The American firm Interactive Brokers is one of the biggest and best-regulated brokers in the world. It’s a veritable financial supermarket, with an astounding range of assets available for trading as well as an enormous menu of managed products for investing. Its feature-rich platform with numerous proprietary trading tools should satisfy the most sophisticated professional trader, while its unusually narrow spreads, low commissions, and market-leading margin rates are a benefit to everyone. There’s no minimum deposit to open an account, and stock and ETF trading are free for US clients in some accounts – you can’t beat free! Traders looking for news, research, and trading ideas need look no further: Interactive Brokers has more than you can possibly read from both internal and over 100 external sources. Beginners will especially benefit from the company’s deep educational offering, including an exhaustive series of introductory videos on most aspects of financial markets. Meanwhile, its many licenses from top-tier regulators around the world, its public listing, and long track record suggest that it’s as safe as any in the business (and more so than many).
Those who already trade using a third-party platform, such as MetaTrader or cTrader, may be disappointed to find that Interactive Broker doesn’t support third-party platforms. Instead the firm offers several of its own proprietary platforms aimed at different market segments, from beginners to professionals.
On the negative side, the account opening process is complicated, you can only fund accounts through bank transfers, and there have been complaints that customer service could be improved. And most US traders won’t be able to trade spot FX (although they can trade FX through futures, options, and indices).
Interactive Broker would be a great choice for any trader looking to trade markets around the world. It’s an “all-in-one” broker that offers not only forex trading but also stocks, bonds, commodities, mutual funds, and ETFs from virtually every major market through a single interface. It’s particularly attractive for those who want to trade these markets in size, as its extremely low costs and facilities for automated trading make it an excellent broker for those trading high volumes.
Interactive Brokers Group, Inc. was founded by its Chairman and CEO Thomas Peterffy in 1977, making it one of the oldest online brokerage firms in the US. It’s grown to be one of the biggest US-based discount brokers and is listed on the NASDAQ (symbol: IBKR). It’s regulated by many financial authorities globally, including top-tier ones like the UK's FCA as well as the US SEC With $10.9bn in equity capital and $7.7bn in excess regulatory capital, it’s extremely well capitalized.
The firm was one of the first brokers to offer a complete range of investment products on its platform, which now spans the gamut of investment products across 135 market centers in 33 countries, and 23 currencies – all accessible from a single trading account.
Interactive Brokers is a true ECN broker. That means direct access to liquidity-providing banks or other clients with no mark-ups and no price spreading. The company and its affiliates provide trade execution and clearing services to institutional and professional traders across its wide range of markets, executing close to 2mn trades a day. While it doesn’t publish its average spreads (which would allow comparison to other brokers), their real-time quotes are available for all to see on their website.
I can state categorically that it’s as safe as they get in this industry. The parent company is listed on the NASDAQ, which means it has to publish audited financial statements regularly. These show that it has billions of dollars in capital. It’s regulated by more regulators than you can shake a stick at. Plus just in case the compensation schemes required by the regulators aren’t enough, the company has an excess policy with the US Securities Investor Protection Corporation (SIPC) with certain underwriters at Lloyd’s of London for up to an additional $30mn per account, subject to an aggregate limit of $150mn. (Futures and options on futures are not covered.) I don’t know about you but that would certainly cover my account.
Standard & Poor’s rates the firm A-, outlook stable. Client money is held globally in accounts segregated from the firm’s own money so that in the unlikely case that the company did go under, clients’ money would be safe and wouldn’t be available to creditors. You can read more about their financial security here if you’re interested in details like which banks they keep the money in and how much is in US Treasuries.
If your #1 priority is safety, this is definitely the broker for you.
Hah!What a question. Interactive Brokers may well be the most highly regulated FX broker around. In fact, it may well be too wellregulated for some players – so much regulation restricts what it can do. Don’t look for 500:1 leverage and deposit bonuses here!
The company is regulated in 10 countries: eight Tier-1 regulatory agencies, including the US SEC & CFTC and UK’s FCA, and two Tier-2 agencies (Hungary and India). No Tier-3s.
The company is regulated by:
Which entity you sign up under makes a different to what recourse you have. For example, negative balance protection for forex spot and CFD trading is only available for retail clients from the EU. In the case of bankruptcy your account would be covered by different insurance plans depending on the country, ranging from $500k in the US to sweet FA in Australia (plus the additional coverage from Lloyd’s mentioned above).
OK stuff does happen – Lehman Bros. was regulated in the US too and it went bust, after all – but it just doesn’t get much more highly regulated than this. And the firm is at pains to point out that unlike Lehman Bros., it holds no material positions in over-the-counter (OTC) securities or derivatives.
