Interactive Brokers review: A great platform for active investors
monticello / Shutterstock
Updated: January 12, 2024
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
Interactive Brokers overview
Who is Interactive Brokers for?
Interactive Brokers initially established itself as the premier ultra-low-cost broker for active traders. Their rock-bottom fees and robust features cemented their position as one of the most popular brokerages. However, the platform is making a push into retail investors lately.
Additions, such as IBKR Lite, fractional shares, and IBKR Campus flatten the learning curve for newcomers. Today, Interactive Brokers has features for any investor; it’s just a matter of navigating a Frankenstein of services. That said, Interactive Brokers is designed for three core categories of users;
- 1.
Retail Investors: With IBKR Lite, investors get unlimited commission-free trading for U.S. stocks and ETFs.
- 2.
Sophisticated and Active Traders: The IBKR Pro plan offers robust trading tools and fees that align with active traders.
- 3.
Institutions: IBKR is also for institutional investors, such as hedge funds, family offices, and registered investment advisors. However, this article will focus on the former two categories.
Read more: Best investment strategies (and how to choose the right one for you)
Interactive Brokers pros and cons
Pros
-
Low commissions, margin rates, and pricing overall
-
Powerful trading platforms and tools
-
Massive selection of tradable securities, including crypto
-
Access to global markets across 150 exchanges
-
Fractional shares trading
-
Strong interest rates on cash balances
-
Commission-free trading with IBKR Lite
Cons
-
Complex overall user experience
-
Confusing pricing structure for IBKR Pro
-
Less account options compared to competitors
-
Features aren’t available on each individual platform
Features of Interactive Brokers
Account types
Before diving into all the bells and whistles, it’s worthwhile to understand the accounts you can hold within IBKR. While Interactive Brokers offers a range of basic accounts, it lacks some key account types that competitors provide, notably solo 401(k)s and banking services.
The platform provides basic individual and joint taxable brokerage accounts. You can also choose between different individual retirement accounts (IRAs), including traditional, Roth and SEP. Finally, Interactive Brokers offers both UGMA and UTMA custodial accounts.
However, you may notice that some account types are missing from this list. For example, Interactive Brokers doesn't offer Solo 401(k)s, even though they're a popular retirement savings tool for self-employed individuals. You also won't have access to a SIMPLE IRA, banking accounts, or other popular investment accounts.
Investment selection
Next, it’s key to understand the type of investment options within your IBKR account. The brokerage shines with unparalleled investment choices.
As usual, you can invest in stocks, bonds, exchange-traded funds (ETFs) and mutual funds. More sophisticated traders will be delighted to access complex strategies like options, cryptocurrencies, futures, and forex. While the fee structure changes by asset class (and choice of Pro vs Lite plan), you’ll generally receive market-leading rates.
Eligible IBKR clients can also trade a handful of cryptocurrencies. However, the selection is quite limited, ranging from Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). Crypto investing with IBKR is somewhat nuanced, as you’ll need to transfer and hold the crypto in a Paxos or Zero Hash account. However, everything appears the same from the front end. You can trade cryptocurrency alongside other asset classes on the Interactive Brokers platform, creating a unified experience.
Trading platforms
By now, we’ve covered the different account types and investments available with Interactive Brokers. However, IBKR has seven trading platforms that cater to any investment level. To clarify, trading platforms are the tools you log in to make trades.
Platforms such as IBKR Trader Workstation (TWS) offer a desktop experience to advanced traders. Meanwhile, IBKR GlobalTrader provides a friendlier mobile experience to newcomers. Each platform caters to different investment goals and has different functionalities.
Although confusing, it’s critical to understand the best IBKR platform for your investment goals. This is perhaps the most overwhelming part, as IBKR doesn’t do a great job of simplifying your choices. However, this provides a unique opportunity to experiment with different investment styles, from algorithm trading to impact investing.
BKR platforms for beginner traders
Beginner and intermediate investors can turn to streamlined platforms. Reviewing short-float, standard deviation, and trend line breakouts is unnecessary when you aim to buy a basic index fund. However, you may prefer fractional share investing, simple account management, and sustainable investing options.
