Interactive Brokers and TradeStation are two of the most popular online brokerages, and they both target active, higher-volume traders more than most traditional online players do. But each also offers a number of features that could appeal to newer or intermediate investors, including low pricing, a wide range of tradable securities and high-powered trading platforms.
Interactive Brokers and TradeStation both have two main pricing tiers, each of which may appeal to a different group of customers, too.
Interactive Brokers offers two major plans:
- Pro: The broker’s original plan offers stock and ETF trades at a $1 minimum, but that’s a minimum. The broker charges a half-penny per share, so once your trade surpasses 200 shares, you’ll go over that minimum. For example, a trade of 1,000 shares could cost $5.
- Lite: This low-cost plan allows you to make unlimited stock and ETF trades at no cost. However, you won’t enjoy the broker’s lowest margin rates in this plan (more below).
TradeStation’s two major plans are set up as follows:
- TS SELECT: This plan lets you trade stocks and ETFs for no commission and options for $0.60 per contract. You’ll also get free access to TradeStation Desktop. This plan requires a $2,000 minimum deposit.
- TS GO: This plan lets you trade stocks and ETFs for no commission and options for $0.50 per contract. However, you’ll pay a substantial surcharge for each trade with TradeStation Desktop, though you still have access to free trading platforms. This plan has no minimum deposit.
As for options trades, Interactive Brokers offers standard pricing at $0.65 per contract, with a $1 minimum. Trade more than 10,000 contracts a month? You’ll enjoy standard pricing at $0.50 per contract, and pricing dips as low as $0.15 a contract for trading more than 100,000 contracts.
TradeStation charges either $0.50 or $0.60 per contract depending on which plan you’re using. The $0.50 baseline is the lowest non-discounted price in the industry, excluding no-cost brokers such as Webull and Robinhood.
Edge: For stock and ETF commissions, these brokers are neck and neck. You can pick a no-commission plan with either broker and get going — and that probably suffices for most investors. For options, TradeStation looks like the better pick given its lower standard pricing if you’re trading dozens or even hundreds of contracts per month. But truly active traders will likely prefer Interactive’s substantially reduced commissions at higher volumes.
How do Interactive Brokers and TradeStation compare on their rates for margin loans?
|Loan amount||Margin rate|
|0 – $100,000||1.59 percent (Benchmark rate + 1.5 percent)|
|$100,000 – $1 million||1.09 percent (Benchmark rate + 1 percent)|
|$1 million – $3 million||0.75 percent (Benchmark rate + 0.5 percent*)|
|$3 million – $200 million||0.75 percent (Benchmark rate + 0.3 percent*)|
|$200+ million||0.75 percent (Benchmark rate + 0.3 percent*)|
* The broker puts a floor on these rates at 0.75 percent.
Interactive Brokers has margin rates that fluctuate based on the benchmark rate. As of April 2021, the highest rate charged is 1.59 percent (for margin balances less than $100,000), and then it declines to 1.09 percent and so on, as the amount of the margin loan increases.
Interactive Brokers’ rates are tiered, meaning that regardless of how much you borrow, you’ll still pay the rate at each level. For example, if you borrow $200,000, you pay the base rate for the first $100,000 (the benchmark plus 1.5 percent). Then for the next $100,000, you pay the rate for that tier (the benchmark rate plus 1 percent), up to $1 million in borrowing, and so on.
|Loan amount||Margin rate|
|0 – $49,999||9.5 percent|
|$50,000 – $499,999||8.75 percent|
|$500,000 – $1,999,999||5.5 percent|
|$2+ million||3.5 percent|
TradeStation’s rates are subject to adjustment if overall interest rates fluctuate.
Edge: Interactive Brokers is the clear winner here, with lower rates even for more modest margin loans. As you borrow more, the rate declines further. In fact, U.S. interest rates are so low (and expected to be low for some time) that Interactive Brokers has to put a floor on its lowest rates at 0.75 percent. Otherwise, margin rates would be even lower still.