That having been said, the company has had some brush-ins with the law in recent years with regards to anti-money laundering (AML) rules (you can read about it here and here). These breaches did not endanger clients’ funds or involve unfair trading practices. They may however be one reason why the company takes so long to open an account now and has few ways of funding accounts.
Yes, as mentioned above it’s a US-listed company listed on the NASDAQ (IBKR).
Note though that US clients – even professionals – are not allowed to trade spot forex with Interactive Brokers unless you have over $10mn in total assets in your account. (You can still trade FX through futures, options, and indices, though.) Nor can they trade CFDs. So if you’re a US resident looking mostly for a forex broker and not interested in other investments, this might not be the best choice for you.
The company is headquartered in Greenwich Connecticut, with offices in Australia, Canada, China (Hong Kong and Shanghai), Hungary, India, Ireland, Japan, Singapore, Switzerland, and the UK. It has over 2,650 employees.
Most of the company is privately held by employees and their affiliates. Chairman Peterffy is the largest single shareholder. About 24% of the company is publicly held, with a variety of investment firms such as Vanguard and BlackRock among the major shareholders.
If this company can’t be trusted, then no company can be.
Only forex, indices, and equities are available as leveraged products. The amount of leverage available will vary depending on which regulatory agency you have joined under, e.g. those who were onboarded through the UK-regulated entity will be limited by UK regulations to 30:1 leverage in forex trades.
Interactive Brokers offers a staggering 16 different account types. Pardon me if I don’t go through them all. The ones that will be of most interest to the average Joe and Josephine are:
In addition, if you happen to be an American citizen like me, there are also accounts that are only available for US clients:
After that, it’s mostly for the professional and semi-professional market. Some of our more sophisticated readers might be interested in the Non-Professional Advisor accounts, for an advisor who is exempt from registration and has 15 or fewer clients, or the Small Business accounts. I’d be delighted if any potential Hedge & Mutual Fund account clients were reading this website, but I doubt it.
Once you’ve waded through the different account types and decided which one you want, you then have to choose whether you want a Cash account, which only allows you to buy assets up to the amount of spare cash you have in your account, or a Margin account, which allows you to buy assets on margin. If you want a margin account – and the odds are that you do – you have to specify whether you want a “RegT” or “Portfolio Margin” account. “Reg T” is short for “Regulation T,” Fed rules governing the amount of credit that brokers may extend to customers to buy securities. According to Regulation T, an investor may borrow up to 50% of the purchase price of securities; the remaining 50% of the price must be funded with cash. For Portfolio Margin accounts, the broker takes into account the risk in the entire portfolio under various market scenarios, not just the one asset that’s being purchased on credit, and sets the margin accordingly. That may allow you to borrow more and thereby get more leverage. If this is confusing, don’t worry; clients from outside the US and UK automatically get a risk-based model similar to “Portfolio Margin.” (UK and UK clients have to meet various requirements, including an account minimum of $110k, in order to get Portfolio Margin.)
On the other hand, if you’re a beginner and aren’t familiar with margin accounts, you might want to avoid the issue entirely by just opening a cash account. That’s because Interactive Brokers doesn’t issue margin calls and will liquidate your position pretty quickly if you start to run out of margin. (You can set a position you particularly like as 'liquidate last' in the Account window.)
That’s not the end of it. If you’re a US resident, you next have to decide between two account types: IBKR LITE and IBKR PRO. It’s simpler if you’re not a US resident, because in that case only IBKR PRO is available.
The difference is mainly that IBKR LITE allows you to trade US-listed stocks and ETFs without commissions. IBRK PRO on the other hand gives you access to the firm’s IB SmartRoutingSM system. According to their description, this “helps support best execution by searching for the best available prices for stocks, options and combinations across exchanges and dark pools. SmartRouting continuously evaluates changing market conditions and dynamically re-routes all or part of your order, seeking immediate electronic execution.” There are also differences in other fees and interest paid on cash balances. You can see the full comparison here.
Basically, if you’re a less experienced US-based client who wants to trade stocks, the IBKR LITE is for probably for you (although be forewarned that order execution may not be the best because of payment for order flow, or PFOF). If you’re not US-based or if you’re a more experienced trader, then it’s IBRK PRO, the pricing plan “designed for the active trader and sophisticated investor.”
Even then you’re not done yet: IBRK PRO has two pricing plans, fixed or tiered commissions! But we’ll get to that later under the “Fees” section.
There may well be other restrictions and other plans for other jurisdictions, notably the notoriously strict Japan. At this point, I give up.