IBKR’s beginner platforms cater to this audience and directly compete with other options, such as Robinhood. Investors can leverage an IBKR Lite plan for commission-free trading (explained further in the article).
- IBKR Desktop: Streamlined desktop platform for beginner to intermediate traders. Easy-to-use interface to trade stocks, options, futures and more while providing great pricing, execution, research and market data.
- Client Portal: Easy-to-use web platform accessible on any device. Allows users of all experience levels to view, trade, and manage their accounts with a single login. No download is required.
- IBKR GlobalTrader: Streamlined mobile experience tailored to beginner and intermediate traders. Invest and trade fractional shares of stocks, ETFs and options worldwide. Start with as little as $1.
- IMPACT: Mobile app to discover and invest in companies aligned with personal values. Available on iOS and Android devices.
IBKR platforms for advanced traders
For experienced investors with complex trading strategies, Interactive Brokers offers platforms with advanced functionality. These platforms are more complex to learn but won’t constrain you. Advanced traders may also appreciate using the IBKR Pro plan for favorable margin and cash balance rates. This maximizes returns in between trade opportunities.
- Trader Workstation: Flagship desktop platform with advanced tools for seasoned, active traders who trade multiple products across 150+ markets. Offers speed, flexibility, and unified access to stocks, options, futures, currencies, bonds and funds.
- IBKR Mobile: Robust mobile trading app for experienced traders. Provides power to trade various assets across 150+ global markets. Advanced order types and tools. Access trades anytime, anywhere.
- IBKR APIs: A suite of APIs to support building custom trading apps and accessing global investments. Various options span beginner Excel API to an advanced FIX API.
Additional features spotlight
The icing on the cake of Interactive Brokers is the rabbit hole of additional features provided. While useful, they can overwhelm newcomers, as if IBKR is screaming at you with a constant barrage of use cases.
The deep library of additional features sets IBKR in a league of its own. Not every trader may use the additional features, but they exist for those who want to maximize their experience. We’ve rounded up a few of our favorite features; however, their usability varies across platforms.
Interest on instantly available cash
Cash balances over $10,000 can earn up to 4.83% with a Pro plan. The rate drops to 3.83% with an IBKR Lite plan. The interest accrues daily and posts into your account monthly. This lets investors earn a strong interest rate while awaiting the next investment opportunity.
Fractional shares trading
Fractional Trading allows IBKR clients to purchase fractional share quantities of eligible US, Canadian, and European stocks and ETFs. Users can spread investment dollars across more securities by dividing investments into fractions of shares, regardless of each share's price. Fractional Trading works across all IBKR trading platforms.
Recurring Investments
The Recurring Investments tool lets users set up automated recurring trades into selected US and European stocks. Users define the start date, frequency, and which fractional shares to purchase over time. Recurring Investments provide a simple way for clients to dollar-cost average into the market using an automated schedule they define.
Overnight Trading Hours
Overnight Trading allows IBKR clients to trade certain US stocks and ETFs during extended market hours. This expands trading access during the week, giving investors more opportunity to react to news and events outside regular market hours. Overnight Trading is available on select platforms, including Trader Workstation, Client Portal, and Mobile.
The Discover Tool
The Discover Tool helps users identify trading opportunities, enhance strategies, and explore new markets. Users can customize filters based on their trading style and preferences to surface relevant ideas. Key features include Trading Central's Market Buzz bubble view highlighting trending assets, Technical Insights for directional market signals and pattern recognition, News Analytics revealing market-moving events, and more.
PortfolioAnalyst
PortfolioAnalyst is a free aggregation platform that consolidates, tracks and analyzes your finances. Users can connect accounts ranging from their investments, checking, savings, credit cards, annuities, incentive plans, mortgages, student loans, and more.
Key features include aggregated views of balances, returns, allocations, risk metrics, and other analytics. Recent upgrades include an integrated real-time dashboard showing various charts and tools to monitor portfolios.
