Interactive Brokers is an online broker that offers two main investing accounts: IBKR Pro and IBKR Lite. The IBKR Pro is more suited towards institutions while the Lite option is better for novice, retail investors. Traders that use the IBKR pro have access to more advanced features like its API and web trader platform. The web trader platform is HTML based, which lets traders find outside bids to gauge liquidity and see the market value/volume for single investments.
This guide will review the entire Interactive Brokers platform without putting too much focus on one of these two main trading account options.
Interactive brokers stands out from the crowd since it offers many different investment types.
- Domestic and International Stocks
- Mutual Funds
- Hedge Funds
Like Charles Schwab, it offers users the opportunity to invest in Robo advisor managed portfolios. Robo advisors use algorithms to automatically create and manage tailored investment portfolios for each client. Traders can invest in several portfolios with a $1,000 minimum that has management fees ranging from 0.08 to 1.5%. They can also invest in unique sectors like sustainable funds. Sustainable funds invest in companies that run energy and environmentally friendly businesses like Tesla (TSLA).
Unlike most brokers, it charges commissions for stock trades, which are just $0.005 per share. This might not seem like much, but it can add up over time as many competitors don’t charge a cent to trade! However, Interactive Brokers has some of the lowest margin rates which can drop to 0.75% depending on account balance, type, and currency.
In general, Interactive Brokers has high customer service reviews per its 3.7 overall rating on TrustPilot. This is a decent rating considering that it was reviewed by approximately 530 people. It has received negative reviews for a chat system that crashes often. Other customers have complained that they’ve lost documents, dealt with customer service reps that don’t call back, and long hold times.
Some clients like that IB offers so many investment types. That way, they won’t have to toggle back between various platforms to trade stocks and forex. Others have commended it for its quick, secure register and sign in processes. They’ve also received good reviews for having options for both beginner and advanced traders. For example, swing traders can time their investments by setting multiple entries and exits.
Ease of use
Interactive Brokers can be a great tool for individual and institutional investors. However, it hasn’t gotten the best reviews for user-friendliness. For example, clients have been confused with different commission structures and how they apply to their accounts. Some traders, especially novices, might feel overwhelmed with the vast amount of options.
Its TWS program is very robust and users can create advanced algorithms along with other tools. They can time trades, analyze resistance and support levels, as well as master technical analysis or charting. However, this platform is difficult to navigate as it can be tough to perform basic research on stocks, ETFs, or mutual funds. This broker lacks in this area compared to competitors Charles Schwab and TD Ameritrade, who make it easy for novices to research ETFs/mutual funds.
One key differentiator includes the various types of accounts that are offered. It has standard brokerage accounts, IRAs, Roth IRAs, family office solutions, and its proprietary trading group that caters to business entity accounts. Another differentiating factor is that it has two account types which are Lite and Pro. These let beginners and advanced traders choose the best account types for their needs.
It also has an extensive library with educational resources like blogs, whitepapers, webinars, and user guides. The audiovisual content like webinars come with notes and all resources are free. This is refreshing considering some competitors like Tradestation charge its client base for access to some educational resources.
Unlike other platforms, it’s very consolidated meaning that users can trade stocks, forex, international investments, and more with one broker. They don’t have to switch back and forth between multiple platforms.
- Low Margin Rates. Margin can be a tool to fuel investment gains with debt, but it can be costly as brokers charge high-interest rates. IB offers a very affordable, tiered rate structure with rates going as low as 0.75% for accounts with at least $1,000,000. These rates are affordable for lower account balances, as those with $100k or less only pay 1.54%. Keep in mind these rates are for the Lite Account as Pro rates for these thresholds are 2.54%.
- Quick, Secure Sign in. This broker has great technology since it makes it easy to open an account online. Other brokers operate online but still require paperwork for account opening.
- Having the greatest variety of accounts. This broker caters to many different investors from retail investors to family offices and business entities. Others might work with just business entities, but this broker goes a step beyond the rest.
- It charges commissions for stock trading. IB might be one of the last brokers to charge transactions for trading stocks. While it’s low at $0.005 per share, these can add up and they might implement commission-free trading in the future.
- Mediocre customer service. This broker serves many types of investors, but it has mediocre customer service. It needs to ensure that systems don’t crash and that its representatives are punctual
- Account minimums for its Robo advisor platform. Robo advisor technology can help beginners automate investments, but main Robo advisors like Betterment don’t require minimum balances.
Interactive Brokers can be a great choice for both novice and advanced investors. Novice investors can stick to simple strategies like buy and hold investing with IBKR Lite. Advanced traders could take it up a notch by investing in forex and riskier investments with IBKR Pro. This broker offers benefits its competitors don’t like access to Robo advisors, international trading, and low margin rates. However, it falls short since it doesn’t have free stock trading and its platforms can be difficult to use.