Interactive Brokers at a glance
*minimum, or $0.005 per share, but also cheaper with volume-based pricing
Features you’ll love
Trader Workstation: This is Interactive Brokers’ flagship trading platform, and it’s among the best in the industry. This is not a platform for investors who have never used one before, however. It’s a complex, fully featured program that feels like it does just about everything. You’ll get real-time monitoring, market data, customizable charts and streaming news.
The platform also includes tools for risk management, such as option analytics, so that you can see how price changes affect options values. You’ll have access to more than 100 global markets all from your desktop, and you’ll be able to trade virtually anything.
If that’s all a bit too much, traders can downshift to the highly functional WebTrader, a platform that will still get the trading job done with its highly practical and no-frills interface.
Where Interactive Brokers rocks
Low trading commissions
Low trading commissions are one of the biggest draws for customers, and Interactive Brokers definitely trumpets its pricing structure, as it should.
Stocks and ETFs: On its IBKR PRO platform Interactive Brokers’ headline rate for stock and exchange-traded funds (ETF) trades is $1, but customers should note that’s a minimum commission and you could run up higher costs than that. That’s because the broker’s pricing is based on a per-share cost of a half-penny per share. If you trade more than 200 shares, you’ll start to move above that $1 headline rate. Still, a $1 trade is a good deal, especially if you’re not running thousands of shares in each trade. If you’re running mammoth-sized trades (think 300,000 shares and up), then you’ll benefit from the broker’s lower-tiered pricing, where commissions can reach as low as just 10 percent of the half-penny rate. It’s another way that Interactive Brokers tries to attract active and professional traders.
But investors with a bit less coin can now receive unlimited free stock and ETF trades if they're part of the company's IBKR Lite program, which debuted just recently as the industry slashed prices. Plus, you'll avoid the monthly activity fee while still enjoying many of the features of the flagship program.
Options: Among the brokers who charge a commission for options trading, Interactive Brokers now stands in line with the pack, after much of the industry slashed their prices to the same $0.65 per contract level. Like most brokers today, Interactive does not charge a base commission and then charges a per-contract fee. But here, too, the broker offers discount pricing, with rates as cheap as $0.15 per contract, if you trade more than 100,000 contracts a month.
No-transaction-fee mutual funds: Interactive Brokers is competitive with all the top players in the number of no-transaction-fee mutual funds on offer. The broker offers more than 4,000 such mutual funds, and these reduced fees are great for beginning investors.
Interactive Brokers’ reputation in low-cost margin loans precedes it. It’s one of the best features of the broker's PRO program and really makes it stand out from others, and that makes Interactive especially popular with advanced traders. For margin balances below $100,000, the broker charges just 1.5 percent above the benchmark rate, and the fees only go lower as you borrow more. In some cases, Interactive Brokers is charging less than half of what competitors are, so those investors using margin often should absolutely examine this broker closely.
However, if you're using the IBKR Lite program, you won't enjoy rates that are quite so cheap. Here rates start at 2.5 percent above the benchmark rate. That's still much better than comparable brokerages, however, and if you don't use margin, then it's not a deal-breaker anyway.
Variety of investing choices
If it trades on a public exchange, it feels like it’s available to trade on Interactive Brokers. Of course, the broker offers the usual candidates – stocks, bonds, ETFs, mutual funds and options – but it goes even further. Traders can also find futures, forex and metals there, and are able to trade stocks on foreign exchanges as well. You’re going to feel like you can trade it all at Interactive Brokers.
Interactive Brokers is well-calibrated for the needs of active and professional investors, with many features that are attuned to their needs:
- Low margin rates that allow traders to expand their buying power to take advantage of opportunities.
- A world-class trading platform that allows you to take advantage of Interactive Brokers’ execution capabilities.
- The ability to buy almost anything that trades anywhere in the world.
Those who think the account fee on the flagship program is a bit too steep could turn to IBKR Lite or to Fidelity Investments or even Merrill Edge, where you’ll be able to find free trades for much less than you need at Interactive Brokers just to avoid the account fee. And while Interactive Brokers touts its $1 trade fee, traders turning more than mega-share blocks might find a better value at one of the $0 commission brokers such as Charles Schwab, Fidelity, or TD Ameritrade.
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