Is Interactive Broker the best solution for investing? Read this article to find out what we think.
Globally recognized for stock market investment and trading, the online broker Interactive Broker is present in many countries. It provides access to over 135 markets in 33 countries and offers a wide range of financial instruments, including physical stocks, CFDs, ETFs, currency pairs, bonds and options.
This US-based broker is currently trusted by several million users. If you want to know more about it, this article is for you! Read on for information about reliability, available financial instruments and rates.
The online broker has nine international subsidiaries located in the US, Hong Kong, Canada, India, Japan, the UK, Luxembourg, Singapore and Australia. Interactive Broker is a brand operated by the parent company IBG LLC. It is a global group that was founded in 1978 by Thomas Peterfly and was originally known as T.P & Co until 2000. Present in 33 countries, this online broker provides access to almost every stock exchange in the world.
Interactive Broker is popular because of its decades of experience in the financial sector. In addition, it complies with current standards and is regulated by the main market control bodies. It is a member of the NYSE (New York Stock Exchange), which is the largest stock market in the world. It is also a member of FINRA (Financial industry regulatory authority), which is an independent organization operating in the United States for the protection of investors and the regulation of securities companies. This online broker also benefits from the SIPC (Securities Investor Protection Corporation), which has been protecting investors for over 50 years. Interactive Broker is regulated by the CFTC (Commodity Futures Trading Commission) and the SEC (Securities and Exchange Commission), which is the US federal agency responsible for the regulation, control and supervision of the financial markets in the USA.
Interactive Broker's operations are in compliance with the regulations of the financial authorities in each country in which it operates, including in Canada, the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF). In the United Kingdom, it is licensed and regulated by the Financial Conduct Authority. Its Luxembourg subsidiary is a member of the Investor Compensation Scheme (ICS) and is regulated by the Commission de Surveillance du Secteur Financier (CSSF). Other authorities that regulate its activities include the Central Bank of Ireland, the Australian Securities and Investments Commission (AFSL), the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore.
Interactive Broker has also gained a lot of credibility among investors and traders, thanks to the numerous awards it has received. These include:
This online broker has a market capitalization of over 28 billion USD. This means that it has the capacity to compensate its clients in case of bankruptcy. Moreover, their funds are covered by SIPC insurance. This provides coverage of up to $500,000 for securities and $250,000 for foreign exchange. This means that each client has a total of $750,000 in financial coverage. For accounts holding more than $250,000 in cash, FDIC insurance can supplement the potential claim up to $2.5 million.
Interactive Broker's technical support is available and responsive. Traders have many means of contact: telephone, email, chat. In addition, this broker allows users of its platform to make recommendations to improve its services. It also offers numerous online guides, FAQs, release notes, a forum and various online knowledge resources.
At Interactive Broker, you can choose between two main account types, either an individual account or an institutional account. Individual accounts are intended to be used by one or more individuals.
Legal entities and registered financial advisors must open an institutional account. Investors also have a free demo account at their disposal so that they can use virtual funds to test their trading strategies. At Interactive Broker, the demo account allows the use of 1 million USD in the real markets. This large virtual fund allows seasoned traders to recreate the conditions of trading large volumes of assets.
For individual traders, Interactive Broker allows you to sign up for an individual account. This is specifically designed for individuals to manage their own funds. However, the account holder can add other people by proxy. However, this broker also offers the subscription to a joint account, which is especially dedicated to be used by two people.
Each of these will also be able to add other users via the proxy. For US tax residents, this broker also provides an individual retirement account.
At Interactive Broker, legal entities can also open accounts to invest on behalf of their clients. However, the Registered Investment Advisor account is for US professionals who manage their clients' funds. This type of account is called UGMA & UTMA and can be used by the guardian of a minor.
It is also possible to open an account with friends or family. This allows investors to manage their investments, as well as those of their family or friends. However, the number of holders of this type of account is limited to 15 people. These people have access to all the features of the platform.
Institutional investors can take advantage of several account types at Interactive Broker. For example, companies can open a Proprietary Trading Group, which is an account where multiple users can place orders for the company. For small and medium-sized businesses that have fewer requirements, the online broker also offers dedicated small business accounts.
It also offers a broker account for licensed brokers. This type of account supports the simultaneous activity of several users in different investment areas, which is ideal for combining stock buying and trading, for example. Interactive Broker can also provide advisor accounts for professionals who need an account for each of their clients. Wealth management firms also have the option of subscribing to family office accounts.
This online broker offers a comprehensive range of financial instruments, thanks to its presence in the main stock markets around the world. It offers financial products from America (USA, Canada, Mexico), Europe (Austria, Hungary, Poland, Belgium, Italy, Israel, Spain, Estonia, Netherlands, Sweden, France, Switzerland, Latvia, Germany, Lithuania, Norway, United Kingdom), Asia-Pacific (Australia, India, Singapore, Hong Kong, Japan) and Africa (South Africa).