Interactive Brokers does not charge any recurring fees such as account maintenancefees or inactivity fees. They do charge fees for some of the many, many third-party features that they offer, which is only fair. These include market data (exchanges often charge a fee for their data) and news subscriptions.
Looking at spreads and commissions, overall Interactive Brokers has some of the lowest trading fees and narrowest spreads in the industry. As mentioned above, stock and ETF trading is free for US clients under the IBKR Lite plan – you can’t beat free! For non-US clients who will by default be in a IBKR PRO account, the commission is $0.005 (1/2 cent) a share, with a $1 minimum and 1% maximum for US-listed stocks and ETFs.
Margin rates are pretty good too: benchmark rate + 1.5% for IBKR PRO and benchmark rate + 2.5% for IBKR LITE. And on the other hand, the firm will pay you interest on idle cash balances of benchmark – 1.5% in IBKR LITE and benchmark – 0.5% in IBKR PRO. The benchmark rate will of course vary depending on the base currency of your account – you can see the different ones here if you’re curious. At the time of writing (December 2022) it’s 3.83% in USD and 1.38% in EUR.
I mentioned above that IBRK PRO has two pricing plans, fixed and tiered commissions. Fixed means of course that the price is the same no matter how much you trade, tiered means the more you trade, the cheaper it gets. (In stocks there are four tiers ranging from trading less than 50mn euros a month to trading over 500mn euros a month.) It’s hard to say which is cheaper – it depends on how much you trade.
This tiered vs fixed system applies for stocks, ETFs, options, futures, and mutual funds. Furthermore, in many cases the price is going to be different depending on what country you live in. If you’re particularly interested in what it costs to trade a specific asset in a specific country, you can look it up here.
For currencies and bonds on the other hand the charge is the same everywhere and only tiered pricing is available. That makes the firm a great place for high-volume traders, such as those using automated trading.
For currencies, the firm doesn’t publish its average spreads so it’s difficult to compare it to other brokers. The prices are the best available from the 16 or so interbank liquidity providers that they use (which make up over half of the professional market by volume), with no mark-up, so you can be reasonably assured that you’re getting the best price available. The spreads are very narrow, often less than 1 pip. On top of that you pay a commission. The commission goes from 0.2 bp (.002%) times the trade value per order down to 0.08 bp in four tiers, depending on how much you trade. That’s it. (You get the same deal if you convert an account balance from one currency to another, by the way.) This is in the same ballpark as other firms for small trades and comparatively inexpensive for larger trades.
Crypto trading can be done through Interactive Brokers but they are just passing the trade through to the crypto exchange Paxos. Crypto trading fees are 0.12% to 0.18% of the trade value, depending on the amount that you trade every month (four tiers from below $100k to over $1mn), with a minimum commission of $1.75 and a maximum of 1% of the trade value. There are no added spreads, markups, or custody fees. You can also trader cryptocurrency futures on the CME for $5 per Bitcoin contract, $2.25 per micro contract.
Futures commissions range from $0.25 to $0.85 per contract, plus exchange, regulatory and carry fees. The fees that each exchange charges vary wildly so you’d have to look up exactly what it is that you wanted to trade to know how much it costs. As they trade on over 30 exchanges globally there’s no point listing them all here.
For those who are more interested in investing than in trading, they have over 46,000 mutual funds listed, many of which are available for free (although of course there’s likely to be a management fee involved.) Because of the tax laws there are different lists for US and non-US residents. (US funds: Some of the US funds charge 3% of the trade value or $14.95, whichever is lower; minimum initial order is $3,000, subsequent orders $100.) (Non-US funds: Some of the non-US funds charge a nominal EUR 4.95, while other European funds charge a bewildering array of exchange settlement fees and tiered pricing structure. I’d stick to the free ones if I were you, simply because I don’t think I’d be able to figure out ahead of time how much I’d be charged for the fund.)
With low margin fees and tiered commissions, Interactive Broker is a great choice for the active trader.
Interactive Brokers offers a vast array of investment products. There is an incredible selection of products to trade from all over the world plus an equally incredible selection of managed investment products for those who would like to leave the decisions to others. This is the “Alice’s Restaurant” of brokerages: “You can get anything you want/At Alice’s Restaurant.” Or at Interactive Brokers.
(Depending of course on where you live. Not all products are available to all clients everywhere. More on that below.)
Forex: The company trades over 100 currency pairs comprised of 24 currencies: USD, AED, AUD, CAD, CHF, CNH, CZK, DKK, EUR, GBP, HKD, HUF, ILS, JPY, MXN, NOK, NZD, PLN, SAR, SEK, SGD, TRY, ZAR and KRW.
