Interactive Brokers Review
Pros, Cons & Conclusions – Updated For 2024
Different brokers tend to cater to different clients. Some systems are built for beginner traders and offer more accessible, albeit less sophisticated, trading tools. Then, platforms like Interactive Brokers pull out all the stops to ensure that it’s equipped with the best features on the market.
It connects to every electronic exchange around the globe, allowing you to trade to your heart’s desire regardless of the time and your market of choice. It has a plethora of features that allow users to optimize their trading experience, far more than most of the other “best” brokers out there.
I’m pretty bullish on Interactive Brokers. It’s one of my favorite platforms for trading, and I’m going to run you through exactly why.
What is Interactive Brokers?
Interactive Brokers is a comprehensive trading platform built to provide serious traders with the power they need to control their portfolios. It goes above and beyond the typical stop-loss, takes profit orders of lesser trading sites, and offers things like the Impact Dashboard, allowing users to combine their moral values and investment portfolios.
Interactive Brokers gives clients the ability to trade on their terms, regardless of whether they want stocks, assets, or a combination of different markets. It goes above and beyond the typical stop-loss, takes profit orders of lesser trading sites, and offers things like the Impact Dashboard, allowing users to combine their moral values and investment portfolios. Interactive Brokers gives clients the ability to trade on their terms, regardless of whether they want stocks, assets, or a combination of different markets.
In my experience with the trading industry, there are different brokers that all specialize in different things.
You have certain sites that are built to help ease new traders into the lifestyle. These platforms tend to push educational resources as a heavy selling point as to why you should choose them.
Then there are platforms built for clients that have progressed past that stage but are still a far cry from being on the top of the hill. These traders know what they’re doing, but they don’t have the funds to qualify for the high-end brokers. These platforms are a middle ground that I quite enjoy. The tools on them tend to be solid, the fees are low, and while nothing tends to stand out too much, they are a solid and safe experience.
Then there’s the last type of broker, the type within which Interactive Brokers falls into. This is the broker that is built for the professional. It’s identifiable by its almost overreliance on tools and advanced trading technology compared to its lower-tier competitors. With these brokers, you can expect some seriously high fees and minimum requirements and access to the most sophisticated tools that the trading world currently offers.
Interactive Brokers follows through on all of those identifiers. It’s an unbelievably complex and sleek system that is inaccessible to you unless you already have a large war chest ready to go. That’s what Interactive Brokers is, in a nutshell. However, as with every brokerage out there, though, the platform’s quality is revealed in the little details.
Why Interactive Brokers?
Why did I choose to try out Interactive Brokers? Well, I was looking for a new platform to trade off of after getting tired of balancing different portfolios on different brokers. I was looking for a single place where I could comfortably trade everything I wanted to without having to switch between accounts.
Interactive Brokers was recommended to me as a solution by a friend. She had been using the platform for a few months at that point and swore by it. It actually wasn’t the first time she had attempted to sell it to me, but I decided to indulge her this time.
I’m glad I did because I found a plethora of trading options and tools, all for decently priced costs.
That’s what surprised me the most. I expected Interactive Brokers to have higher fees than other brokers, given how much versatility the platform offers. Still, there’s nothing too outrageous about how much of my earnings I have to cough up.
That’s why I choose to try out Interactive Brokers, but the experience that I’ve had since then is why I’m doing this review.
Are Interactive Brokers Safe?
If you’re not worried about your money being safe, are you really an investor? The first thing you should ask yourself when you sign up with a new brokerage is whether or not it’s safe.
This is particularly important if you’re looking at more niche and lesser-known trading systems but is critical for well-known sites like Interactive Brokers, as well.
I’m happy to report that, as you might expect, Interactive Brokers is a perfectly safe site. There are absolutely no red flags to speak of. Everything is above board, so don’t worry about the safety and security of your well-earned cash.
The legitimacy of the platform is just one area of concern, though. We also have to talk about security.
