Interactive Brokers at a glance
*minimum, or $0.005 per share, but also cheaper with volume-based pricing
Top features you’ll love
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, streaming news and plenty more.
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 basic client portal, a platform that will still get the trading job done with its highly practical and no-frills interface.
If you’re into socially responsible investing, then Interactive Brokers has what it says is a first for the industry: a detailed scoring system for ESG (environmental, social and governance) factors. The system scores companies along granular areas, such as reducing emissions or engaging with human rights or their workforce, and then totals a score for each ESG category and overall.
You’ll be able to quickly scan for companies that score highly and then compare them against one another with easy-to-use graphical representations. For those looking to evaluate their investments on these dimensions, this schema brings a usable way to put it into practice.
Pros: Where Interactive Brokers stands out
Trading commissions are one of the biggest draws for customers, and Interactive Brokers definitely trumpets its pricing structure, which favors truly high-volume traders. The broker has eliminated its minimum monthly activity fee, which typically cost customers at least $10 a month if they didn’t ring up at least the same amount in commissions. So it’s even friendlier now for newer investors to get started here.
The broker runs two service tiers: Pro and Lite, which are the paid and free levels, respectively.
Stocks and ETFs: On its Pro platform, Interactive Brokers’ headline rate for stock and exchange-traded funds (ETFs) trades is $1, but customers should note that’s a minimum commission and you could run up higher costs. 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 can be a good deal if you’re getting a better overall price for your shares. High-volume active traders will have to evaluate whether the broker’s execution is worth the extra cost.
If you’re running mammoth-sized trades (think 300,000 shares and up each month), then you’ll benefit from the broker’s tiered pricing, where commissions reach as low as 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 Lite program. Plus, you’ll still enjoy 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 but 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 bests all the top players in the number of no-transaction-fee mutual funds on offer. The broker offers more than 7,700 such mutual funds, and these reduced fees are great for beginning investors.
Cryptocurrency: Interactive Brokers charges a commission of 0.12 to 0.18 percent, depending on monthly trade volume, with a $1.75 minimum commission. It charges no spread markups, unlike other brokers who tout commission-free crypto trading. So, for example, a basic $1,000 trade would cost $1.80 and you’ll avoid paying fees that are hidden in the trading prices.
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 stands out from others, and it 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 rates only go lower as you borrow more. In some cases, Interactive Brokers is charging much less than half of what competitors are, so investors using margin often should absolutely examine this broker closely.
However, if you’re using the 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.
Such cheap margin may allow some clever investors to use their Interactive Brokers account as a way to fund larger purchases tremendously cheaply, but the margin rate is variable and so if overall rates rise, so will the costs of your loan.
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 and metals (gold and silver) 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.
In addition, the broker offers cryptocurrency trading, not something you’ll find at every rival. You’ll be able to trade Bitcoin, Bitcoin Cash, Ethereum and Litecoin at an attractive commission.
Interactive Brokers has the dubious distinction of being the only major online broker that allows you to buy fractional shares but doesn’t allow you to reinvest your dividend in partial shares. So it’s better than brokers allowing only reinvestment, but not quite as good as those doing both — a small point. But the Interactive Brokers program is more robust, allowing you to buy partial shares in a simply huge number of stocks and funds — more than 10,000! Tops by our count.
To buy a fractional share you’ll need to buy at least $1 or one-ten-thousandth of a share (if you’re buying by shares), and the program works whether you’re in the Pro or Lite service tier. It’s a solid feature that gets smaller investors into those high-dollar stocks more easily.
Account management interface
Dealing with all the stuff surrounding actual trading can be a pain if the account management portion of a broker’s site is poorly laid out. Who wants to go hunting for tax forms? In years past we docked Interactive Brokers for its clunky account management page. It was disorganized, unintuitive and slow. That’s no longer the case, and it’s made serious strides.
Interactive Brokers has cleaned up its account management site (which you have to log into separately from the main trading platform, unlike the rest of the industry). Now it has a clean dashboard layout — with account balances, top positions, clearer menus, and one-click links to “high-frequency” parts of the site, such as downloadable activity reports, tax forms, funds transfer and the like. Plus a trade button allows you to launch an order ticket quickly.
It’s a welcome change from the prior layout and may now be the easiest-to-use account site among the major online brokers.
There’s just no other way to say it: You’re going to get more out of Interactive Brokers if you’re an advanced investor. But if you’re a new investor that shouldn’t prevent you from at least trying out what makes experienced investors turn to this broker:
- Interactive Brokers has introduced more features, such as fractional trading and a cleaner login page that make it more accessible to all investors.
- The Lite tier gets newer investors in the game with no commissions, though the Pro tier is still available for more advanced traders who get value from it.
- Incredibly low margin rates, ESG scoring and a robust trading platform make Interactive Brokers a great place for more sophisticated investors.
If you’re on the hunt for a robust trading platform, you can have a look at TradeStation and TD Ameritrade, both of which are geared toward more advanced traders. Of course, if cost and convenience are your only concerns, you could turn to Robinhood and Webull, both mobile apps that deliver slick performances, though you may pay for them in other less subtle ways.
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