Note though that US clients – even professionals! -- cannot trade spot forex with Interactive Brokers.In order for US clients to trade spot FX they have to be an “Eligible Contract Participant,” which effectively means they need to have over $10mn to trade. And as mentioned below, US clients can’t trade currency CFDs, either.
US clients who are determined to trade FX can trade currency futures, indices, or options, such as those listed on the Philadelphia Stock Exchange (see below). (When I lived in Tokyo and got paid in dollars I used to hedge my salary with Philadelphia JPY options.) This could be a deal-breaker if you were solely or mainly looking for a broker to trade FX with.
Contracts for Difference (CFDs): Interactive Brokers offers CFDs on some 8,000 individual stocks, 13 stock indices (the major indices in the US, Europe, and Asia Pacific), 85 currency pairs, gold, and silver. The stock CFDs include all the major markets plus several smaller markets that they don’t offer direct access to (Finland, Denmark, Czech, South Africa, and Brazil). These CFDs not only include the constituents of the major market indices but also many small cap stocks. While the company’s stock CFD selection is outstanding, the selection of other CFDs is on par with its competitors – one of the few product areas where it’s not way ahead. (For information on their FX CFDs, click here.)
Note that the firm doesn’t offer CFD trading to residents of the USA, Canada, Hong Kong, New Zealand and Israel. In addition, residents of Spain, Australia, Japan, and Singapore face some restrictions.
Stocks: You can buy stocks from over 90 exchanges in 27 countries: the US, Canada, Mexico, Austria, Belgium, Estonia, France, Germany, Hungary, Italy, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, UK, Israel, Australia, Hong Kong, India, Japan, and Singapore. (Well, I don’t know about Russia right now.) If that isn’t enough for you, try the CFDs I mentioned above. Fractional shares are available for many US and European stocks in many cases if the price of one share is too high.
Futures: Access 33 markets around the world offering futures in every class: Agriculture, Cryptocurrency, Currencies, Energy, Equity Indices, Fixed Income, Interest Rates, Metals, Softs, and Volatility Indices. There’s no point in listing all of them; you can just assume that if there’s a major futures exchange trading a major contract, you can deal in it.
Options: 34 exchanges in 18 countries: the US, Canada, Mexico, Belgium, France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India, Japan, Singapore, and South Korea.
Indices: Again, more than you can shake a stick at. 18 countries covered: US, Canada, Austria, Belgium, France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, India, Japan, Singapore, and South Korea.
What I mean by “indices” is not just the major stock market indices for each of these countries, which of course are available. I mean you can trade many of the indices that are listed on the major exchanges in these countries. For the US, that means you can trade indices on 15 different exchanges. EG you can trade the Radar Logix 28-day Real Estate Index and CBOE S&P 500 three-month variance index, two indices listed on the Cboe Futures Exchange (CFE), or you can trade 69 indices listed on the Philadelphia Stock Exchange, ranging from 11 currencies to the famous Philadelphia Semiconductor Index. Heaven knows how many indices total there are.
Spot gold & silver: While most brokers that we review offer CFDs on precious metals, Interactive Brokers offers you the real thing too: spot gold and silver. You can take delivery of one ounce or one kilogram gold products, or you can store it with them for 0.15% of the value per ounce per month. If you buy a COMEX gold future you can take delivery if you want. This is in addition to CFDs on gold and silver.
Cryptocurrencies: As mentioned above, crypto trading is done through Paxos Trust Co. They offer Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Aave, Uniswap, Chainlink, and Polygon. There are also a number of crypto derivatives you can access directly, such as futures on Bitcoin and Ether, plus a number of stocks and ETFs associated with cryptos, e.g. the Grayscale Bitcoin Trust (GBTC) or the Stockholm Stock Exchange’s Bitcoin and Ether Exchange Traded Notes (ETNs). There are no crypto CFDs.
Bonds: Bonds are available from 10 US markets, plus Euronext, Australian Stock Exchange, and Hong Kong Stock Exchange. These are not bond futures but rather actual, real, honest-to-goodness bonds. These include over 1mn US municipal bonds (available to US clients only).
Exchange Traded Funds (ETFs): You can trade ETFs listed on 29 exchanges in 15 countries: the US, Canada, Mexico, France, Germany, Italy, Netherlands, Spain, Sweden, Switzerland, UK, Israel, Australia, Hong Kong, and India. I wouldn’t even begin to think about how many are available – well over 10k.
Mutual Funds: Hundreds of mutual fund providers offering thousands of funds to both US residents and non-residents. I counted 135 fund companies for non-residents, each of which would no doubt have dozens if not hundreds of funds available. I didn’t bother counting the number of fund companies available for US residents – it’s much higher. All told the company has over 46,000 mutual funds available, of which over 18,000 have no transaction fees. There’s also a search tool to help you navigate this incredible offering.
