Efficient Interactive Brokers Evaluation: Aiming Regular Investors
Interactive Brokers Group has long occupied a distinct niche in the world of online brokerage. Originally designed for advanced traders, the firm has always had a comprehensive — and occasionally befuddling — interface chock full of the market and trading information.
With the introduction of its IBRK Lite platform, Interactive Brokers recently opened its doors to more casual investors.
This interface is more user-friendly and provides the same trading capabilities as the IBRK Pro platform, but without all of the extras that may be confusing to newer investors. Here’s an inside look at Interactive Brokers, including comparisons to competitors.
In a Nutshell
The recent introduction of IBKR Lite brings commission-free trading and basic investment capabilities to casual investors, while experienced traders can continue to benefit from the more advanced IBKR Pro trading platform.
What you’ll learn in this review is as follows:
- What are Interactive Brokers
- The advantages and disadvantages
- Interactive Brokers at a Glance
- Individual Services Feedbacks
- Trading Experience
- Account and Investment Minimums
- Commissions and Costs of Funds
- Trading Technology
- Usability
- Mobile and Emerging Tech
- Range of Offerings and Investment Selection
- News and Research
- Customer Service
- Security
- Costs
- It is Best for
- The Limitations of Interactive Brokers
- Upcoming Promotions
- Brief Comparison of Interactive Brokers and other brokers
- Are you going to invest with Interactive Brokers?
What are Interactive Brokers
Thomas Peterffy founded Interactive Brokers in 1978 to serve advanced traders seeking speed, price, size, and diversity of global products.
The firm had more than $7 billion in equity capital as of 2019. Every day, Interactive Brokers and its affiliates execute over 859,000 trades on over 125 global market destinations.
The firm underwent significant changes in 2019 when it launched IBKR Lite, a new platform for less-active traders.
The advantages and disadvantages
Overall, it receives high marks for its trading capabilities and low costs. However, there are some disadvantages to the company.
Adv:
- There is no required minimum
- With IBRK Lite, there are no commissions.
- Significant charting and research capabilities, particularly for IBRK Pro
Disadv:
- IBRK Pro inactivity fees
- IBRK Lite has limited capabilities
Interactive Brokers at a Glance
Here is a quick rundown of Interactive Broker’s attributes and advantages:
| Interactive Brokers at a Glance | |
| Account Minimum | $0 |
| Stock Commission | $0 |
| Option Commission | $1 per contract; U.S.-direct routed and “Compare Plans” popup shows that IBKR Lite has fixed pricing only, not tiered |
| Commission-Free ETFs | All listed ETFs |
| Zero Transaction-Fee Mutual Funds | Yes, hundreds |
| Investment Selection | Stocks, options, futures, forex, metals, fixed income, ETFs, mutual funds, EFPs, hedge funds, and robo portfolios are all examples of financial instruments. |
| Customer Service | 24/7 phone lines via regional call centers, live chat, email and fax |
| Mobile App | Yes, with full functionality |
| News and Research | Educational webinars, videos and courses |
| Miscellaneous Fees | Wire transfers are $10, checks are $4, bounced checks are $25, and cash deposits are the greater of 1% or $50, whichever is greater. |
| Current Promotion | N/A |
Individual Services Feedbacks
Most online brokers provide comparable services, but with varying interfaces and capabilities. Here’s how it distributes its products across various categories.
Trading Experience
IBKR Lite and IBKR Pro are its trading platforms. IBKR Lite is a better platform for the average investor because it is less expensive and easier to use while offering similar investment capabilities to IBKR Pro.
Advanced traders may feel more at ease with the IBKR Pro platform, which features enhanced trading technology.
The IBKR Pro platform includes the following features that the IBKR Lite platform does not:
- Trader workstation
- IBKR web trader
- IBKR APIs
- Order types and algos
- Conditional orders
- Paper trading
- Mutual fund/ETF replicator
- Risk Navigator
- Back testing
Account and Investment Minimums
There are no account or investment minimums at Interactive Brokers on either the IBKR Pro or IBKR Lite platforms.
Commissions and Costs of Funds
The commissions for the IBKR Lite platform are as low as they can get. It does not charge any fees for online equity and ETF trades, and it also has hundreds of no-fee mutual funds.
The absence of inactivity fees is a significant benefit for casual traders who use the IBKR Lite platform.
This used to be a major issue for less-active traders on the regular IBKR platform, as the IBKR Pro platform does charge an inactivity fee of up to $20 per month for traders with less than $100,000 invested or who generate less than $10 in commissions.
Trading Technology
Because trading has been at the heart of it for over 40 years, its award-winning technology is effective at lowering costs for investors.
IB SmartRouting executes trades immediately and improves prices, saving investors an average of 43 cents for every 100 shares traded.
