Interactive Brokers USA Review & Rating 2021
Is Interactive Brokers Scam Or Legit?
Interactive Brokers Group Inc. founder and present chairman Thomas Peterffy joined the stock market in 1977, trading in equity options as an individual market maker. The firm was formed a year later and has since witnessed exceptional growth.
It is now one of the leading securities firms with equity capital of over $8.1 billion. The firm runs its business in more than 135 countries worldwide, and offers numerous choices of electronic trades such as forex, options, stocks, and stocks for both institutional and professional traders.
FINRA, FCA, SEC, NYSE, and other regulatory agencies worldwide regulate Interactive Brokers Inc., headquartered in Connecticut. You can still find other offices in many states in the U.S., Canada, UK, Australia, Hong Kong, Japan, Switzerland, Russia, Hungary, India, and Estonia.
Trading in securities can be unpredictable and risky. The first right decision you must make is choosing a company to represent and guide you to make the right trades. Depending on the kind of security you’d prefer, there are always a few things to consider.
Interactive Brokers USA is as legit as they come. It is also worth noting that Interactive Brokers Group Inc publishes a monthly metric. What this information shows is the all-in execution cost of customers. It is valued at 0.8 basis points or 8 cents per every $1000. This cost includes market impact, commission, and third-party fees, making it one of the best stats in the market.
You can compare it with other brokers to be sure. Check out our M1 Finance review, for example.
Primarily, Interactive Brokers USA is an ideal firm for seasoned and active traders. The firm’s Pro package is not suitable for casual traders since inactivity often racks up fees. However, if you’re a generally inactive trader in the US longing for an Interactive Brokers open account, their Lite package is your best option.
Interactive Brokers Pro and Con
- A wide variety of asset classes (forex, stocks, options, etc.) to choose from
- Available to investors and traders in many countries worldwide
- Excellent research tools are available to traders
- Low trading fees
- Inactive Pro accounts could accumulate a lot of fees
There are two categories of account types you can choose from when considering Interactive Brokers USA. There are account types for individuals and those for institutions. Our Interactive Brokers review lays down the facts, so you know what to expect.
Brokerages often compete with each other for customers by using enticing deals. Each firm has its benefits for opening an account. The requirements for an Interactive Brokers open account, for example, are the same across all the countries where they operate.
However, individual and joint applicants would need a guarantor or commissioner of oaths in addition to personal identification documents to sign up with Interactive Brokers. The requirements for each country are available on the Interactive Brokers webpage.
Completing all the requirements does not necessarily guarantee your account would be activated. The company has to verify your information electronically. Once that is done, your account is then activated.
US residents are the only ones with the luxury of funding their activated accounts with any one of 21 currencies approved by the firm. The minimum amount needed to open an account, on the other hand, is the same across every country. Verification of an Interactive Brokers open account is approximately two business days.
You need $0 for an Interactive Brokers open account unless you plan to trade or margin, then the minimum deposit is $2000. Trading on margin means you borrow money from the brokerage to trade. Interactive Brokers opinions all over the internet agree that its minimum deposit amount is indeed one of the firm’s best qualities.
Switching and Transfers To Interactive Brokers
You can switch from a Pro account to a Lite account and vice versa as an Interactive Brokers USA customer. You can use Account Management or the Client Portal to configure this. Explicit instructions for the process are available on the firm’s website.
You can also transfer assets from a different brokerage to Interactive Brokers or vice versa using the Automated Customer Account Transfer Services (ACATS) of the National Security Clearing Corporation (NSCC).
The catch is, the assets you plan to transfer must be products that are available for trading like cash, options, bonds, etc. The firm accepts both partial and full transfers. The firm completes your transfer into your new account within four to eight working days.
But, once your account is activated, you have up to 90 days to fund it or the brokerage terminates your account. There are also no fees charged for the first withdrawal of every month.