They also list warrants, structured products, and single stock futures. Hedge funds are available to Accredited Investors and Qualified Purchasers (if you have to ask, you’re probably not one.) Besides, the minimum investment is usually $25k, maybe more.
They even have one product I had never even heard of: Event Futures. That’s an attempt to rebrand the disreputable binary options (“yes” or “no” bets). Will the S&P 500 close above A,BCD today? Will gold close above $W,XYZ today? While binary options have a terrible reputation in the FX world and are banned in many places, these futures seem on the up-and-up. They’re listed on the Chicago Mercantile Exchange (CME) and the payout is much better than the usual binary option. If your contract expires in the money (i.e., if you win your bet) you win $20. The price of the future is between $0.25 to $19.75 and quoted in 25 cent increments, with a 10-cent commission. The usual binary option scam contract only pays out 70% of the cost of the option, making it one of the great losing bets of all time – much worse odds than going to a casino and playing black or red on the roulette wheel, and you don’t even get comped a drink by a hot waitress in a slinky black dress.
Separately, if you don’t feel like investing your money yourself, you can make use of their asset management service, called Interactive Advisors. You answer nine quick questions and the system will make up a portfolio comprised of equities, bonds, and “an inflation-hedging component.” They use ETFs for the equity and bond parts and commodities and real estate for the inflation-proofing. The exact mix depends on your risk preference. Or you can choose from any number of pre-made portfolios based on a particular theme, such as energy, health care, “mindful business models,” or “fair labor & thriving communities.”
For US clients, the firm has something called the Integrated Investment Management Program. This allows clients to deposit money through direct debit cards, borrow money against your account, and pay bills directly.
Interactive Brokers claims to have clients in “over 200 countries and territories.” That’s quite an achievement, considering that a) the United Nations only has 193 member states, and b) residents of some of them, like North Korea and Iran, aren’t allowed to open accounts with the firm. But “territories” widens the net a lot. Come on in, Guam! In most of these places you’ll have to be 18 to open a Cash account and 21 to be able to trade on margin.
The account opening process is fully digital and the required minimum deposit is as low as it gets: zero, in fact. (To start trading though you need to deposit $100, or $2,000 if you want to trade on margin.) On the other hand, the process is complicated and account verification takes a relatively long time, probably because the US is fussier about “Know Your Client” (KYC) regulations than many other countries. It can take about two or three working days to get your account approved after you’ve finished applying and submitted all the required documents.
Then you’ll want to fund your account. Interactive Broker is unusually inconvenient in that non-US clients can only fund their accounts using bank transfers, which are not only expensive but can take two or three days. US clients can use debit cards or checks (remember those?), Australian clients can use BPAY, and no one can use PayPal. I’m surprised they’re not accepting Pony Express transfers. You can only deposit money from an account in your name, part of the KYC regulations.
There’s no deposit fee, which is good because bank transfers are outrageously expensive already.
The firm offers an unusually wide range of 21 base currencies for your account: in addition to the usual USD, EUR, GBP, and JPY, you can use AUD, CAD, CHF, CNY, CZK, HKD, HUF, ILS, INR (only in India), KRW, MXN, NOK, NZD, PLN, RUB (at least, RUB used to be available – probably not now), SEK, SGD, and ZAR. Not all these currencies will be available in every country though. Clients under the Irish, Hungarian, and Indian entities face some restrictions, for example.
A bank transfer can take two or three business days to arrive. This is probably why your funds are subject to a withdrawal hold and can’t be withdrawn until three days after they were deposited.
The first withdrawal each month is free. After that, there’s a charge that varies depending on the currency and how it’s sent. Withdrawals are processed within 48 hours but may take up to five days to reach your account, depending on your bank. (As with deposits, withdrawals can only be made using bank transfers, except for US & Australian residents.) You can only send money to an account in your name, thanks to the Anti-Money Laundering regulations, and all non-profit funds are returned to the original deposit source.
One source of great fun: you can track your withdrawal in real-time on the Client Portal. Better than watching your laundry go around!
There’s bad news and good news here.
The bad news is that Interactive Brokers doesn’t allow you to trade through third-party platforms. You have to use one of their proprietary platforms. So no MetaTrader, no cTrader. This means:
The good news is, their platforms are plenty good enough. Among the best in the business, in fact.
They have five platforms:
IBKR GlobalTrader: trade stocks, options, ETFs, mutual funds, and crypto (in certain regions) from a mobile device. For beginners to intermediate.
