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Interactive Brokers is an online broker of investment trading, including mutual funds, bonds, ETFs and other investment products. The company offers two trading plans, the IBKR Lite, which includes $0 commissions on U.S. stocks and ETF trades, and IBKR Pro, which includes access to the company’s SmartRouting system for a fee. The company allows domestic and international trading on its online platform or mobile app.
Interactive Brokers is a brokerage firm open to national and international investors alike. It's popular with advanced traders, but casual traders may enjoy the low commission rates of IBKR Lite.
- Large investment selection
- International trading available
- Comprehensive mobile app
- Unintuitive website
- Some inactivity fees with IBKR Pro
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What is Interactive Brokers?
Interactive Brokers is a brokerage that provides low-cost, direct-access trades and clearing services to professional and institutional traders. The company connects to any electronic exchange worldwide, allowing you to trade equities, options and more at any time of day. Customers can also purchase fractional shares to buy only a portion of a company’s stock instead of its full-priced share.
Traders enjoy low to no commission rates and low margin rates. There are more than 8,300 funds with no transaction fees, and customers can earn income through the Stock Yield Enhancement Program by lending fully held shares to other traders.
How Interactive Brokers works
Interactive Brokers customers can make trades from their client portal for casual trades or use the Interactive Brokers’ Desktop Trader Workstation for advanced trading. The company’s mobile app is an on-the-go version of its Trader Workstation, sporting a slew of features like trading shortcuts, order presets and more.
Customers can choose from a wide selection of offerings, such as stocks, precious metals, warrants and more. Users also have access to many news services and research providers for free, including Fundamentals Explorer, as well as paid options.
The firm’s advanced trading platform has a host of asset classes and tools, including an Impact Dashboard that lets customers make trading decisions in tune with their personal values. It also offers real-time monitoring, watchlists, alerts and a customizable dashboard.
Interactive Brokers fees
Interactive Brokers boasts they have low trading costs and the lowest financing rates. Its IBKR Lite plan for retail clients has $0 commissions on U.S.-listed stock and ETF trades, no inactivity fees and no account minimums.
IBKR Pro for experienced investors and active traders has access to the company’s IB SmartRouting system, which the company claims allows for $0.47 per 100 shares of price improvement compared to the industry.
The company’s fixed pricing for shares under IBR Pro are $0.005 per share with a minimum order of $1.00 and a maximum 1% trade value. It includes exchange and most regulatory fees.
Its tiered pricing per share depends on the volume per month and ranges from $0.0035 for 300,000 or fewer shares to $0.0005 for greater than 100,000 shares. The minimum is $0.35 per trade, and exchange and regulatory fees aren’t included.
Interactive Brokers FAQ
- What is Interactive Brokers’ margin rate?
- Interactive Brokers uses a blended margin rate based on tiers, such as a Tier I rate for the first $100,000 of your balance and a Tier II rate for the next $900,000 when the total balance is $1 million. You can use its calculator to calculate the interest charged on margin loans.
- Does Interactive Brokers charge options fees?
- Yes, Interactive Brokers charges fixed and tiered commissions for its option fees. Fixed fees are $0.65 per contract plus surcharge, regulatory and other fees. Tiered fees range from $0.15 to $0.65 per U.S. option contract.
- What is Interactive Brokers’ account minimum?
- The IBKR Lite plan has no account minimums or inactivity fees. IBKR Pro also has no account minimum but charges account maintenance fees anywhere from $0 to $10, based on your activity for accounts with less than $100,000. However, traders 25 and younger are only charged a minimum monthly trade commission of $3.
- Is Interactive Brokers good for beginners?
- Interactive Brokers’ IBKR Pro is popular with experienced traders and may be challenging for new or less active traders to navigate. The IBKR Lite plan is better for beginners, but it can be challenging to find the information you need on the website.
Is Interactive Brokers safe?
Interactive Brokers has always been a great option for active traders. The recent introduction of its IBKR Lite plan now makes it a strong choice among casual traders as well. IBKR Lite customers have the advantage of $0 commission on stocks and EFTs and no account minimums or inactivity fees. But the firm’s website can be counterintuitive for inexperienced traders and may not provide enough educational resources or guidance to help beginners succeed. Either way, it's a trusted company and a solid option for many.
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IMHO, they are just another extension of the crooked minds of Wall Street. They just put a suit on before stealing from their customers. Their options/margin policies are arguably criminal--allowing purchase of an option with same day execution **only if THEY THINK the option will expire worthless**. And then, once that changes, you cant buy that option anymore. "because of margin requirements to exercise". Even if you want to exercise the option at 3:59 PM, yourself. Or heck, SPY options can be executed til 4:15. But no.
