Interactive Brokers Review 2023
As the financial markets continue to flourish, an increasing number of online trading brokers are emerging to assist traders in maximizing their financial market returns. It is essential to ensure that the online trading broker you select offers the most essential features.
In this article, we will examine Interactive Brokers (IBKR), a leading financial services provider that offers trading services to both novices and experts. For the purpose of evaluating Interactive Brokers’ potential, we conducted a comprehensive review of its regulations, platforms, global access, registration, leverage, and education.
Regulation and Security
Interactive Brokers (IB) was founded in 1977 and has been one of the most reputable brokers in the financial industry since then. It is an agency-only, direct market access broker and provides customers with execution, clearing, settlement, and prime brokerage. The scope of its business includes equity trading brokerage and commodity futures and options brokerage.
IB is regulated in the US and UK:
United States: As a Futures Commission Merchant, IB is licensed and regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). As an equity broker-dealer, IB is subject to the Securities Exchange Act of 1934 and is regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). IB is also a member of the Securities Investor Protection Corporation (SIPC) — a nonprofit corporation created by an act of Congress to protect the clients of brokerage firms in the event of a broker’s insolvency.
United Kingdom: Interactive Brokers (U.K.) Limited is licensed and regulated by the FCA, and its regulated products are covered by the UK’s financial services compensation scheme (FSCS).
Interactive Brokers’ account security is robust and includes all of the features you would expect, including firewalls, 128-bit encryption, two-factor authentication, and mobile security features. Other brokers are beginning to implement voice recognition technology for customer service, but they do not.
The broker keeps clients’ funds separate from its operational funds and does not use them to run its day-to-day business.
Negative Balance Protection
Negative balance protection is necessary for leveraged products, as it is easy to lose more than your trading capital and become indebted to the broker. IB negative balance protection by making margin calls and closing out a position to prevent the equity from becoming negative.
Is Interactive Brokers available worldwide?
IBKR has offices in the United States, Switzerland, Canada, Hong Kong, the United Kingdom, Australia, Hungary, Russia, Japan, India, China, Luxembourg, Estonia, Singapore, and Ireland, and accepts clients from more than 220 countries and territories. Click here to see the full-list.
Interactive Brokers provides a variety of trading platform options, including:
The Trader WorkStation (TWS)
This is the broker’s premier trading platform. It features one-click trading, order management tools, charts, and watch lists. It also includes a wide range of other tools, such as the Options Strategy Lab, Volatility Lab, Market Scanners ,and Portfolio Builder, which you can use to test out your investment ideas, research different markets, and construct a diversified portfolio.
The platform gives you real-time access to market news from publications like Reuters, Dow Jones, and Morningstar. It also allows you to view and create customizable charts for more effective analysis.
Web Trading Portal
Interactive Brokers also provides a simplified portal that you can access directly from the website without having to download and install the TWS. This interface makes it easier to make trades, track your portfolio, and see key metrics, such as your net liquidation value. While it doesn’t offer quite as many research tools, it still allows you to track market news and access some charts for technical analysis, though with fewer data points than on the desktop version.
IBKR Mobile Trading App
The broker provides traders with a proprietary mobile trading app. It allows traders to access over 150 markets worldwide right from the palm of their hands. Thanks to its powerful trading tools, traders can trade stocks, options, futures, currencies, bonds, and more no matter where they are with advanced order types and trading tools.
With over 50 data columns and access to institutional quality research, IBKR Mobile provides the same functions as the powerful desktop TWS trading platform.
The IBKR Mobile works on both Android and iOS devices. It also includes most of the features from the web service but far less than what’s available on the desktop version. Through the mobile app, you can still trade all available asset classes while accessing similar research resources as the other platforms.
The IBKR mobile app features comprehensive charting and the ability to execute trades directly from the charts. It also comes with 127 available indicators.
Interactive Brokers serves both corporate and retail clients. It offers different account options to suit its different clientele. The broker offers Individual, Joint, Trust, IRA, UGMA/UTMA, and Islamic accounts. The minimum deposits for these accounts range from $0 to $10,000 USD or the equivalent. And they are tailored to the requirements of individual traders and investors.
The Islamic account is for Islamic clients who cannot pay interest on swaps due to their religious beliefs. It also offers a demo, which traders can use to get acquainted with the broker’s trading platforms without risking their funds.
