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Brokerage / Investing

Interactive Brokers Review: New Changes Cater to Regular Investors

By John Csiszar

January 16, 2020

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Interactive Brokers Group has long occupied a unique niche in the online brokerage world. Originally developed for advanced traders, the firm has always had a comprehensive — and sometimes confusing — interface, chock full of market and trading information. Recently, Interactive Brokers opened its doors to more casual investors with the introduction of its IBRK Lite platform. This interface is a bit more user-friendly and offers the same types of trading capabilities as the IBRK Pro platform, but without all the extras that might be a bit overwhelming for newer investors. Here’s a look at the inner workings of Interactive Brokers, including comparisons with competitors.

Quick Take

For casual investors, the recent introduction of IBKR Lite brings commission-free trading and basic investment capabilities, while experienced traders can still benefit from the more advanced IBKR Pro trading platform.
Equity Trades $0
Account Minimum $0
Promotion N/A

 

Here’s a quick look at what you’ll find in this Interactive Brokers review:

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About Interactive Brokers

Interactive Brokers was founded by Thomas Peterffy in 1978 to serve advanced traders looking for speed, price, size and diversity of global products. As of 2019, the firm had equity capital of over $7 billion. Interactive Brokers and its affiliates execute more than 859,000 trades a day on over 125 global market destinations. Big changes came to the firm in 2019 when it introduced a new platform for less-active traders called IBKR Lite. The firm’s advanced capabilities and low costs have earned it a spot on the GOBankingRates’ Best Brokers of 2019-2020 list.

Pros and Cons

Interactive Brokers has impressive trading capabilities and low costs, receiving high marks overall. The firm does have some drawbacks, however.

Pros

Cons

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Interactive Brokers at a Glance

Here’s a quick overview of the services and costs of Interactive Brokers:

Interactive Brokers at a Glance
Account Minimum $0
Stock Commission $0
Option Commission $1 per contract; U.S.-direct routed and “Compare Plans” popup shows that IBKR Lite has fixed pricing only, not tiered
Commission-Free ETFs All listed ETFs
Zero Transaction-Fee Mutual Funds Yes, hundreds
Investment Selection Stocks, options, futures, forex, metals, fixed income, ETFs, mutual funds, EFPs, hedge funds, robo portfolios
Customer Service 24/7 phone lines via regional call centers, live chat, email and fax
Mobile App Yes, with full functionality
News and Research Educational webinars, videos and courses
Miscellaneous Fees Wire transfers $10, checks $4, bounced checks $25, cash deposits greater of 1% or $50, if accepted
Current Promotion N/A

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Individual Services Reviews

Most online brokers offer similar services but with different interfaces and capabilities. Here’s a look at how Interactive Brokers delivers its product across various categories.

Trading Experience

Interactive Brokers has two trading platforms: IBKR Lite and IBKR Pro. IBKR Lite is the more appropriate platform for the average investor because it has low costs and is simple to use, yet has similar investment capabilities to IBKR Pro.

Advanced traders might be more comfortable on the IBKR Pro platform, which provides enhanced trading technology. The IBKR Pro platform offers the following additional capabilities that are not available on IBKR Lite:

The IBKR Pro and IBKR Lite platforms are both available on the Interactive Brokers mobile app as well.

A Beginner’s Guide: How To Invest in Stocks

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Account and Investment Minimums

Interactive Brokers has no account or investment minimums on either the IBKR Pro or IBKR Lite platforms.

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Commissions and Fund Expenses

Commissions for the IBKR Lite platform are just about as low as they can go. Interactive Brokers charges nothing for online equity and ETF trades and also offers hundreds of no-fee mutual funds.

One big perk for casual traders who use the IBKR Lite platform is that there are no inactivity fees. This used to be a huge hang-up with the regular IBKR platform for less-active traders, as the IBKR Pro platform does have an inactivity fee of up to $20 per month for traders with less than $100,000 invested or who generate less than $10 in commissions.

Trading Technology

Trading has been the core of Interactive Brokers for more than 40 years, so its award-winning technology is efficient at minimizing costs for investors.

IB SmartRouting immediately executes trades and improves prices, averaging 43 cents in savings for investors for every 100 shares traded.

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Usability

Fast executions, advanced charting capability and price improvement make Interactive Brokers a dream to use for advanced traders, but all of these do-it-yourself features can be a bit much for newer investors. The introduction of IBKR Lite makes the Interactive Brokers platform more user-friendly for the casual investor.