Client Portal: This web-based application is a “one-stop destination to check quotes and place trades, see account balances, get reports, and manage your account.” Again, beginners to intermediate – a little more advanced than GlobalTrader. You can set most commonly used order types with this platform, such as Limit, Market, Stop, Stop Limit, Limit-on-Close, Market-on-Close, Trailing Stop, Trailing Stop Limit, and order time limits, such as Day, Good-'til-Canceled (GTC), Immediate or Cancel, Market-on-Open, and Limit-on-Open. The Client Portal is available in 11 languages: Dutch, English, French, German, Italian, Japanese, Russian, Simplified & Traditional Chinese, Slovakian, and Spanish. It has many excellent features, such as advanced charting capabilities, integrated news headlines, and access to research and education. Moreover it’s fairly easy to set up and use.
IBKR Mobile: The company says with this you can “easily trade and monitor your IBKR account on-the-go from your mobile device.” Available in both Android and iOS. This seems to be not for total beginners but not for the pros either. It offers the same extensive range of order types as the web trading platform and is available in all the same languages as the web trading platform except for Slovakian. There are numerous charts available and trades can be executed from inside the charts. It can be a little complicated to set it up for forex trading, but once that’s established it can compete with the best in the industry.
These platforms are in effect slimmed-down versions of the firm’s flagship platform:
Trader Workstation (TWS): Now we’re getting somewhere. This is a serious, serious product for intermediate to advanced traders. It’s complex and difficult to use. However, it provides access to everything you could want – more, in fact, than most people could imagine (see Trading Tools). You can trade the firm’s entire offering from this one portal, which basically means you can access most of the developed world’s financial markets with a click or two of your mouse (I suggest a trackball though – much better for your hands). No need for separate brokers for this, that, or the other thing. As mentioned above, you can access 71 different types of orders or algos to trade your position. Algorithmic trading is catered for. You can have numerous watchlists and customized market scanners. For an extra fee you can access all the news and research you could possibly want. And there are excellent risk management tools.
This is one of the most comprehensive and complete trading platforms out there. It’s ideal for a professional trader who might want to set up a delta hedge when entering into an options trade or who wants to graph a synthetic security. But while this complexity can be difficult and daunting to ordinary mortals, remember that you don’t have to use all its functions. You could just buy & sell AAPL all day long if you wanted to and never bother with the fancy stuff.
IBKR APIs: This is the kind of thing that if you don’t know what it is, then you probably don’t need it. An API is an application programming interface,a bit of software that allows one bit of software to talk to another. IBKR APIs enable traders to automate their trading strategies, request market data, and monitor their account balance and portfolio in real time. You can use Excel (using DDE or ActiveX) or C++, Posix C++, Java, and Visual Basic for ActiveX. And Python too, apparently. As you may have guessed, this is for the more advanced traders. Personally I have no clue about this. I’ve yet to master Excel macros.
There are two other specialty platforms:
IBKR EventTrader: This is a real simple platform for beginners who just want to trade the Event Futures mentioned above (aka binary options). All you have to do is say “yes” or “no.”
IMPACT: This is an app for your mobile device that allows you to “put your money where your heart is.” It’s to help stock market traders focused on Environmental, Social, and Corporate Governance (ESG) investing find companies and portfolios that meet their moral criteria. EG I’m a vegetarian so I wouldn’t want to invest in the meat industry.
However…given that many of Interactive Brokers’ clients are Americans, what if the client’s values are Republican Party values? Do they offer portfolios that only invest in companies that pollute the environment, discriminate against LGBT clients, or refuse to pay for birth control for their workers? Enquiring minds want to know!
For those outside the US who are focused on FX, the Trader Workstation has a special interface customized for trading FX: the FXTrader
FXTrader displays the best bid and ask prices from multiple liquidity providers. It conveys market direction instantly by showing rising prices in green and falling prices in orange. Each currency pair occupies its own "cell," complete with market data and order information, where you can create, transmit and cancel orders with a single click. It supports over 20 order types. Moreover, it’s not just for currencies – you can show data and manage orders on any instrument using its trading cells. It also includes additional real-time news from Thomson Reuters, Dow Jones, and others. Versions of FXTrader are available for the web and mobile platforms as well.
Verdict: For those who want to trade every or any asset under the sun (FX, stocks, options, futures, CFDs, etc) with powerful analytical tools, this is a great set-up. On the other hand, if you’re focused on just forex and CFDs, aren’t looking for much besides the main currency pairs and a few stock indices, and want to be plugged into the social network available on widely used platforms such as MT4, then maybe you should consider going elsewhere.