I go a little more in-depth regarding the security systems that Interactive Brokers has in place later on in the review, but it’s all good-looking stuff. There are a number of different systems in place to keep your account secure, including two-factor authentication and state-of-the-art cybersecurity.
There have been some issues with Interactive Brokers’ security in the past, though. While it hasn’t had a major data breach since before 2019, it was subject to over $30 million in fines for failure to prevent money laundering in 2020.
This doesn’t necessarily affect you or your security, but it’s important that you know about it, all the same.
Interactive Brokers Fees
While I said there wasn’t anything too outrageous about the fees that Interactive Brokers offers its clients, I didn’t say they were great. The pricing structure is quite complicated, and it’s comparably expensive compared to the rest of the big-name players out there. However, it offers a lot more in terms of versatility than its competitors, so it’s easier to justify the fees.
It has a fixed per-share pricing of $0.005 per share that you trade with a minimum of $1 and a total maximum of 1% trade value. Its tiered per-share pricing is based on a monthly order activity system that can range from $0.035 per share for under 300,000 shares per month down to $0.0005 per share for over 100,000,000 shares per month.
That’s a very brief and simplified look at the fee structure used by Interactive Brokers, but it’s far, far from being the whole picture. I would be here all day if I were to review every instance and every clause, but you can find that information on the Interactive Brokers website if you’re interested.
Interactive Brokers Margin Rates
Interactive Brokers claims to offer the lowest margin rates out of any mainstream broker, but what exactly does that mean? Well, the amount of interest you’re paying on margin loans is dictated by the amount you’re borrowing, but you can expect a margin rate of around 0.070% on your USD loans. Still, that number can change dramatically based on your personal situation.
Interactive Brokers has a margin rates calculator on its site that you can use even without an account. This is only one kind of trading, so I’m not going to break it down too much given that I’m not a fan of it, but you can seek that calculator out if you are.
It has different rates for different loans in different currencies and is remarkably comprehensive, so chances are it’s going to satisfy your curiosity.
Interactive Brokers Pros and Cons
You don’t have all day to sit around scanning my review for a summary of Interactive Brokers, so I’ve thrown together a pros and cons list so that you can get a quick idea of what the platform does right, as well as what it does wrong.
I also have a final verdict at the end of the review where I sum it all up, so check that out if you’re looking for a one-paragraph summary of the system.
The Pros & Cons
- Interactive Brokers has one of the best smart order router systems I’ve ever seen.
- The range of offerings and markets on the platform is remarkable. As I said, I use it because I want one plays to store everything in my portfolio.
- The MTF, or Mutual Funds Replicator, finds inexpensive ETFs for you.
- You can only stream data on a single device at any given time.
- If you make use of the Interactive Brokers Lite service, which is less expensive than the standard one, you don’t have access to the smart order router.
- If you have a smaller trading account, or you go inactive, you’re going to get stung with some serious fees.
Signing up for an account with Interactive Brokers is what you would expect from a high-level trading platform. It isn’t a Micky Mouse ordeal like a lot of smaller trading brokerages. You’re going to have to take the time to go through all of the standard protocols, verify your identity, and fill out all of your details.
Despite it being time-consuming and fully comprehensive, it’s not a particularly difficult or irritating experience. You’re dealing with a lot of money when you’re opening an Interactive Brokers account, so you need to be prepared for the security and precautions that come along with that.
This is indicative of the level of security in place on the platform, though. Interactive Brokers takes the protection of its client’s data seriously, and that is reflected in this process.
On top of that, though, the verification process has become more rigorous after the AML fines that Interactive Brokers received in 2020, so having such an intensive signup process is a direct result of that failure.
The fluidity of your deposits is vital to your overall trading experience on any broker, so it’s no surprise that the system is as optimized as it could be on Interactive Brokers.
You’ve got a range of deposit methods and processing times that are competitive compared to the company’s competitors.