Fundamentals Explorer
The Fundamentals Explorer is a research tool that provides comprehensive data at no additional cost. It consolidates hundreds of key data points from 80+ sources into a unified platform available across all IBKR trading interfaces. Users can analyze financials, ownership structure, analyst forecasts, ESG ratings, historical trends, and news.
Options Wizard
The Options Wizard helps users easily create complex options trading strategies. Users input their price and volatility forecasts for a stock, and the Wizard suggests common strategies that align with their projections. The tool allows filtering and comparing potential strategies by metrics like probability of profit. Users can tap any strategy to view details and create an order with one click.
IBot
IBot is like ChatGPT for portfolio management. It lets you access trading tools and account information by typing or speaking natural language commands. Traders can use IBot to check quotes, view charts, run screeners, manage orders, and get account details. IBot works across Interactive Brokers' desktop, mobile, and web platforms.
IBKR Campus
The IBKR Campus is a free educational platform that provides investors with content to navigate the trading environment. This helps investors, regardless of their experience, enhance their understanding of markets, trading strategies, and IBKR's platforms and tools.
Learn more about Interactive BrokersDrawbacks of Interactive Brokers
Complex user experience
While packed with features and tools, Interactive Brokers suffers from a complex user experience that can overwhelm beginners. Between multiple platforms, account types, pricing structures and investments, it takes effort to grasp what IBKR offers.
Finding key details on a dense website is not always intuitive. The sheer depth of IBKR's offerings creates a learning curve. So, while IBKR excels for advanced traders, new investors may prefer more streamlined brokers.
Limited retirement accounts
Compared to competitors, Interactive Brokers lacks key account types for retirement and small business investors. For individuals, IBKR does not support solo 401(k)s and SIMPLE IRAs, which are popular among the self-employed. While sufficient for basic retirement and organization needs, IBKR trails rivals in retirement plans.
Interactive Brokers pricing and fees
Interactive Brokers is known for rock-bottom rates and fees. However, their IBKR Lite plan adds another layer to their pricing. The following table details pricing across plans for the most popular asset classes.
Users can switch between the pricing plans anytime based on their evolving needs. So both plans provide flexibility tailored to a range of trading requirements.
IBKR Pro vs. Lite
Interactive Brokers offers two main pricing plans: IBKR Pro and IBKR Lite. While both provide access to IBKR's powerful trading platforms, they differ in fees, margin rates, account types allowed, and some functionality.
IBKR Lite is better for retail investors, especially those trading smaller volumes in US stocks and ETFs. Meanwhile, IBKR Pro is tailored to active traders with larger volumes, margin trading, and global asset needs. Here’s an overview of the two plans;
- Trading commission: IBKR Lite offers commission-free trading on US stocks and ETFs. IBKR Pro has fixed or tiered commissions per trade.
- Margin costs: Margin rates are lower for IBKR Pro
- Cash balance interest rates: IBKR Pro pays higher interest rates on cash balances.
- Trading hours: IBKR Pro permits trading starting at 4 am ET before the market opens. IBKR Lite trading starts at 7 am.
Additional services: Some exclusive tools like IB SmartRouting help support the best execution price.
Get started with Interactive BrokersInteractive Brokers customer service
Interactive Brokers makes it easy to get help when you need it. You can request customer service via email, phone or live chat. Live chat support is available 24 hours a day, Monday through Friday, with limited support hours on Sundays. Phone support is available Monday through Friday from 8 a.m. to 8 p.m., Eastern Time, and Sundays from 1 p.m. to 7 p.m. U.S. users can call the following numbers for phone support:
- 877-442-2757 (Toll-Free)
- 312-542-6901 (Direct Dial)
It's worth noting that Interactive Brokers is an entirely online company. As a result, there are no physical branches or offices where you can speak to a customer service representative.
Interactive Brokers also offers Ibot, an AI-powered resource that can provide quick access to information, account data, trading tools and help from Client Services.