I’ve never seen so many types of orders: 71 different types of orders and algos. In this case, “algos” means pre-set programs that will execute your trade in a certain way. These range from “Accumulate/Distribute” to “VWAP – Best Efforts”. Many I’ve never heard of. Of course not all of them are available for every market – it would be impossible to have a “market on open” order in the FX market, which runs 24 hours a day.
(Accumulate/Distribute is an algo that slices your order up into smaller randomly sized orders that are executed at random intervals between two times that you specify, to enable you to work a large trade without being noticed. VWAP– Best Efforts seeks to achieve the Volume-Weighted Average Price calculated from the time you submit the order to the close of the market but doesn’t guarantee it.)
And that’s just the in-house orders & algos. They also offer an additional 51 third-partyalgos that provide additional order types. These are from CSFB, Fox River, Jeffries, and QB Algos (for futures).
It would take me days to run through all the trading tools available with Interactive Brokers’ trading platforms.
We already discussed the large number of orders and algos – the extensive range of ways to execute orders, especially large ones. We also discussed the various APIs that you can use to connect directly with their system and trade automatically.
The firm’s IB SmartRoutingTM function, mentioned above, automatically searches for the best available prices for stocks, options and combinations across exchanges and dark pools.
All of Interactive Brokers’ platforms have an innovative function called IBot. It’s Alexa for trading: an AI-powered tool that understands human speech (written or spoken) and will do your bidding as best it can. It saves you the trouble of looking through long trees of menus to manage your account, get information, execute orders, or take care of some other task. You can just type in what you want (or say it into an Alexa-powered machine) in normal language and the gremlins will take care of it: “Show my account margin,” “What’s my P&L?”, “Give me a 1 hour line chart of AAPL,” “Close all positions,” “Show all of my filled orders,” “Show the top tech companies by volume,” etc etc. Everything except “Make me a cappuccino,” and they’re probably working on that even as we speak. (Come to think of it, if you’re trading through Alexa, you might be able to do that too.)
Charting possibilities are almost endless, and trades can be executed through the charts. There are 127 technical indicators built in that you can access. Indicators accessed on the mobile app automatically synch with the TWS platform. Moreover, when viewing a chart on the mobile app, related news headlines display nearby. This is helpful for seeing the impact that news is having on the market.
IBKR Global Analyst allows you to search for stocks by region, country, industry, market cap and currency to find undervalued stocks worldwide.
PortfolioAnalyst®consolidates, tracks, and analyzes your portfolios and offers a variety of sophisticated analytics and reports to help you understand what’s going on in them.
Bond and mutual fund search functions. With over 1 million bonds available and over 46,000 mutual funds, it’s hard to find the ones that are right for you. The company provides a detailed search function to facilitate this task. For example, you can search for funds by type (bond, equity, both), country, fund family, and commission structure.
IBKR Investors’ Marketplace This is a networking area that offers the opportunity for Interactive Brokers’ clients to meet up with outside providers. Some of these offerings are for professional or high-net-worth investors, such as the Hedge Fund Marketplace or Administrators Marketplace. But there’s also an Advisor & Broker Marketplace for people looking for a financial advisor and a Research Marketplace for those who want access to institutional-caliber research.
Short Securities Availability: Is there a stock you hate? Want to short it? IBKR's Securities Loan Borrow (SLB) system is a fully electronic, self-service utility that lets clients search for availability of shortable securities globally from within the Client Portal.
US residents can take advantage of the firm’s Tax Optimizer, which lets clients fiddle with their accounts to minimize their tax liability (within legal limits, of course).
The IMPACT dashboard helps you to assess stocks relative to Environmental Social Governance (ESG) factors.
This is the one area where we can dispose of Interactive Brokers’ offering briefly. The firm doesn’t offer any copy trading alternatives in the narrow sense of the word. No PAMM accounts, no copying this trader or that trader, no linking up with ZuluTrade or Duplitrade.
As mentioned above though they do offer accounts through which the client can provide discretionary trading authority to a financial advisor of their choosing. Or there are the many actively managed or diversified portfolios offered by Interactive Brokers Asset Management.
OK, well all the time I saved not having to investigate copy trading facilities I’ll have to use investigating their Research & Education offering, because it’s massive. Here’s what the drop-down menu alone says:
Each one of those menu options leads to a full set of offerings that in itself is probably as much as what most other brokers offer. Together…well, it’s a lot. And all done in quite a professional manner. The main focus is stock market trading, not FX, but there’s a significant amount of information for everyone.
IBKR Campus is the overview site for all the others.
Traders’ Academy offers online courses on the concepts of trading and the tools, of course using the firm’s own trading tools as a way of both teaching the concepts and how to use Interactive Brokers’ platforms. There are hundreds of professionally produced videos with study notes & quizzes on stocks, options, futures, commodities, bonds, economics, technical analysis, and institutions, plus “Intro to IBKR Tools” and “Advanced IBKR Tools.” And lots more. Courses are divided between beginners, intermediate, and advanced.