The Minimum Deposit
The elephant in the room when it comes to depositing on Interactive Brokers is, of course, the minimum deposit figure. You need $2,000 for a margin account and $100,000 for a portfolio margin account.
This should tell you that Interactive Brokers are not for beginner traders. It’s a complicated and heavily optimized system for professional traders. If you’re only looking to get your feet wet in the trading world, go with a more beginner-friendly broker instead.
Alternatively, Interactive Brokers has Interactive Brokers Lite, which is a service dedicated to more casual trading. I’m going to be talking more about that in a little while, but it is an option if you have your heart set on Interactive Brokers.
It shouldn’t come as much of a surprise at all to learn that the trading experience on Interactive Brokers is one of the best on the market. The sophistication of the platform is unrivaled in my experiences, but that is a double-edged sword.
While there are a plethora of tools, markets, and options available to traders, you need to know how to navigate that minefield of information.The UI does the best that it possibly can, but you’re going to struggle to get where you want to go if you’re not already familiar with the layout.
The execution of orders and the actual trading process is just like any other major broker. I’ve had no issues, and everything is working as expected. Where Interactive Brokers excels is in everything that surrounds that trading process.
Withdrawing your funds is the last stop of an overall trading experience, so it’s just as important that it is as optimized as the rest of the platform. Given how much money users of Interactive Brokers are going to be trading with, it’s even more critical that the withdrawal process is safe, fast, and secure.
I’m pleased to report that it is. Interactive Brokers spares no expense when it comes to its cybersecurity and financial systems. Transferring money to and from your account is seamless and smooth, even more so than most of the other major brokers I’ve ever traded with.
Interactive Brokers Lite
That’s a summary of the main Interactive Brokers service, but I’m going to dive in deep into Interactive Brokers Lite. This is the platform that 99% of you are going to be using, so I’m going to try and be as comprehensive as I can.
The first thing you need to know about the Lite version of the site is that it’s far less expensive. Interactive Brokers is built for professional traders that already have a whopping portfolio to their name. Interactive Brokers Lite is the opposite, dedicating itself to casual and beginner traders who don’t have six digits on standby to open an account.
The Cost of Trading
You’re going to be more limited in terms of what you can trade, as well as what tools you can use when on Interactive Brokers Lite. However, to circumvent that, you get unlimited commission-free trading on US-listed stocks, as well as on ETFs.
For a beginner, minimizing your commission fees is important. You’re already going to be working with a limited budget and within incredibly tight margins, so being able to trade on IBKR Lite without any trading fees is a massive bonus.
There’s also the fact that the account minimum you have for IBKR Lite is $0, further increasing just how accessible it is to new traders.
Given that you’re going to be subjected to far lower fees than the main IBKR account holders, you’re not going to have access to the same tools and technology that they do.
Most notably, you lose access to the smart order router. This is a far cry from being a big deal for the average trader. If you’re not able to qualify for a regular IBKR account, then chances are you have no need for a tool like this.
The fact that you’re getting access to a stripped-back service still remains, though. While IBKR Lite is still able to compete with all of the other beginner-friendly brokers out there, I’m recommending that you have a look at the other, more educational-focused platforms first.
The Interactive Brokers Experience
There are a handful of aspects on Interactive Brokers that suffer little changes, if any, between IBKR and IBKR Lite. Such universal services and features are going to be a major selling point of Interactive Brokers Lite on account of the fact that you’re getting a premium level service at a fraction of the cost.
You might not get the same priority when it comes to things like issue resolution as main account holders but having access to that same level of care is still a big deal.
While I wouldn’t recommend Interactive Brokers if you’re exclusively looking for a trading platform to learn and grow, it does still have a wide variety of programs designed to help traders learn regardless of what position they are at in their career.
These programs are provided for free to account holders, as well as non-account holders, which is an incredibly nice touch. While this means it’s not an incentive to open an account, it is an aspect of the service that I feel obliged to bring up. Even if you have no intentions of setting an account upon IBKR, making use of the educational resources available to you is going to help improve your trading skills.