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Mobile and Emerging Tech

Interactive Brokers has a mobile app that allows traders to access more than 125 markets worldwide. You can trade stocks, options, futures, forex and more from the mobile app, just like you would on the website. Advanced quotes and research also are available, offering more than 50 data columns.

Range of Offerings and Investment Selection

Interactive Brokers originated as an advanced trading platform, so it’s good to see that even the IBKR Lite platform offers nearly unlimited investment options. Even if you’re a relatively advanced trader, you’re likely to find nearly any type of investment you’d like to buy. The impressive range of options at Interactive Brokers includes the following:

At present, Interactive Brokers allows futures trading on Bitcoin but no trading in the actual physical cryptocurrency itself.

Learn: How To Decide Between Mutual Funds and Stocks

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News and Research

Interactive Brokers offers a host of educational materials for investors along with specialized apps to help with trading strategies. The IBKR Experts’ Community offers access to market commentary, blogs, data and social media platforms. The firm also offers a wide variety of market research and news, from Alexandria Sentiment Scores to the IBIS Research Platform. Note that while there are many free research options available, others are subscription-based.

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Customer Service

Interactive Brokers offers 24-hour phone customer service via regional Client Services Centers. It also offers a national toll-free customer service number, but hours are limited to 8 a.m. to 8 p.m. EST Monday-Friday and 1 p.m. to 7 p.m. EST on Sunday. Online chat is available 24 hours. Customers can also email or fax the company.

Security

Unlike many brokers, Interactive Brokers offers a free security login device for users that generates a random security code that must be entered in addition to a username and password. Mobile users are protected through the proprietary IBKR Mobile Authentication system. Accounts with greater than $500,000 have access to a Digital Security Card that adds extra security layers via a PIN code, a challenge code and a high number of code permutations. 

Costs

Costs are extremely low for Interactive Brokers compared with other platforms. In fact, for most investors the most important cost of all — commissions — are zero for most trades. There are no account minimums or maintenance fees to worry about, either.

What First-Time Investors Need To Know: Investing for Beginners

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Best For

Interactive Brokers excels in the following categories:

Falls Short

Here are the disadvantages of working with this broker:

Current Promotions

No promotions are currently available at Interactive Brokers.

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Comparison With Other Brokers

Many online brokers have dropped their commission rates for stock and ETF trades to zero, and Interactive Brokers is no exception. Here’s how the firm stacks up against competitors when it comes to stock commissions, account minimums and new account promotions:

Broker Comparison
Broker Stock Commission Account Minimum Promotion
Interactive Brokers $0 $0 N/A
E-Trade $0 $0 $100-$2,500 bonus when you deposit or transfer $5,000-$1,000,000
Merrill Edge $0 $0 Up to $600 in cash with new account deposit
Charles Schwab $0 $0 500 commission-free online equity and options trades for 2 years with $100,000 deposit  (still listed even though the firm recently went to $0 commissions)
Fidelity  $0  $0 N/A
Firstrade  $0  $0 Up to $200 in transfer fee rebates
Robinhood  $0  $0 1 share of free stock when your brokerage application is approved
TD Ameritrade  $0  $0 Up to $600 in cash with new account deposit

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Should You Invest With Interactive Brokers?

Interactive Brokers is a bit different from most other online brokers. Founded as a trader’s brokerage, the firm still offers advanced capabilities that experienced investors can utilize to great advantage. However, with the advent of IBKR Lite, Interactive Brokers now serves beginning and intermediate investors as well.

Interactive Brokers has always had low commissions, but in the “race to zero” that began in October 2019, the firm has joined many of its competitors in charging $0 commissions for online stock and ETF trades. Interactive Brokers also has hundreds of no-fee mutual funds to choose from, making it a great option for casual and active investors alike.

Overall, Interactive Brokers offers a very low-cost package that can serve two distinct investor types: advanced and beginner. While the trading platforms and educational offerings can be overwhelming for first-timers, Interactive Brokers has a great combination of low costs and high-level capabilities.

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You can find out about other top online brokerages, the best retirement accounts and other investing information in these articles:

Information is accurate as of Jan. 16, 2020; commission rates are accurate as of Jan. 16, 2020. This content is not provided by Interactive Brokers. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by Interactive Brokers. This site may be compensated through the bank advertiser Affiliate Program.