The point of our Interactive Brokers USA review is to educate readers about the firm’s features as much as possible, and the website of an online brokerage is as relevant as its benefits and offers. Customers must be able to navigate easily for accurate executions of trade. It is thus vital to know that not every online brokerage’s website is user-friendly, especially to beginners.
The website of Interactive Brokers USA is not great, but it’s not entirely terrible either. There is a wealth of information available for traders on the site. However, navigation is not easy. Once you figure out where to look, all the important information every trader signing on to the firm needs to know is there. From the deposits and fees, through to the requirements for US residents.
You get access to the Client Portal, which makes all the firm’s online tools available on the website once your account is activated. However, seasoned traders might prefer the firm’s Trader Workstation (TWS), which is downloadable on any desktop.
Overall, it’s a semi-decent website which does provide you with a plethora of information. After getting the hang of navigating the site, you’ll be able to access an account of your choosing and trade in multiple financial instruments.
Our Interactive Brokers review USA helps prospective customers understand what they need to do to get an account with the firm.
US applicants are eligible to apply for four choices of account types. There is the individual account, IRA, Trust, and Joint. Each of the four accounts has their respective documents that applicants need to create an account with the firm. But, this Interactive Brokers review identified what all four have in common are:
- Names of applicants, employers, beneficiaries, trustees, and sometimes charity (For IRA accounts)
- Social Security Numbers
Extensive information for each is available on the webpage of the firm.
The trading platform of the brokerage is worth mentioning in an Interactive Brokers Review. Although it is not user-friendly to beginners or new investors, professional traders are immensely satisfied with all the available tools and information.
Traders of Interactive Brokers use a Trader Workstation (TWS). You can use the Client Portal, the downloadable TWS on desktops, and the mobile app on your phone. An additional feature is you can customize your Trader Workstation to your preference.
There are also various tools available to traders with an Interactive Brokers open account. Some examples are the Market Scanner, Risk Navigator, Algo Trading, Portfolio Builder, etc.
Using the Client Portal of your Interactive Brokers open account gives you a simple and straightforward view of all the information you need. It is the ideal TWS option for beginners or new investors. You’ll be able to view all vital account information like your Buying Power and Net Liquidation Value in real-time.
Tracking your portfolio performance also becomes more manageable, using easily interpreted charts. You get relevant notification and messages when necessary, and iBot is also now available on the Client Portal. This uses artificial intelligence to serve customers through the voice app or chat on devices.
Desktop Trader Workstation (TWS)
The desktop trader workstation (TWS) is a downloadable software to use on your desktop and is ideal for professional traders. With this platform, you can monitor your Interactive Brokers open account in real-time whenever you deem necessary. You can also create alerts to notify you of vital changes in the market. Information on trades, as well as profits and losses, are also available for you when you need them.
All tools available to customers of the firm are equally accessible on the Desktop TWS. It would come in handy for professional traders who want to take advantage of technical research, risk assessment technology, and up-to-date news.
The mobile app of Interactive Brokers is also available for traders who like to monitor their accounts 24/7. You have an assurance of security accessing an Interactive Brokers open account on your phone since it requires an IB key. Alternatively, you can use a Face ID or fingerprint on devices that support this security feature.
Like all the other trading platforms, the mobile app equally has all the tools available. You get all perks and benefits traders get using the web and desktop TWS or Client Portal on your phone. The difference, however, is portability and convenience. The app is available for free on both the App Store and Google Play Store.
The firm’s WebTrader is an HTML based TWS. This platform is available for only traders with an Interactive Brokers Pro package. Comparably, it is easier to use than the Desktop TWS. It still has all the features, tools, and resources the other platforms enjoy.
Payment and trading fees is an essential topic in our Interactive Broker Review. Prospective customers need to know all impending costs to choose for themselves if they want to sign up.
In the case of Interactive Brokers, some people might argue that some accounts attract higher fees than others, while some are also entirely free.