There isn’t that much specific on forex. I only found one four-part series, two parts of which concern how foreign exchange rates will affect your investment in overseas stocks. But the courses on technical analysis, charts, key economic events, etc are as applicable to the FX market as they are to stocks and bonds.
Traders’ Insight provides articles and videos on the markets by the firm’s own analysts and economists and outside contributors. The company’s own people are serious analysts: a former US government economist and a former trader from Morgan Stanley, not “Joe Blogs who’s been trading from his bedroom for five years and now works as a salesman for us.” There’s commentary on stocks, options, futures, forex, fixed income, ETFs, commodities, crypto, ESG, securities lending, retirement, technical analysis, and macro.
I counted 147 outside contributors, from AlgoTrading101 (articles on algorithmic trading and an online course) to WisdomTree US, a listed company that creates portfolios that it sells as Exchange-Traded Products (ETP). Some – like State Street Global Advisors, for example – provide heaps of world-class research for free, while others, like the technical analysis website ChartSmarter, require a paid subscription.
IBKR Webinars gives free webinars on trading, world finance, and current trends in the markets. Webinars are provided by such first-class contributors as Cboe Global Markets, CME Group, SGX (Singapore Exchange), and of course Interactive Brokers themselves. Recent topics included “US Equity Markets: 2022 Wrapped,” “Calendar Spreads,” “Tax Loss Harvesting,” “Strategist for a Volatile Market,” etc.
IBKR Podcasts offers what looks like a weekly podcast on the markets from both internal and external contributors. Personally I don’t listen to podcasts, but that’s because my daily commute is about 10 meters long. For those Americans who drive an hour each way to their jobs in their cars, or back when I took the train every day, maybe I would’ve had a different view.
IBKR Quant I’m sure it’s wonderful. It’s just that I’m not at all equipped to evaluate a website with articles like “How to Request Market Data via the Python API” Or “Hull-White 2-factor Model: 2) Zero Coupon Bond.” But if you have any interest in algorithmic trading or the financial mathematics, this is the place for you. Maybe articles like “How Much Salary Does a Quant Earn?” would grab your attention.
Student Trading Lab This site is for educators who want paper trading accounts for their students so they can get real-life experience of the financial markets.
Short Videos As the name suggests, lots and lots of short videos to teach you how to use the many features of the company’s trading platforms. It’s impressively well done. Most are in English but there are also videos in Mandarin, Italian, Spanish, French, Dutch, German, and Japanese.
For those who are trading stocks, you can receive an email alerting you to a new analyst buy or sell recommendation on a stock you hold or reminders about upcoming dividends or options expiries. You can also receive daily ETF trading ideas from Trading Central. If you’re keen on Environmental, Social and Governance (ESG) investing, ESG scores from Refinitiv are available.
If this isn’t enough for you, you can subscribe to research and recommendations from third-party vendors as well for an additional fee.
Interactive Brokers also streams news from major news agencies, such as Reuters, Dow Jones, and Market News International (MNI), plus Bloomberg Television.
In short, it’s hard to think of anything any reasonable trader would want that isn’t available here, except perhaps more FX-specific tutorials. Oh, there is one thing: no Autochartist. That’s about it. But given the 127 built-in indicators and many chart types available, I’m not sure that there’s any use for it, either.
As mentioned above, your first option will normally be to ask IBot. If you don’t get an answer there, there’s a huge FAQ section. If that fails, you can contact the “community of experts.” And after that? Customer service is available 24/6. There are several ways to contact customer service:
I got a full answer to my emailed questions the next day, and although the format was a bit awkward to read, it answered my question completely.
A lot depends on where you are and what your aims are. If you’re a US resident who simply wants to start trading forex, this probably isn’t the best choice for you. If on the other hand you’re a US resident who wants to get started investing, you could hardly do better. Interactive Brokers offers stocks, bonds, commodities, mutual funds, and ETFs from virtually every major market around the world. Moreover, its near-universal product range is matched by a veritable information supermarket, including an exhaustive series of introductory videos on most aspects of financial markets. The firm’s web-based and mobile platforms are relatively simple and aimed at retail clients, while its desktop trading platform is aimed at sophisticated investors and professionals.
Regardless of how or what you trade, the broker you choose should be safe to use, affordable, and offer everything you need to trade at your best. That’s why we’re highly selective. We only feature brokers regulated by a trusted authority and we make it easy to compare their fees & features, so that you can make an informed choice.
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