Customer service is a major pet peeve for me when it comes to financial services of any kind. I’ve become very bearish on Revolt recently purely because of how poor the customer service is on the platform. When you’re dealing with money and technology, regardless of in what capacity, people need to be on call that can resolve any technical issues you face.
These issues are the fault of the technology provider, not you, and can end up costing you a lot of cash if they don’t get resolved quickly. Thankfully, as seems to be the case with everything IBKR does, the customer service quality on the platform is great.
Granted, it doesn’t run on the weekends, but you do get access to a 24-hour live phone support Monday to Friday. As well as that, IBKR has an online live chat support function, an AI-powered FAQ section, and a secure message center. What’s interesting to note is that Interactive Brokers didn’t always have good customer service. For a long time, it was considered the weakest part of the platform and drew a lot of criticism from members of the trading community. It’s only relatively recently that the site has been focusing on the improvement of this service, and while it’s far better than it was, there is still a ways to go.
Don’t get me wrong, it’s great, but it’s not spectacular, which is what I’m looking for when it comes to customer service where my money is involved.
Interactive Brokers have clients located everywhere, all over the globe. The amount of data that the company processes is immense, and it’s dealing with far more money than a lot of its competitors. Therefore, it needs to have good cybersecurity.
The system has a handful of security systems in place for its clients to make use of, including:
- Mobile biometric login options.
- Two-factor authentication.
- It’s own unique mobile two-factor authentication app.
- Each account gets access to excess SPIC insurance that is provided by Lloyd’s of London. This ensures that each account is covered for $150 million, as well as methods to increase that coverage.
- There is the option for eligible accounts to supplement their coverage with $2,500,000 of FDIC insurance, as well.
- Interactive Brokers has not had any data breaches since before 2019.
Of course, security has just as much to do with prohibiting illegal trading as it does with securing your trading account. In 2020, FINRA fined Interactive Brokers $15 million for failures in the company’s anti-money laundering program. As well as FINRA, the SEC and CFTC also fined Interactive Brokers $11.5 million for the same charges.
Since then, IBKR has taken serious steps to increase the quality of its AML program. While all of this doesn’t affect you as a trader, it is something that you should be aware of if you’re going to be using the platform.
Interactive Brokers FAQs
What is the minimum deposit amount required to open an Interactive Brokers trading account?
There are two different minimum deposit numbers that you are going to be subjected to depending on the type of account you’re opening.
The minimum deposit is $2000, or the equivalent non-USD amount in your currency for a margin account.
For a portfolio margin account, the minimum deposit is $110,000 of the equivalent non-USD amount in your currency.
Interactive Brokers has a high minimum deposit compared to a lot of the major brokers out there, which is in line with it not being very beginner-friendly.
Is there a fee for opening an Interactive Brokers account?
There are no initial fees associated with opening your Interactive Brokers account. There is an inactivity fee imposed on accounts that hold less than $100,000 each month. This isn’t too surprising, given that the platform is for high-level trading, but the fees are very high.
Is there an Interactive Brokers mobile app?
Yes, there is an iPhone and Android app available for Interactive Brokers. These apps get the job done, but you are much better off using the web portal for your trading when you can.
There’s a lot to unpack when we’re looking at IBKR and the range of services that it provides. It’s an incredibly fleshed-out system that gives users their money’s worth, and I personally love it.
With that being said, I definitely would not recommend Interactive Brokers for users across the board. It’s a platform built for professional traders, and I mean that in the truest sense of the words.
The trading experience is flawless from start to finish. The range of research tools and charts it has means you’re never going to need to consult an outside source, although you always should.
At the end of the day, I’m giving Interactive Brokers a 4.1/5. It would easily be a 4.5 if I were talking exclusively about it from the scope of a professional trader, but I’m not. Limiting your services to such a small percentage of the trading community means that I need to be critical in how applicable the site is for everyone, overall.
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