On friday, I picked up 2500 contracts (100 shares per contract) in a SPY 3/26 393. I was in and out of these, but probably my basis was .10-.20 (per share if you're new to options... Total cost in about 25k = 2500 * .10*100. I sold some (1000) at about $0.22 at maybe 3:30 with the intent of reentering if it turned. It turned. So I tried to reenter. But then the "IB ALGO" decided that particular option was likely to expire ITM, and thusly decided I could **no longer buy it back**.
From there, the option rallied to .91 cents by about 3:51, when you the IB algo sold basically ALL of the remainder of my contracts, leaving me with like 20 or something of a similar magnitude. In the next nine minutes, the option rallied to $2.50. From $0.20. Then, just after close, I sold my remaining, I don't know, like 17 contracts. ...Cause you can execute spy options after close. But the algo doesn't provide this option.
You'll note, I intended, and had IB not screwed me with their "default policies" "enforced by algo", I would have nailed at least a 10x on 25k. Possibly as much as a 20x on 25k. In like 3 hours. This is like, the best trade ever. And that's like, a lot of money. And it's my birthday week, and I know that's irrelevant, but man. The way I see it, I should have ended the day with at least 250k in new cash, maybe as much as half a mil. But then IB screwed me, cuz your "policy". Yes, I understand this is the policy of most brokerages. I use three to trade options. Yes, I understand margin. But, no, this is absurd.
IB has access to basically unlimited cash at basically 0 cost through the overnight markets. IB can borrow at zero, and execute my 500k profit of options to the 7mm worth of shares, then sell them immediately. Or, just sell the option at 4:01. AND IB then could CHARGE ME BOTH COMMISSION (on 500k profit) AND MARGIN (on 7mm). But you refuse to.
It makes no sense that you would refuse that profit, so I have to assume they didn't actually liquidate those options, but shifted them to their own balance sheet once they decided they were "becoming more profitable". And, I would get it, if at any time customer service reps had said "the SEC requires...". BUT THEY DIDN'T because THEY DONT. IB are crooks, like the rest of the financial industry. Yeah look, I didn't have 7mm in cash, but I have plenty of mm in assets, and you'll be hearing from a lawyer as well as the BBB. And if we don't resolve this, I have half a mind to start my own brokerage, because DAMN.
The best thing about IB was the low commissions. However, now everyone has those so it's not really a differentiator any more. That said the platform is customizable and fairly easy to use after some practice. However, the customer service is weak. They take up to two days to get back to you and oftentimes the responses are vague or don't answer your question at all. I'd recommend if you're looking for a powerful trading platform and can mostly get by without customer support.
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I am Financial Adviser and have been working with Interactive Brokers on my personal as well as my clients' accounts for 15 years. It used to be a cheap alternative for online trading with a very good electronic trading platform. They have always been bad when it came to the customer service. But recently things got worse and worse and worse. They do not follow industry standards on Margin Requirements for example. The customer service never properly answer any questions. And they are all too eager to make trades in your account to help benefit to their own traders. I am advising all my new clients to open an account with an alternative broker for the last year or so. I also advised older clients with an existing Interactive Brokers account to move their business to another broker.
My mother had her trust account with Interactive Brokers. When she passed, there was a dispute between family members that went before a judge to be settled. Even though we had a court order on how funds were to be dispersed, it took Interactive Brokers over six weeks to take action. Slowest people on the planet! No way would I ever leave my money with them.
IB is cheap. That is the only advantage. You get what you pay for. Service does not exist. You deal with callcenter employees who have no clue and no power to help you as a customer. If you ask for a supervisor they will put you on hold for 40 minutes and promise a callback which will never happen. The internal system is broken. They answer with text modules which sound like sent from a bot and which have nothing to do with your questions. Be warned: they do not return your funds and they will not tell you why even though you do not owe them anything and you just want your funds back. Better get Schwab, Fidelity, Scottrade or Ameritrade. They all are excellent in customer service and you can talk to a supervisor who will make it right.
The IA platform is a bit more difficult to navigate than other online brokers I've used in the past. So there was definitely a learning curve. They do provide ways to speed up this curve, however, and I've availed myself of them from time-to-time. When the going got too difficult, I contacted their Chat function and was very happy with the results. Overall, I think this has been a good move for me!
Interactive Brokers Company Information
- Company Name:
- Interactive Brokers
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