Founded in 1978, Interactive Brokers has a long history of providing quality services to customers around the world. As an online broker, the company has catered to the stock trading crowd, and it has recently become even more popular after dropping its inactivity fees in July 2021.
The brokerage is known for providing all the tools advanced traders need to gain a leg up on Wall Street while offering multiple trading platforms that are relatively easy to use, even for a beginner.
The platform has long been a go-to option for the most technical traders, giving you everything you’ll need for detailed analysis. Here’s what you need to know first:
Key Features of Interactive Brokers
Interactive Brokers offers two account types: IBKR Lite and IBKR Pro. In this review, we’ll focus on IBKR Lite because it’s the account that’s designed for most individual investors. IBKR Pro was designed for active institutional investors and high net worth individuals.
The vast majority of beginner traders — and most professional traders — are best served by the zero-commission, low-cost IBKR Lite account.
Multiple Intuitive Trading Platforms
The first feature that stands out about Interactive Brokers is the trading platforms it makes available. Each platform was designed to cater to a specific type of trader. The options include:
The Client Portal is the most user friendly trading platform offered by the brokerage and is generally the best option for beginners or those who aren’t interested in the most active of trading strategies.
The platform offers intuitive charting capabilities and all the data you’ll need to make sound investment and trading decisions.
Trader Workstation (TWS)
The Trader Workstation (TWS) is where most professional traders who use the company’s services like to hang out. The TWS platform offers access to the most comprehensive technical analysis tools available.
The charting capabilities go above and beyond what the average trader needs to be successful, offering deep insights into the risk-and-reward balance of each trade.
Whether you’re an active trader or a buy-and-hold investor, it’s nice to be able to make your moves in the market on the go. With Interactive Brokers, you’ll be able to do just that.
The company’s mobile app on Android and iOS devices is just as intuitive as the desktop application. The workspace is even customizable, making mobile trading on your terms possible, with the data you need readily available when you need it.
Access to Global Markets
Many expert investors suggest international holdings are a key part of any well-balanced investment portfolio. However, not all brokers offer international trading.
Interactive Brokers is one that does. You’ll have access to thousands of assets in more than 200 countries and territories around the world. That’s the most comprehensive access to global markets available.
Access to Cryptocurrency
Cryptocurrencies like Ethereum, Bitcoin, Bitcoin Cash, and Litecoin have become all the rage after delivering monumental gains for investors in the past few years, turning many into millionaires. Today, it seems as though everyone wants to get involved in the metaverse, but there’s one big problem.
It’s important to work with brokers you can trust, but the entire cryptocurrency industry is new and largely unregulated, making trustworthy brokers harder to come by.
Unfortunately, few traditional stock brokers offer access to crypto assets, making risk-taking with lesser-known names more likely. Interactive Brokers is helping to change that.
The company offers low-commission trading on the four cryptocurrencies mentioned above through its Paxos platform. It charges just 0.18% on trades, which is significantly lower than competitors like Coinbase and Gemini Active Trader, which charge 0.5% and 0.35%, respectively.
Crypto traders also have access to all the trading tools Interactive Brokers has become famous for, offering up a level of technical analysis capability that’s not available elsewhere.
The more educated your investment and trading decisions are, the more likely you are to succeed on Wall Street. Unfortunately, most schools don’t teach kids about the stock market, and it’s not something many parents talk much about either.
Some beginners resort to high-cost training programs, but these expensive courses are inaccessible to many.
With an Interactive Brokers account, you’ll have full access to the IBKR Campus, a compelling suite of educational materials that beginners and experts alike can learn from.
Whether you prefer learning through reading or you’re better off watching videos and attending webinars, the IBKR Campus has something for you.
The best part is that everything in the IBKR Campus is free. So there’s no reason to pay for expensive courses or learn by trial and error anymore.
Stock Market Simulator
Adding to the educational tools offered by the broker, members also gain access to a Paper Trading account. The Paper Trading service is a stock market simulator driven by real-time market data and comes with all the functionality you would have in a live trading environment.
When you sign up for the Paper Trading account, you’ll start with $1 million in virtual cash. Test your strategies in the virtual environment before risking your real hard-earned dollars.
If you find that your strategy works well, you’re off to the races, and it’s time to dive into a real-world trading environment. On the other hand, if your strategy leads to losses, you don’t have to sweat it. Simply tweak your strategy until you’re consistently in the green.
This is perhaps the most unique feature I’ve seen from an online brokerage in years. iBot is Interactive Brokers’ artificial intelligence, but it’s also a sort of virtual assistant, more like Alexa from Amazon than a push-button AI that just combs the market for you.
Once you launch iBot, you can ask it general questions like, “what’s the current price of Apple stock?,” “what is the forward-looking P/E ratio of Walmart?,” or “what companies are announcing earnings in the premarket tomorrow?”
You’ll also be able to give iBot commands like “add Apple stock to my watchlist,” “deposit $100 to my account balance,” or “close all positions.” iBot will answer just about any question having to do with the stock, forex, or cryptocurrency market and perform the simple tasks you ask of it, reducing the time you’ll need to allocate to research and account management, and increasing your earning potential.
The market is known for repeating patterns. Throughout the history of the stock market, traders have made it their business to read these patterns to determine what the next movement in the market most likely will be.
