Could Interactive Brokers be the best trading platform for beginners? This is a review of Interactive Broker’s services and what it offers for the beginning trader.
- Name: Interactive Brokers
- Services provided: Trading platform.
- Price/fees: low/zero
- Website: https://www.interactivebrokers.com/
- Main features: Simple and advanced trading platform, tools, and research.
- My rating: 4 out of 5
Interactive Brokers at a glance – for the beginning trader?
 |
|
|---|---|
| Standard brokerage | Yes |
| Cryptocurrencies | Yes |
| Fractional shares | Yes |
| Research tools | 10 of 10 |
| Tutorial resources | 10 of 10 |
| Support | 8 of 10 |
Interactive Brokers – who is it for?
Interactive Brokers’ services are targeted at either individuals or institutions: Interactive Brokers uses the abbreviation IBKR
- Individual clients – there are two service offerings for individual clients:
- IBKR – Lite
- IBKR – Pro
- Institutional clients – services are offered for:
- registered investment advisers,
- propriety traders,
- hedge funds,
- compliance officers,
- small businesses,
- money managers and others
This review will focus only on the services for individuals.
IBKR – Lite vs IBKR – Pro
Interactive Brokers has two main service offerings, IBKR Lite and IBKR – Pro.
| FEATURES | IBKR - Lite | IBKR - Pro |
|---|---|---|
| COMMISSIONS | Commission free | Fixed or tiered pricing |
| US listed stocks/ETFs | Fixed pricing | Fixed or tiered pricing |
| Other stocks / ETFs | Fixed pricing | Fixed or tiered pricing |
| Options | Fixed pricing | Fixed or tiered pricing |
| Futures | Fixed pricing | Fixed or tiered pricing |
| Forex | Tiered pricing | Tiered pricing |
| Bonds | Tiered pricing | Tiered pricing |
| Mutual funds | Fixed pricing | Fixed or tiered pricing |
| ACCOUNT FEES / FEATURES | ||
| Minimum balance | $ 0 | $ 0 |
| Maintenance fee | $ 0 | Up to $10 / month |
| Outside trading hours | 07:00 - 20:00 | 04:00 - 20:00 |
| TRADING TECHNOLOGY | ||
| Client portal | Yes | Yes |
| IBKR mobile | Yes | Yes |
| IBot | Yes | Yes |
| Trader workstation TWS | Yes (except Broker clients) | Yes |
| IBKR Web trader | Yes | |
| IBKR APIs | Yes | |
| Algos | Yes (fees may apply) | Yes |
| Condition & Advanced Orders | Yes | Yes |
| Paper trading | Yes | Yes |
| Mutual fund / ETF replicator | Yes | Yes |
| Risk navigator | Yes | Yes |
| Back testing | Yes | Yes |
IBKR Platforms
Client Portal – simple and easy to use
This is an easy to use platform that provides a view of account balances, gains, and losses, price quotes and place orders in real-time. Client Portal working with the IBKR product IBot which can be used to place orders and get quotes. IBot takes text and speech inputs.
Desktop TWS – the advanced trading platform
Desktop TWS, the abbreviation for Trader Workstation is Interactive Brokers’ advanced trading platform. It has two views, Classic TWS and TWS Mosaic.
Classic TWS – provides views of orders and bid and ask prices market data
TWS Mosaic – has the features you expect on a top-flight trading platform. Features include customizable workspace, trading and order management, multiple watch lists, customizable charts, technical research, and analysis, attached orders, bracket, stop limit and take profit, one cancels other, beta, FX order and pair hedging, customizable market scanners allowing you to add gradients, bars and lines to spot trends, streaming market news with filters by subject, additional subscription services available, customizable symbols across all windows.
IBKR – Mobile
Monitor and trade on your IBKR account from any iOS or Android smartphone or tablet.
IBKR – IBot
Allows you to issue orders or ask for information by voice or text commands. Works with Desktop TWS, IBKR Mobile, and Client Portal.
IBKR – WebTrader
Available for IBKR – Pro only. Provides similar but slightly simpler functionality to the Desktop TWS. Works behind a firewall.
IBKR – API
Available for IBKR – Pro only. Allows traders to create their own code for automated trading. Hardly beginner territory!
Trading Tools
IBKR trading tools and features include
- Options trader
- Probability lab – for single and multiple leg options trading
- FX trader – for forex
- Mutual fund/ETF replicator – allows you to find lower-cost ETFs that replicate common mutual funds.
- Fixed income screeners – for corporate, municipal and agency bonds and CDs
- Portfolio builder – walks you through investment strategies using fundamental data, research, and backtesting.
- IB Risk Navigator – shows your exposure to risks from around the world.
- Large volume traders have access to 30 Algos – again not beginner territory!!
Research and market news
IBKR has the following research and market news features. New accounts have to maintain minimum equity of $2,000 to have access to market data and research.
- News sources include Reuters, Dow Jones, and others.