Alternatives to Interactive Brokers
Not sure that Interactive Brokers is the right for you? Here are a few similar brokers that may be worth exploring.
| Highlights | Ally Invest | E*TRADE | Robinhood |
|---|---|---|---|
| Rating | 4.5/5 | 4.8/5 | 4.3/5 |
| Min. Investment | $0 | $0 | $0 |
| Stock Trades | $0/trade | $0/trade | $0/trade |
| Options Trades | $0.50/contract | $0.65/contract | $0 |
| Crypto Trades | ❌ | ❌ | ✔️ |
| Mutual Funds | ✔️ | ✔️ | ❌ |
| Virtual Trading | ❌ | ✔️ | ✔️ |
| Learn more | Open account | Open account | Open account |
| Read reviews | Ally Invest review | E*TRADE review | Robinhood review |
Want even more options? Check out our full list of the best online stock brokers.
Ally Invest vs. Interactive Brokers
Ally Invest and Interactive Brokers cater to different types of investors. Ally Invest positions itself as an integrated banking and investment solution, appealing to more casual investors looking for simplicity. Interactive Brokers provides best-in-class trading technology, tools, and pricing for active traders and investors.
Ally Invest offers a user-friendly website and robo-advisor for less active investors to build and manage long-term, set-it-and-forget-it portfolios easily. Interactive Brokers' powerful but denser platforms can be overwhelming for beginners. Ally Invest also integrates banking products like savings and checking accounts, while Interactive Brokers focuses on investments.
However, advanced and active traders benefit from Interactive Brokers' more expansive trading options. Through advanced platforms, Interactive Brokers offers trading in stocks, bonds, mutual funds, forex, futures, and cryptocurrencies. It also provides low margin rates, advanced order routing, and global trading. The breadth of tools and products available makes Interactive Brokers the preferred choice for more sophisticated investors and traders.
E*TRADE vs. Interactive Brokers
E*TRADE and Interactive Brokers offer robust trading platforms catering to mainstream and advanced
traders but have some key differences.
The Power E*TRADE platform focuses on intuitive usability for self-directed investors trading primarily US stocks, ETFs, options and mutual funds. Its strengths are ease of use, guided support features, research capabilities, and robust screeners and scans. The straightforward pricing models appeal to casual, long-term investors.
In contrast, Interactive Brokers' Trader Workstation (TWS) targets more sophisticated traders seeking global market access, advanced order types, and customizable workspaces. Traders can analyze and trade stocks, ETFs, options, futures, forex and crypto across 150+ international markets. However, this expansive functionality results in complexity that mainstream investors may find challenging.
Both companies also offer simplified platforms to newcomer investors. E*TRADE Web and App platforms go head to head with IBKR’s Desktop and GlobalTrader platforms.
Robinhood vs. Interactive Brokers
Robinhood is a mobile-first brokerage that positions itself as a straightforward trading app for beginners. It directly competes with IBKR’s GlobalTrader app when using a Lite plan. Both platforms offer low-cost trades on stocks, ETFs, options, and crypto.
Furthermore, both options enable fractional share trading, benefitting newcomers. This allows buying slices of stocks and ETFs, making investing more accessible for small portfolio sizes.
However, Robinhood seems more focused on simplicity and ease of use for beginner investors. At the same time, IBKR GlobalTrader offers more advanced trading tools like options chain analysis, multi-leg option strategies, and overnight trading of US stocks. This is amplified by IBKR GlobalTrader’s enhanced access to 90+ global stock markets.
Investors preferring simplicity may prefer Robinhood. However, IBKR GlobalTrader offers similar features with more flexibility.
Interactive Brokers summary
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
Updated: January 12, 2024
We adhere to strict standards of editorial integrity to help you make decisions with confidence. Please be aware that some (or all) products and services linked in this article are from our sponsors.
Interactive Brokers spans solutions for all investors. Although its scale creates complexity, the depth of IBKR's tools enables everything from cost-free trades to quant trading algorithms. Casual and advanced traders alike will find offerings explicitly tailored to their needs. It’s just a matter of navigating the maze of functionality.
So, while beginners may still prefer streamlined rivals, IBKR's continuous enhancements make this broker more welcoming every day.
With files from Erin Gobler
Latest Articles
Disclaimer
The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.