Our Lightspeed USA review, as well as JP Morgan USA review, are also useful comparisons for traders looking for lower fees. But, these companies do not have asset classes as vast as ones found according to this Interactive Brokers USA review.
The main idea is to trade with firms that are compatible with your trading goals.
Trading fees are those you incur from your trades. Conversion fees, commissions, financial rates, and spreads are all examples of trading fees. Due to the numerous assets, you can trade with your Interactive Broker open account. The charges vary depending on your choice.
Our Interactive Brokers review must commend the company on their low fees. Due to this, it is advisable for clients who frequently trade to take advantage. The firm makes two price plans available for traders, the tiered price plan, and the fixed rate. The latter charges a set amount per share or contract while the tiered price plan uses your monthly trading volume.
In this Interactive Brokers review, Lite traders in the US can make money in a margin account. The point of this account is to borrow trade using stock or cash lent to you by your broker. Lite users can also enjoy commission-free deals of US-listed stocks and ETFs.
Pro accounts, on the other hand, of consistent and frequent traders incur an ETF and stock commission of $0.005 per share. The respective minimum trade commission and maximum trade commission are $1 and 1% of your account’s total trade value. These amounts include regulatory fees and exchange fees in these commission amounts.
Non-trading fees include inactivity fees and deposit fees. They do not have a direct link to your trading. This Interactive Brokers Review analyzes these numbers to make sure traders enjoy the money they make while incurring as little costs as possible.
The good news is, your Interactive Brokers open account attracts no deposit fees. The first withdrawal you make each month is also free. But, any other future withdrawal in the same month attracts a fee.
The inactivity fee is the only non-trading fee that is high compared to the others. Traders with an Interactive Brokers Pro account do not have the luxury of being casual traders since an inability to reach a specific commission each month attracts an inactivity fee. The calculation of this fee is the difference between the required commission and the commission amount you were able to attain.
US traders have more options for depositing into their Interactive Brokers open account. Having said that, US clients cannot use e-wallets or credit cards to make deposits. The exclusion of e-wallets as a payment option might be lost on many US traders.
However, at the beginning of 2020, direct debit card deposits were added to the options, exclusively for US traders. Additionally, you can use checks, direct roll-over and trustee-to-trustee, (which are available only for traders with IRA accounts), the online bill payment method, and Automated Clearing House (ACH).
You can withdraw using ACH, bank transfers, or check. Again, exclusively for US traders.
Our Interactive Brokers Review also includes a customer service analysis of the firm. You can check out our Merrill Edge USA review to compare this feature. For Interactive Brokers USA, the customer services are the same. The following are options customers and prospective traders can check out if they need any help with any information about the firm or their accounts.
It is an Artificial Intelligence (AI) powered assistant that answers all questions you ask in English. Interactive Brokers USA, as well as Interactive Brokers in all English speaking markets, can take advantage of this assistant.
It is available on all trading platforms and is especially popular with the mobile app. It specializes in directing customers to find the answers to frequently asked questions.
The firm advises both customers and prospective traders to avoid sending emails to the firm. This is especially for ones concerning security and password related issues. Instead, the phone is the best customer service method for such inquiries.
In the pop-up box assigned for emails, the firm adds a link that redirects customers to the message center. However, customers can decide if they want a reply via email.
Customer Service via phone call is available only on weekdays for 24 hours each day. The firm urges more clients to use this method of communication for all security-related issues.
On the web page allocated to reach customer service via phone, some FAQs answer questions the firm usually gets. Additionally, all numbers of customer services in operating countries are displayed.
Aside from the United States, other countries are Canada, Europe, Asia, Russia, India, Hong Kong, Australia, China, and Japan. Interactive Brokers USA, Europe, and Russia are the only countries with toll-free numbers available.
The online chat service is for clients with an account with the brokerage. This option is accessible through the “support” menu present in the Client portal. Chat services are available 24 hours on weekdays and Sundays from 1 pm to 7 pm US Eastern Time. New traders also have a link to follow once they check support options on the main websites.