Although some humans are pretty good at determining future market movements using technical indicators, there aren’t many who can beat a computer at doing the same thing.
That’s why algorithmic trading has become a popular option.
Trading algorithms are built to put the technical analysis in the hands of some of the world’s most powerful computers. Interactive Brokers has developed a list of more than 100 trade types and trading algorithms that its users all have free access to.
If you’d like access to these algorithms, you’ll need to use the TWS platform. It’s not available on the Client Portal or mobile platforms.
Interactive Brokers also offers a service known as Interactive Advisors. This is an AI-driven robo-advisor that allows you to take your hands off the wheel in your investment portfolio. Simply answer a few questions about your financial goals and it outlines a plan for you.
From there, follow your contribution plan and check in on your performance from time to time; Interactive Advisors will take care of the rest.
Integrated Cash Management
Interactive Brokers helps you build complete financial freedom by making it easier to manage your personal finances. The company offers several integrated cash management tools to help make sure your complete financial picture is on the right track.
Users have access to a debit card that gives you the ability to borrow against your brokerage account at the company’s low margin rates, which are significantly lower than average credit card interest rates.
You’ll also have the ability to seamlessly pay invoices from your brokerage account, making cash management a much easier process.
Research & News
Any news about a company or the state of the economy has the potential to move the stock market, so it’s important to stay informed of the latest developments.
Interactive Brokers acts as a market news and research syndicator, offering research and analysis from some of the most trusted names in financial news, like Dow Jones and Benzinga. The company also offers the latest news on the wire by syndicating press releases from services like AccessWire and Globe Newswire.
Interactive Brokers offers a PortfolioAnalyst service that gives you the ability to aggregate accounts and analyze your financial stability. By linking your other financial accounts to the service, you’ll be able to keep track of your investments, annuities, student loans, bank accounts, incentive plans, mortgages, and credit cards.
The service outlines areas where you can both save on expenses and earn through your investments at a more efficient rate.
Advantages of Interactive Brokers
Interactive Brokers is one of the most popular online brokers today, and for good reason. There are several advantages to opening an account:
- Low Cost. There are no trading commissions on U.S. stocks and exchange-traded funds (ETFs). Commissions on international trades, contract fees for options and futures, and margin rates are all highly competitive.
- Intuitive Trading Platforms. The trading tools available on the Interactive Brokers trading platforms are second to none. Not only do users have access to charting and research tools generally reserved for Wall Street professionals, the platforms provide this data in a way that’s easy to understand, offering a strong overall trading experience.
- Available Assets. Interactive Brokers offers more access to assets than the vast majority of brokers online. Not only will you have access to domestic stocks, ETFs, mutual funds, options, futures, bonds, and more, you’ll also have access to the forex and cryptocurrency markets.
- Fractional Shares. Some stocks have exorbitantly high price tags. For example, a single share of Tesla will cost around $1,000, while a single share of Chipotle will set you back around $1,500. This makes diversification difficult, if not completely cutting out access to stocks like these for beginners with small account balances. Interactive Brokers offers fractional shares. Whether you want to invest $10 or $10,000 into a high-cost stock, you’ll be able to do so.
- No Account Minimum. There is no account minimum for most accounts. Broker accounts, meant for institutional investors, come with a $10,000 minimum, but for the average Joe, you can invest as little or as much as you’d like with IBKR.
Disadvantages of Interactive Brokers
Although there are plenty of reasons to consider opening a brokerage account with IBKR, there are also a few drawbacks. Those include:
- Website is Difficult to Navigate. Although the trading platforms are straightforward and relatively easy to use, the company’s website is anything but. You may have to dig around to find what you’re looking for.
- A Push Toward Trading. Interactive Brokers has always catered to the active trader. Unfortunately, stock trading — especially highly active trading like day trading — comes with high levels of risk. Beginners should be aware of the risks they’re taking, thoroughly educate themselves using the IKBR Campus resources, and use the company’s trading simulator before risking real money.
- Trading Algorithms Only Available On TWS. One of the most compelling features of the Interactive Brokers service is its trading algorithms. These algorithms are known for beating the market and helping to simplify the trading process. Unfortunately, they’re only available on the TWS platform, which means you won’t be able to use them on the go with the mobile versions.
How Interactive Brokers Stacks Up
Aside from Interactive Brokers, one of the most popular stock brokers online today is Robinhood. How does Interactive Brokers stack up in a head-to-head comparison with Robinhood? See the table below:
|Thousands of assets across more than 200 countries and territories.
|Access to more than 250 international assets.
|Intuitive Trading Tools
|Some of the most compelling charting capabilities online today coupled with top-level data and research.
|While some charting and trading tools are available, they’re not nearly as intuitive as those offered by IBKR.
|A complete digital campus of educational resources for beginners and experts alike.
|An education center is offered, but is limited compared to IBKR.
All told, Interactive Brokers is one of the best stockbrokers online today. Not only does the company offer general perks often seen in the industry, like fractional shares and low-cost trading, it offers some of the most in-depth educational and technical analysis resources online today, making market research a breeze.
At the same time, when working with Interactive Brokers, you’re working with a company that has a long history of providing services to investors. When you open an account with the company, you can rest assured that your money is well taken care of.