Both TradeStation and Interactive Brokers offer among the widest breadth of tradable securities in the industry. In fact, each offers at least one type that is not offered by the other. Here’s how they stack up against each other:
|Tradable security||Interactive Brokers||TradeStation|
Interactive Brokers and TradeStation are tied when it comes to all the major categories (stocks, ETFs, bonds, options and mutual funds). When it comes to more advanced securities, there’s some differentiation, however, with each bringing something different to the table. Interactive Brokers brings forex and metals, while TradeStation offers trading in five cryptocurrencies.
Edge: Too close to call, unless you need one of the advanced trading types. If you need crypto trading, then TradeStation gets the nod. Or if you need forex and metals, then Interactive Brokers.
Trading platforms and tools
A bigger draw for more active traders may be the brokers’ trading platforms and tools, and both brokers have multiple offerings in these areas, including web, desktop and mobile platforms.
Interactive Brokers has multiple ways to trade, but highlights its Trader Workstation. It’s a fully featured desktop platform that delivers real-time monitoring, market data, customizable charts and streaming news and lets you trade more than 100 markets. You’ll get tools for options analytics, and can downshift to the legacy WebTrader platform or trade from the client portal.
A recent addition to Interactive Brokers’ suite of tools is a detailed scoring system for ESG (environmental, social and governance) factors. It scores companies on a number of granular areas (such as emissions or human rights), and provides a score for each ESG category and overall. You can quickly compare companies with an easy-to-use graphic.
TradeStation brings together a web-based platform and its flagship TradeStation Desktop platform. The latter brings more than 10 charting types with dozens of technical indicators, or you can create your own. You’ll have decades of historical data, too. If this option looks appealing, you’ll probably need to opt for the broker’s TS SELECT pricing plan, however.
TradeStation brings a number of tools, including OptionsStation Pro, to analyze and execute options trades, and Portfolio Maestro, which analyzes your portfolio to reduce overexposure to risks across your holdings. You get a back-testing tool, market depth, watch lists and on and on.
Edge: Both brokers offer a ton of tools and solid trading platforms, so who wins may depend a lot more on your needs or what you’re comfortable using than on what the broker provides. And for newer investors, don’t be put off by the complex platforms and tools. You’ll still have access to simplified order entry that gets your order into the market without all the analysis.
Both Interactive Brokers and TradeStation charge more fees than some of Bankrate’s top-rated brokers (such as Fidelity), but in certain cases you can skip those fees with some simple actions.
Interactive Brokers Pro requires you to generate at least $10 in commissions each month, if your account is less than $100,000. If you don’t, then you’ll be charged the difference, up to $10 a month. If your account is less than $2,000, then your monthly minimum is $20. But if you have more than $100,000 equity in your account, you won’t have a monthly minimum at all. However, if you’re using the Lite platform, you won’t be charged any activity fees.
Among major account fees, Interactive Brokers does not charge a transfer-out fee for ACATS transfers, which typically run around $75 at other brokers.
TradeStation charges a $50 inactivity fee per year, though you can easily avoid it if you have an average balance of more than $2,000 or have placed five or more trades in a 12-month period.
But watch out for TradeStation’s other fees. The broker charges $35 annually for an IRA and will clip you for an additional $50 for terminating an IRA. Plus, it hits you for among the highest transfer-out fees in the industry at $125.
Edge: Interactive Brokers. But this race is closer to call than it might look when comparing Interactive’s Pro platform with TradeStation. If you have more than $100,000 in your account, Interactive Brokers is probably the winner, since you can skip TradeStation’s fees. But smaller accounts might prefer TradeStation if they’re not trading frequently or have an IRA there. All that said, Interactive’s Lite platform lets you dodge the broker’s activity fees and trade for free, too.
While Interactive Brokers offers a lot, so does TradeStation, especially in some areas, such as cryptocurrency trading. If you want to trade crypto without going into the futures market, then you’ll want to turn to TradeStation (or another broker that offers it). But if low margin rates really drive your bottom line, then maybe Interactive Brokers is your go-to.
So which is better for you depends not only on the broker but also on what your specific needs are. If you’re looking for good overall brokers with a bit more in the way of research, education and a reputation for customer service, you should also consider Fidelity and Charles Schwab.