Interactive Broker offers stocks in more than 80 global markets. It features low margin rates and the ability to invest in fractional shares to further diversify the portfolio. Its commissions range from USD 0.0005 to USD 0.03335 per share. It uses the SmartRouting system which searches for the lowest price of a stock or ETF on all markets. Its margin lending rate, ranging from 0.75% to 1.57%, is among the lowest in the industry. To facilitate investments, users are informed in real time of the securities available for short selling.
Moreover, for the execution of the most varied investment strategies, this online broker offers 100 order types, ranging from simple orders to complex algorithmic trading. To facilitate decision making, a multitude of trading tools are also available. In particular, the Fundamentals Explorer allows you to analyze over 30,000 companies, through more than 300 data points per company, thanks to over 80 sources of reports and releases.
The financial instruments offered by Interactive Broker come from over 30 stock markets. This guarantees an exceptional choice. In addition, its commissions are limited to between 0.15 USD and 0.65 USD per option contract. This online broker offers many professional features for trading options. In particular, the option writing tool helps to generate additional income, as it identifies the number of covered stock positions to be written against the uncovered ones. The option rollover tool also allows you to roll over expiring options by extending the expiration dates.
In addition, OptionTrader allows you to create and manage order combinations, while displaying the full range of available option chains. You can also use Options Analytics to simulate premiums based on key factors such as price, time and implied volatility.
Other tools are also available: Options Strategy Builder (access to predefined combinations), Options Strategy Lab (identification of better potential gains), Probability Lab (simulations of potentially lucrative options strategies), Volatility Lab (history and forecast of volatility)...
At Interactive Broker, you can trade futures contracts on over 30 global stock markets, with low commissions ranging from $0.25 to $0.85. Many categories are available: agriculture, cryptocurrency, currencies, energy, stock indexes, fixed income, interest rates, metals, softs and volatility indices. Several trading tools can be used: ComboTrader (predefined strategy templates and possibility to create custom programs), SpreadTrader (manage all your positions on a single screen), Index Arbitrage Indicator (measure the spread and analyze your strategies).
Traders have direct access to interbank rates. Over 100 currency pairs based on 23 currencies (USD, AUD, CAD, CHF, CNH, CZK, DKK, EUR, GBP, HKD, HUF, ILS, JPY, MXN, NOK, NZD, PLN, RUB, SEK, SGD, TRY, ZAR and KRW) are available.
Fully transparent, Forex commissions range from 0.08% to 0.20%, with no spread. The Forex trading tools offered are of professional quality: FXTrader (real time quote flow, up/down indicators, information on volumes/transactions in progress/executions/positions/average price/losses/profits...).
Choose from over one million global fixed income securities. Traders can trade directly with each other. They have a search tool to compare available yields. This broker does not spread or mark up trades. Its commissions on bonds are completely transparent, ranging from 0.01 to 10 basis points depending on the volume traded. You can find thousands of Treasury Bonds, Corporate Bonds and Municipal Bonds.
Interactive Broker offers over 40,000 funds from around the world in 400 categories, including 7,700 funds with no transaction fees. Commissions and transaction fees, if any, are low, at $14.95 or 3% of the traded value for US funds and €4.95 for others. You can trade funds from Allianz, American Funds, BlackRock, Fidelity, Franklin Templeton, Invesco, MFS, PIMCO... Investors can also use a mutual fund search tool to filter funds by country, commissions charged, fund type or category and many other criteria.
This online broker offers CFDs indexed on stocks, indices, precious metals and currency pairs. It stands out for its low financing rates and low commissions for trading contracts for differences. In particular, commissions start at 0.05% for equity CFDs. For index CFDs, commissions range from just 0.005% to 0.1%. Commissions are only 0.015% for gold CFDs and 0.03% for silver CFDs.
The trading features offered by Interactive Broker are accessible via 4 platforms.
It is a web-based platform that can be used without prior download. It offers a simplified use of many trading tools. Traders benefit from an asset search bar. However, they can only launch immediate and deferred orders. You can also run technical analysis, download reports and view numerous indicators (quotes, profits, losses, account statements, volatility...)
This platform includes all the advanced research features for traders. It allows you to execute all trading strategies and includes professional tools. This includes real-time market monitoring, alerts, favorites... This trading software allows you to place more than 100 order types and offers advanced charting tools. It also has 51 automatic trading algorithms.
Interactive Broker's mobile application provides most of the functionality of TWS. In particular, it offers all the tools to place orders, a charting system and advanced search functions. This app is compatible with Android/iOS mobiles and tablets.