Before trading on a live account, traders must first sign up and verify their identity. The overall procedure is straightforward and takes only a few minutes. Click on the “Open Account” button on the right-hand side of the Interactive Brokers website and you will be asked to provide an email address and create a username and password.
Once this is done, a verification email will be sent to the provided email address. Click the link in the email to verify your email. This will redirect you to the Interactive Brokers login page, where you will log in to continue with your application process.
You will be asked to provide your information and select the account option you want. Finally, you will have to submit your proof of identity and address.
After completing the process, you will receive an email confirming account approval. This is not an instant email and may take up to seven business days.
Interactive Brokers boasts a straightforward trading interface that is loaded with engaging features and graphics to help traders maximize their deals. The Interactive Brokers interface provides access to your live and demo accounts. The interface makes it simple for traders to deposit funds, access the trading platform, and utilize the trade analytics area.
Deposit and Withdrawals
You handle your deposits and withdrawals from the Account Management section. You log in to your portal to gain access to that section. You will see the payment options available to you.
Interactive Brokers provides a variety of flexible and convenient account funding options, including ACH, Bank Wire, Online Bill Pay, and Mail a Check. Depending on the currency involved, wire transfers may be the quickest means of depositing funds at Interactive Brokers. It involves two steps:
- Log in to your IBKR account to generate a deposit notification each time you send a wire transfer. This crucial step ensures the correct routing of your funds if they do not receive your IBKR account number and account title from the wire template you created at your bank.
- Contact your bank and provide them with the IBKR wiring instructions to request a bank wire. Your bank determines the time required to transfer funds to your IBKR account, which can take up to four business days.
For withdrawals, the broker offers the same payment options. You are advised to withdraw through the method you deposited funds. The Interactive Brokers Web Interface or the Mobile Application can be used to apply for fund withdrawals. Click here to know more about IB’s withdrawals and terms and conditions.
Interactive Brokers offers a wide range of financial assets, including stocks, options, futures, currencies, bonds, mutual funds, and cryptocurrencies, among others. It offers access to some of the biggest stocks traded on various exchanges around the world, including Chinese exchanges.
The broker introduces new items on a regular basis in response to client demand and links to new electronic exchanges as soon as possible.
Commissions and Fees
As with other brokers, Interactive Brokers charge various fees, including spreads, commissions, borrowing fees, and rollover fees.
The spreads and commissions vary with the assets and account type. The broker also charges data subscription fees for the market data supplied over the month, and the data subscription cost also varies with the account type.
The use of leverage allows you to increase your position size using borrowed funds. This way, you can increase your profit potential, but note that it can also magnify your losses.
For Interactive Brokers, the allowable leverage depends on the asset and the account type.
Analysis and Education
Interactive Brokers provides a variety of educational resources to help traders make informed trading decisions. The following is a list of educational resources currently available:
The trading academy of the broker can be found under the “Education” section of the broker’s homepage. It includes a variety of instructional tools, such as learning articles, podcasts, and webinars, among others. Trading Academy’s many instructional offerings are intended to help traders make more informed trading decisions.
Traders can gain insights into the most recent market updates by visiting this section of the broker’s website dedicated to giving such information, which is titled “Trading News.” It provides traders with news items that inform them of the most recent financial market developments.
Interactive Brokers provides phone, email, and live chat support around the clock, six days per week. You can also reach them via their social media handles on Facebook, Twitter, and LinkedIn. The customer service staff are courteous and quick to respond.
Reputation amongst Traders
Different trading forums and review websites have several positive testimonials for the broker. It is favored by traders for its responsive customer service and trading platform. Interactive Brokers received 3.8 stars out of 5 on Trustpilot, a popular review website, based on 1,922 reviews.
Can beginners trade with Interactive Brokers?
Interactive Brokers provides an abundance of trading education and customer service, which can assist novices in understanding the trading process and how the market operates. It also provides a demo account that novices can use to experience trading in a risk-free environment before deciding whether trading is right for them. However, its trading platform is too complicated for beginners.
Interactive Brokers is one of the biggest online brokers using technology to facilitate financial trading. The broker is regulated in multiple jurisdictions by tier-1 regulators, including the CFTC and the SEC in the US and the FCA in the UK.
Overall, we discovered that IBKR is ideal for professional traders who wish to make use of a robust suite of trading tools and access to a vast array of tradable assets across the world. Despite IBKR’s efforts to make its technology more appealing to everyone, the abundance of tools and resources may continue to intimidate many traders who are new to the market.