Pros & Cons
Wide investment selection.
Advanced tools on Pro tier.
Complex pricing on some investments.
Inactivity fees on Pro tier.
Interactive Brokers has long been a popular broker for advanced traders, but in October the company launched a second tier of service â€” IBKR Lite â€” for more casual investors.
With IBKR Lite, you get unlimited free trades on stocks and exchange-traded funds that are listed on U.S. exchanges. If you’re interested in tradingÂ other investments, including options, futures, mutual funds, fixed income and more, on 125 markets in 31 countries, you can do that with a Lite account, but the trading costs will be the sameÂ as or slightly higher than whatÂ IBKR Pro investors pay.
As the name implies, IBKR Pro is geared toward advanced traders. If that’s you, you’ll probably like the broker’s per-share pricing of $0.005 per share (the minimum is $1), advanced trading platform, unmatched range of tradable securities â€” including foreign stocks â€” and ridiculously low margin rates.
Both tiers of service have a $0 account minimum. IBKR Lite has no account maintenance or inactivity fees. IBKR Pro charges an inactivity fee, though it’s possible to skirt that if you trade relatively frequently.
Interactive Brokers is best for:
Casual and advanced traders.
Penny stock traders.
Research and data.
Where Interactive Brokers shines
Low commissions: If you’re a casual investor, itâ€™s hard to beat the free trades you’ll enjoy with IBKR Lite. But even advanced traders who opt for IBKR Pro will like the low stock and exchange-traded funds commission structure at Interactive Brokers, which favors frequent, high-volume traders at just $0.005 per share. Thereâ€™s a $1 minimum trade commission and a maximum of 1% of the total trade value, and exchange and regulatory fees are included. The broker also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay $0.002 or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan. Rates can go even lower for truly high-volume traders.
Options trading, too, is offered at rock-bottom pricing, with just a 70 cent charge per contract and no base, plus discounts for larger volumes. Contracts with premiums at less thanÂ 10 centsÂ are charged just 50 cents each; contracts with premiums at less than 5 cents are charged just 25 cents.Â The minimum options trade commission is $1 per order.
Margin rates:Â Margin tradersÂ will also benefit from the low rates at Interactive Brokers: For IBKR Pro customers, the maximum margin rate is the benchmark rate plus 1.5%; for IBKR Lite, it’s the benchmark rate plus 2.5%. The broker charges a blended rate based on the size of the margin loan, and has a calculator on its website to help investors quickly do the math based on their balance.
Interactive Brokers recently added an integrated cash management feature, which allowsÂ investors to borrowÂ against their accounts with a debit MasterCard, also at low interest rates.
Trading platform:Â The casual traders who find IBKR Lite appealing will find the Client Portal platform adequate for their trading needs. Those who are seeking something more powerful will want to consider joining IBKR Pro, where they’ll get access to Interactive Brokersâ€™ Desktop Trader Workstation, which is considered one of the best trading platforms available for advanced traders. The platform is fast and includes standard featuresÂ such as real-time monitoring, alerts, watchlists and a customizable account dashboard. An options strategy lab lets youÂ create and submit both simple and complex multileg options orders and compare up to five options strategies at one time.
Other tools include a volatility lab, advanced charting, heat maps of sector and stock symbol performance, paper trading and a mutual fund replicator, which helps users identify ETFs that replicate the performance of a selected mutual fund but offer lower fees. InteractiveBroker FYIs offers customized notifications about events that could affectÂ a traderâ€™s investments.
Worth noting: Another broker we review,Â Zacks Trade, offers its customers access to white-labeled versions of Trader Workstation. Zacks TradeÂ charges higher trade commissions, but offers clients free calls with support reps, who are licensed brokers. It’s an option worth considering for traders who want the power ofÂ Interactive Brokers’ trading platformsÂ alongside a bit more personal support.
Mobile app:Â The IBKR mobile app, available to both Lite and Pro customers, is Trader Workstation on the go, with advanced trading shortcuts, over 50 data columns, option exercise and spread templates, news, research, charting â€” including over 60 technical studies â€” and scanners. Users can create order presets, which prefill order tickets for fast entry. Presets set up on Trader Workstation are also available from the mobile app.
Research:Â Interactive Brokers provides access to a huge selection of research providers and news services, many for free: 33 offerings are currently available to all clients, including from providers like Zacks Investment Research, Morningstar Equity Ownership, Market Realist, 24/7 Wall Street and Seeking Alpha. Over 100 additional providers are also available by subscription.
Investment selection:Â Interactive Brokers offers something for everyone here: Advanced traders will love the huge selection of products, from standard offerings of stocks, optionsÂ and ETFs toÂ precious metals, forex, warrants and futures. The retirement-investor set will be happy with the broker’s impressiveÂ list of no-transaction-fee mutual funds â€” over 4,200 in all â€” and respectable selection of 98 commission-free ETFs (and Lite customers get to trade all U.S.-listed ETFs commission-free).
Interactive Brokers also has a robo-advisor offering, which requires a $5,000 minimum investment but charges just 0.08% in management fees. The service offers over 60 portfolio options.
Where Interactive Brokers falls short
Interactive Brokers’ shortcomings are primarily due to the company’sÂ focus on advanced traders:
Inactivity fees:Â Interactive Brokers caters to active traders, and that focus shows up in its inactivity fees for IBKR Pro customers. Accounts with balancesÂ of $100,000 or less must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20. IBKR Lite doesn’t charge inactivity fees.
There is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.
Â» Don’tÂ trade that much?Â View ourÂ best online brokers roundup
Website ease-of-use.Â AÂ section of our rating is based on how easy it is to find key information on a broker’s website, and Interactive Brokers excelled there. That said, the site can be difficult to navigate and the various commission and fee structures can make it hard for investors to quickly identify what their costs will be. PortionsÂ of the website are dedicated to institutional, broker and proprietary trading accounts, and that can be confusing.
Is Interactive Brokers right for you?
Interactive Brokers has always been a great choice for active traders, especially those who can move into the broker’s cheaper volume-pricing setup. Now, with the availability of free trades with IBKR Lite, even casual traders might find Interactive Brokers a strong contender. But beginner investors might prefer a broker that offers a bit more hand-holding and educational resources.