Usability
For advanced traders, Interactive Brokers’ fast executions, advanced charting capabilities, and price improvement make it a dream to use, but all of these do-it-yourself features can be a bit much for newer investors.
The addition of IBKR Lite makes the Interactive Brokers platform more accessible to the average investor.
Mobile and Emerging Tech
Interactive Brokers has a mobile app that gives traders access to more than 125 markets around the world. The mobile app allows you to trade stocks, options, futures, forex, and other assets in the same way that the website does.
Advanced quotes and research are also available, with over 50 data columns.
Range of Offerings and Investment Selection
Because it began as an advanced trading platform, it’s encouraging to see that even the IBKR Lite platform provides nearly limitless investment options. Even if you’re a seasoned trader, you’re likely to find nearly any type of investment you’re looking for.
Interactive Brokers’ impressive array of options includes the following:
- Stocks
- Options
- Futures
- Forex
- Metals
- Fixed Income
- ETFs
- Mutual funds
- EFPs
- Hedge Funds
- Robo-Advisors
At the moment, Interactive Brokers allows futures trading on Bitcoin but not physical cryptocurrency trading.
News and Research
It provides a wealth of educational materials for investors, as well as specialized apps to aid in trading strategies. Access to market commentary, blogs, data, and social media platforms is available through the IBKR Experts’ Community.
From Alexandria Sentiment Scores to the IBIS Research Platform, the firm also provides a wide range of market research and news. While there are many free research options available, others require a subscription.
Customer Service
Interactive Brokers provides 24-hour phone support through regional Client Services Centers.
It also has a national toll-free customer service number, but it is only open from 8 a.m. to 8 p.m. EST Monday through Friday and from 1 p.m. to 7 p.m. EST on Sunday. Online chat is available 24 hours a day, 7 days a week.
Customers can also contact the company via email or fax.
Security
Unlike many brokers, it provides users with a free security login device that generates a random security code that must be entered alongside a username and password. The proprietary IBKR Mobile Authentication system protects mobile users.
Accounts with a balance of more than $500,000 are eligible for a Digital Security Card, which adds additional security layers via a PIN code, a challenge code, and a large number of code permutations.
Costs
When compared to other platforms, Interactive Brokers has extremely low costs. In fact, the most important cost of all for most investors — commissions — are zero for the majority of trades.
There are no account minimums or maintenance fees to be concerned about.
It is Best for
Interactive Brokers is particularly strong in the following areas:
- Offerings and investment options
- Customer care
- Mobile and emerging technology
- Costs
The Limitations of Interactive Brokers
The following are the drawbacks of working with this broker:
- Trading technology (can be confusing for new investors)
Upcoming Promotions
There are currently no promotions available at Interactive Brokers.
Brief Comparison of Interactive Brokers and other brokers
Many online brokers, including Interactive Brokers, have reduced their commission rates for stock and ETF trades to zero.
Here’s how the company compares to competitors in terms of stock commissions, account minimums, and new account promotions:
| Broker Comparison | |||
| Broker | Stock Commission | Account Minimum | Promotion |
| Interactive Brokers | $0 | $0 | N/A |
| E-Trade | $0 | $0 | $100-$2,500 bonus when you deposit or transfer $5,000-$1,000,000 |
| Merrill Edge | $0 | $0 | Up to $600 in cash with new account deposit |
| Charles Schwab | $0 | $0 | 500 commission-free online equity and options trades for two years with a $100,000 deposit (still listed despite the firm’s recent move to $0 commissions) |
| Fidelity | $0 | $0 | N/A |
| Firstrade | $0 | $0 | Up to $200 in transfer fee rebates |
| Robinhood | $0 | $0 | Upon approval of your brokerage application, receive 1 share of free stock. |
| TD Ameritrade | $0 | $0 | Up to $600 in cash with new account deposit |
Are you going to invest with Interactive Brokers?
Comparing Interactive Brokers to other online brokers, there are some differences. The company, which was initially a trader’s brokerage, continues to provide cutting-edge capabilities that seasoned investors can take full advantage of.
But now that IBKR Lite is available, Interactive Brokers also caters to novice and experienced investors.
Although Interactive Brokers has always had low commissions, the company has now joined many of its rivals in charging no commissions for online stock and ETF trades as part of the “race to zero” that started in October 2019.
Additionally, Interactive Brokers offers a huge selection of no-fee mutual funds, making it a great choice for both inactive and active investors.
Overall, Interactive Brokers provides a very affordable package that can accommodate both experienced and novice investors.
While Interactive Brokers has a great combination of low costs and high-level capabilities, the trading platforms and educational offerings can be overwhelming for beginners.
Read More:
A Beginner’s Guide to Investing: Everything You Should Know About Stockbrokers
