Interactive Brokers

Introduction

Interactive Brokers is an investment powerhouse that, until quite recently, has been the playground of active, experienced investors who tend to make major plays.
That began changing in 2019 when the company rolled out IBKR Lite, which was aimed at casual investors and beginners. The platform has experienced some growing pains, however, and so far at least, Interactive Brokers has had mixed success in terms of making their platform more “beginner friendly.”
It should be noted though that they appear to be relentlessly committed to improving and with that said, now may be the perfect time to jump in and give the platform a try.
If it’s something you’re considering, read on, and in the sections that follow, we’ll tell you everything Interactive Brokers has to offer, and we’ll be quick to point out the platforms weaknesses, shortcomings and limitations. Let’s take a closer look.

Ease Of Use (4.3 stars out of 5)

There’s no easy way to say it: The Interactive Brokers platform isn’t the easiest thing in the world to use. It’s not bad, it’s just that the site offers an almost paralyzing amount of information and making sense of it can be a daunting proposition.
This is the first and surest sign that the platform was really designed for experienced investors, who will generally have little difficulty wading through the tons of information and getting to what they need. For a beginner though, it can be overwhelming.

Before we go any further, we should highlight the key differences between the IBKR Pro and Lite accounts. Here are the key differences:

• The Pro account offers fixed per-share pricing of $0.005 per share, with a $1 minimum, and a maximum of 1% of the trade value (this also applies to penny stock trades), while IBKR Lite offers unlimited free trade on US stocks and ETFs.
• Where options trades are concerned, both the Pro and Lite account types are $0.65 per contract ($1 minimum)
• IBKR Lite offers unlimited commission-free trades on all available ETFs. Pro account holders have access to about 100 commission-free ETFs.
• In terms of inactivity fees: None for IBKR Lite account holders. Pro account holders must generate at least $10 a month in brokerage fees or be charged the difference (accounts with $100,000 or less). If you’re account is $2000 or less, you must generate $20 a month in brokerage fees or be charged the difference.

This last point is telling, and another tangible way you can tell that the platform is really geared toward active traders and day traders.
Interactive Brokers prides themselves on being at the bleeding edge of technology, so it’s no great surprise that they have an Android and iOS app version of their platform. The pleasant surprise is that the navigation and functionality is highly similar when you compare the app and web-based platforms, which allows you to move with relative ease from one to the other.
The app-based version isn’t quite as full-featured, but they are functionally and navigationally similar, so although there is a learning curve here, once you’ve mastered it, you’ll be able to switch between the two with ease.
Whether you’re using the app- or web-based client, the heart and soul of your trading operation revolves around the Traders Workstation (TWS). This is your virtual command center and from here, you can do just about anything.
The default TWS interface looks a lot like a spreadsheet which again, beginning traders may find intimidating, but you can toggle between that and a mosaic tile type interface that’s not only more aesthetically pleasing, but also generally easier to use.
Even better, you’ll find a library of predefined mosaic interfaces you can employ to jumpstart your use of that interface, and when you feel comfortable enough with it, you can even design your own custom mosaic interface, allowing you to truly take control of the wealth of data available and put it to work for you.
As we mentioned, the information you can get from the platform can be overwhelming. Where some brokers offer a single source of real time data (say, a Reuters stream) here, you get IBKR Trader’s Insight, Real Vision and Bloomberg TV, and can add others besides that.
Whether you’re using the web or app-client you can execute every type of trade (although getting to the order screen requires a few clicks and can take some getting used to), and you have access to a wide range of indicators and a vast array of charting tools. Curiously, however, the app-client doesn’t provide any drawing tools, which is a minor weakness and limitation to be mindful of.

Before we talk about trading, it’s also worth mentioning that data streams only work on one device at a time, per account, which is to say, if you’re on your PC and have real time data streaming to it, and then you switch to your phone, you’ll be asked to disable streaming on your PC before you can start streaming on your phone.
If you’re not in the habit of using multiple devices to manage your trades, this obviously won’t be an issue at all. If you are, however, it will take some getting used to.
As to actually making trades, you’ll find a lot to like here. First, this, as just about everything else on the platform, is done from the TWS. The platform allows you to set up hotkeys that enable rapid order transmission and you can stage orders for later execution (either as a batch or one at a time).
If you stage one or more orders, you can specify the date and time the order is to be executed, and even set up complex conditional orders that may only be executed when a whole series of conditions are met. This is huge, and gives you virtually unlimited flexibility, but again – learning curve.
You’ve got access to every order type under the sun if you want it, including conditional orders based on margin cushion, daily P&L, volume, price, and a host of other conditions, and you can even execute conditional orders such as one-triggers-another or one-cancels-another. The number of options open to you and the fine-grained control is dizzying, but in a (mostly) good way.

