with TSbot, which is the TradeStation chatbot. TradeStation's Learn page directs you to investment and trading educational presentations and materials on YouCanTrade's website. Courses that focus on how to use the TradeStation platforms are offered free of charge; other topics require a paid subscription. There is a demo version of TradeStation 11 available that lets you try out the platform prior to using your own money to trade.
Interactive Brokers provides a wide range of investor education programs 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 asset classes, markets, currencies, tools, and functionality. Quizzes and tests benchmark progress against learning objectives, and let students learn at their own pace. 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. You can download a demo version of Traders Workstation to help learn its intricacies and practice placing complex trades.
TradeStation has phone support 8 a.m.–8 p.m. ET. The trading desk hours differ by asset class. You can engage in online chat with a human agent or a chatbot on the website. During market hours, a live broker is available to answer questions; orders placed with a live broker incur a $50 surcharge.
Interactive Brokers’ phone support is up around the clock on weekdays. If you don’t want to sit on hold, you can leave your number with a callback service. Online chat with a human agent is available, as is the AI-powered IBot service, which can answer questions posed in natural language. IBot is available throughout the website and trading platforms.
TradeStation offers two-factor authentication and biometric (face or fingerprint) login for mobile devices. In 2019, the firm implemented technology designed to detect attempted fraudulent account openings, and it added enhancements to safeguard against fraudulent cash transfers out of client accounts. TradeStation carries excess Securities Investor Protection Corporation (SIPC) insurance provided by Lloyd's of London with an aggregate limit of $300 million to pay amounts in addition to those returned in a SIPC liquidation. The maximum for any single customer is $24.5 million with a cash limit of $900,000 per customer.
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 multiple forms of two-factor authentication such as IBKR Mobile Key, and its own mobile app for two-factor authentication which supports fingerprint and PIN verification. Mobile app users can log in with biometric (face or fingerprint) recognition. 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.
Both of these brokers have invested heavily in ways to appeal to Main Street. We are not quite ready to recommend either for a new investor, however.
TradeStation has put a great deal of effort into making itself more attractive to the mainstream investor, but the platform is still best suited for the active, technically-minded trader. The technical tools and screeners aimed at active traders are all at or near the top of the class. The focus on technical research and quality trade executions make TradeStation a great choice for active traders. Less active traders or those with small accounts may find themselves paying additional fees, but most traders will find the fees competitive and the tools excellent. In contrast, the tools aimed at regular investors, including the mutual fund and fixed income screeners, are a noticeable step down. This isn't the place for an investor who wants to "set it and forget it" or needs educational resources to get started. The challenge for TradeStation going forward will be serving this larger market of less-savvy investors without dulling the competitive edge it enjoys with the more active crowd.
Interactive Brokers has also worked hard to make its 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 offers a natural next step. 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 the improvements aimed at appealing to these groups is making that a harder call every year.
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In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
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