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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

Interactive Brokers Open Account Offers

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.

Usability, Look & Feel

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.

Interactive Brokers USA Open Account

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)
  • Addresses
  • Social Security Numbers
  • Banks

Extensive information for each is available on the webpage of the firm.

Interactive Brokers Trading Platforms

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.

Client Portal

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.

 Mobile App

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.

WebTrader

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.

Interactive Brokers

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

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

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.

Customer Services

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.

iBot

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.

Email

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.

Phone

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.

Chat

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.

Interactive Brokers Bonds

Interactive Brokers Bonds

Traders get access to corporate bonds, municipal securities, CDs, and government securities of the US.

Like every other product they buy and sell, clients who trade in bonds have access to the company’s tools and resources once their account is activated.

Interactive Brokers Stocks

Interactive Brokers Stocks

As seen throughout this Interactive Brokers Review USA, the firm trades in various assets. But while on the topic of Interactive Brokers, the following are products that clients of Interactive Brokers USA, and other countries can buy and sell.

You can actively buy and sell stocks with Interactive Brokers. You can invest in stocks for dividend income or appreciate your capital. The company also exposes you to stock trade opportunities available both in America and other countries.

The fees on stocks you trade at this firm are as low as $0.005 per every US share. You can also make money through the firm by lending your held shares to other traders via the company’s Stock Yield Enhancement Program.

You can trade your stocks on the firm’s 135 markets in 33 countries. Once your account is active, you get access to the global market 24/7.

Exchange for Physical (EFPs)

EFPs allows you to exchange your short or long stock position for a Single Stock Future (SSF). The many market participants are responsible for determining the interest rate built into the prices of SSFs.

The EFP Market is, however, not for every investor. The risks in this market are pretty high. Thus, you need to be a professional or learn as much as possible before trying this market.

All the risks an investor would need to know about this type of market is on the website of the company. There is extensive information on each product explaining to customers the various markets, risks, and benefits

Interactive Brokers Futures

Interactive Brokers Futures

If you are one for speculations and predictions, this product might interest you. Interactive Brokers allow traders who use their platform to speculate or take a position on price movements on 35 financial markets across Europe, North America, and Asia.

The following future contracts are what traders can trade with on the market: Energy, currencies, agricultural, metals, equity indices, narrow-based indices, volatility indices, soft commodities, single-stock futures, fixed rates, and interest markets.

Interactive Brokers Options

Interactive Brokers Options Trading

Interactive Brokers make the OptionTool available for traders interested in this product. With it, clients can trade varieties of options contracts accessible to them on the leading exchanges of Europe, North America, and Asia.

Other trading tools are also on the TWS of traders to help them evaluate and trade options. The commission rates of Interactive Brokers USA, and all other countries range from $0.15 to $0.70 per every option contract of the US.

Interactive Brokers Funds

Interactive Brokers Funds

The firm has a variety of funds customers can buy and sell, Mutual Funds, Hedge Fund, and Exchange-traded Funds. Each has distinct market requirements and information.

Investors from over 200 countries interested in mutual funds get access to no-load funds from more than 285 fund families. There is no custody fee charged.

On the company website, they also educate prospective customers on the reason to choose between the funds the company offers. The advantages ETFs have over mutual funds, for example, explained.

Many interactive Brokers opinions advise the trading of ETFs with the company due to the numerous benefits customers often enjoy. But in the end, it is the customer’s desire and goals that matter.

Thus, traders interested in these products must take some time to do adequate research before plunging into the market. All available information on all three products is on the brokerage’s website.

Interactive Brokers Forex

Interactive Brokers Forex

Interactive Brokers offers a reliable currency trading service. You’ll get instant access to currency trades with a refreshing lack of costly price spreads and hidden markups. If you’re into Forex trading, it’s worth taking advantage of the Interactive Brokers FX Trader package, which includes real-time streaming quotes on all major currency markets. You’ll also get detailed information on trading volumes, executions, pending trades, as well as the average price plus P&L.

Forex Trading Costs

Interactive Brokers has famously low commissions that won’t eat into your Forex trading. These can be as little as 0.08 basis points, but they might rise to 0.20 dependent upon your trade size. Interactive Brokers is keen to note that you won’t have to deal with any hidden price spreading on its platform, and there will be no markups or kickbacks. There are various price packages available that have tiered and fixed fees. But don’t forget that Interactive Brokers even has a free trial option.

Forex Trading Conditions

Interactive Brokers lets you trade in 23 currencies. These include US dollars, Canadian dollars, Australian dollars, euros Japanese yen and British pounds. Other Forex trading options include CHF, CNH, CZK, DKK, HKD, HUF, ILS, MXN, NOK, NZD, PLN, RUB, SEK, SGD, TRY, ZAR and KRW. All of these feature a special conversion functionality to make Forex trading easy.

Product Summary & Conclusion

Interactive Brokers has an excellent Forex trading platform. You’ll get an easy way to spot value currencies through the brand’s real-time currency quote software. The brand’s currency vendors give you access to over 60% of the global market share. Handy features like the FX Trader facility and the leverage-free currency conversion are tools that take Interactive Brokers ahead of the competition. Plus with a large-size order facility, it shows that Interactive Brokers features a Forex trading package to meet all needs.

Overall Conclusion

Interactive Brokers Group is indeed one of the finest brokerages in the market. Their variety of products attracts so many different buyers. Professional traders have more to gain with the fees and commissions of the company. But, with the Lite package beginner investors also stand a chance of making it.

Our Interactive Brokers Review covers all the essential information prospective clients must arm themselves with before signing up with the firm. Additional information on fees, commissions, account types, and research tools is on the website on the brokerage.

Primarily, the plan should be to trade with a company that brings in more returns than incurs cost. Before you finally decide, it is best to check out some other brokerages and market opportunities.

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