Costs (3.5 stars out of 5)

Interactive Brokers’ costs are, for the most part, competitive, but there’s a caveat here. There are a number of costs that are not exactly hidden, but not quite out in fully visible either. This can make it surprisingly difficult to know exactly what your costs are or will be. IBKR could definitely use some improvement on this point. More transparency is needed.

Educational Resources & Customer Support (3.0 stars out of 5)

Interactive Brokers doesn’t do a great job here. Better than average, to be sure, but not great. In some ways, that’s not a huge surprise. As we said at the outset, this platform has long been the playground of savvy, experienced investors. As such, their educational library is still a work in progress.
The company did introduce an AI HelpBot when they rolled out IBKR Lite, with the bot’s purpose being to help new traders and those new to the IBKR system get where they want and need to be.
The bot is pretty good, but IBKR’s educational resources are still somewhat limited and most of what you find there tends to be geared toward the more experienced investor. This is changing with time, but as of now, is still a work in progress.
On the customer service front, Interactive Brokers is still in the process of reforming their image. Customer service horror stories have been the order of the day for years, but the company is slowly turning that around. They’ve improved significantly and now offer robust, surprisingly helpful phone support 24 hours a day, six days a week, in addition to live support chat available via their app-based platform.
While we can’t say this is one of the company’s strongest areas, they are working hard to improve the quality of their support.

Research & Analysis Tools (5.0 stars out of 5)

Interactive Brokers is best in class in this area. Among other things, you’ll find:

• A tax optimizer tool that allows you to create scenarios so you can experiment to see what strategy winds up netting you the best tax outcome, then set account-wide defaults based on your research with this tool.
• A whole host of international trading data and real-time scans
• A fabulous market screener that allows you to scan the entire market for attractive investments based on hundreds of criteria.
• A Fundamentals explorer to help with in-depth investment research
• Separate screeners for ETFs, Options, Mutual Funds, and Fixed Income investments
• And a wide range of tools and calculators.
• Access to dozens of real-time news feeds
• Access to third party research from TipRanks and Refinitiv
• And amazing charting capabilities (which also exist on the mobile apps, minus drawing tools)

On top of that, the platform gives you a wide range of tools you can use to track and measure the performance of your investment portfolio, and a Trader’s Journal which allows you to record your notes and trading ideas on any product, including the ability to save screenshots.
Simply put, you won’t find anybody who does this better than Interactive Brokers

Range Of Product Offerings (4.9 stars out of 5)

With the notable exception of cryptocurrency, if it’s tradeable, you can probably find it on interactive brokers, and even where cryptocurrency is concerned, you do at least have access to Bitcoin futures.

Among other things, using this platform, you can trade:

• IPOs, individual stock futures, and warrants
• Fractional share trading of US stocks listed on NASDAQ, AMEX, NYSE, ARCA, or BATS
• Penny stock trading
• Forex (twenty-three different currencies and more than a hundred trading pairs)
• International stock, options, futures, bonds, forex, and CFDs, with 135 connected exchanges at last count)
• Futures and futures options
• Bonds (CDs, international bonds, T-bonds, municipal and corporate bonds)
• Mutual funds (more than 26,000 available at all, including more than 8000 no-load funds, and 4500 with no transaction fees for Pro clients)
• And Long/Short Stocks

IBKR’s product range in unparalleled.

Pros And Cons

From a technical perspective, nobody does it better. IBKR offers a stunning range or products and investment and research tools that few can even come close to matching.
The downside is that although the company is working hard to become more “newbie friendly,” they’re not quite there yet. The platform has a daunting learning curve and their customer service and support, while well on the way to reforming itself, is still a work in progress.

Conclusion

If you’re a seasoned, experienced investor, none of the negatives associated with IBRK will feel especially daunting to you, and this platform is highly recommended. If you’re a novice investor, you have to ask yourself how active a trader you plan to be.
If you don’t know for sure, or you don’t think you’re going to be an especially active trader, or if you’re not tech-savvy enough or don’t think you want to put in the time needed to conquer IBKR’s learning curve, you’re probably better off looking elsewhere.
Make no mistake, for the right trader, Interactive Brokers is pretty close to heaven. It allows you to invest in almost anything and has a brilliantly designed set of tools that will help you become an even better investor than you already are. On that basis, we recommend them.