- Market analysis from Morningstar, Zacks, and others
- Company data from Reuters Worldwide Fundamentals
- Global real-time data on specific markets
- Event calendars
Educational materials
IBKR’s Trader’s Academy offers an impressive and comprehensive range of complementary courses to educate financial professionals, investors, educators, and students. These courses include videos, notes, learning goals-setting, and tests to check learning. The Trader’s Academy curriculum of courses is truly extensive:
- Beginner Level
- Advisors orientation I and II
- Client Portal
- CME – building a trading plan
- CME – futures fundamental analysis
- CME – introduction to treasuries
- CME – learn about key economic events
- CME trading and analysis
- Fixed-income trading for TWS
- FTSE – introduction to indexes
- IBKR Mobile
- Intro to ADRs
- Intro to Charts
- Introduction to mutual funds
- Introduction to stocks
- Introduction to technical analysis
- Order type
- Portfolio analyst
- Taxes and retirement
- TWS for beginners
- US municipal bond market
- US taxes for non-US residents
- US taxes for traders and investors
- Intermediate Level
- CME – intermediate technical analysis
- Direxion – Understanding leveraged and inverse ETFs
- ETF trading and liquidity
- Fundamental analysis
- Introduction to futures
- Sector investing
- Trading around the world
- TWS Algos
- Wisdometree – Introduction to Exchange Traded Funds
- Advanced Level
- Advanced trading tools
- Introduction to margin trading
- Python TWS API
- Securities lending and borrowing
- Trading using R
Interactive Brokers other educational materials include:
Webinars
Available live or recorded.
IBKR Short Videos Courses and Tours
Subject include:
- Mechanics of a short sale
- Introduction to technical analysis
- Mechanics of a foreign stock transaction
- Options 101 – pricing
- Options 102 – the Greeks
- Options 103 – strategies
- Forex markets 101
- TWS basics
- Understanding margin
- IB tax optimizer
Apps, Tools and Widgets
- Trader’s calendar app – international calendar of trading holidays, asset expiration dates
- Options calculator app – input: security price, strike price, days to expiration. Outputs: theoretical call and put prices, Greek values. Allows you to change inputs and do “what’s ifs”.
- Options strategies app – views of profit and loss profiles of options combinations. Enables testing strategies either in up-trending or down-trending markets.
- Options pricing calculator widget – similar functionality as the Options calculator app.
- Options strategies widget – similar functionality as the Options strategies app
- Probability Lab – allows you to test your assumptions about options without using mathematics, and test your assumptions vs the market.
Interactive Brokers – the pros – for the beginner
Interactive Brokers service offerings are really aimed at the professional and advanced investor and trader. The beginning or casual trader, IBKR Lite is a good choice. IBKR Lite gives access to many of the tools and platforms available for Interactive Brokers’ advanced traders including $0 commissions on US-listed stocks and many ETFs. Interactive Brokers’ Trader’s Academy is also an excellent educational platform. If you do move up to IBKR Pro, the costs of trading are very low especially on higher volumes and their margin rates are also very low.
Interactive Brokers – the cons – for the beginner
As above Interactive Brokers is really aimed at advanced and professional traders. The focus is also on trading rather than investing. Most of the materials, advice, research, and tools are aimed at active trading rather than long-term investing. Also, finding your way around the website is not very intuitive. Customer complaints against Interactive Brokers are typical of what you would expect of a company of this size. All complaints have been answered and most resolved to the customer’s satisfaction.
Interactive Brokers – how does it rank?
I’d say 4 out of 5. I am reluctant to give 5 out of 5 as the focus of their service offerings is on active and sophisticated trading and if after a while you shift focus to investing for long-term gain, Interactive Brokers may not be the best place for your account. This article compares Interactive Brokers compares with its main competitors.
My recommendation
If you are a beginning trader wanting to get into advanced and sophisticated trading and you are looking for a brokerage account, opting for an account with Interactive Brokers would be a good choice.
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There’s a boatload of content here…. good job. I appreciate your recommendation, but as a newbie to this I’m finding it to be a little overwhelming. I wouldn’t know where to start here… it would feel like trying to get onto the interstate while riding a moped. Any suggestions?
Hi Bob, I think that is pretty much my conclusion too. I think it would only be someone who wants to start trading who has a serious ambition to take it to an advanced and sophisticated level should consider signing up with Interactive Brokers. If you feel your ambitions for a brokerage account are more modest then check other providers. I have reviewed some others here, TD Ameritrade, or E*Trade are likely better options. I will add another article that provides a side by side comparison of all these providers that helps to see the wood for the trees. Thanks very much for your comment. Best regards, Andy
A lot of advice here Andy for anybody new thinking of taking a punt.
Always had a fascination for the stock market, but wouldn’t know where to start.
The terminologies that they use I sometimes think is so to complicate things but I know this is not the case.
Thanks for at least bringing what seems to be a complex industry and explaining it in a more understanding fashion.
Hi Mick, I agree this is a complex topic and not everyone’s cup of tea. I think I need to find a way to simplify this material somewhat. Thanks for the comments, I really appreciate. Best regards, Andy
This is some serious stuff that is little overwhelming to my liking. But you did a great job of deciding to go with it or not.
Thanks for the comment. You’re right it can be complicated and somewhat overwhelming. Thanks again for the comment. Best regards, Andy
Hey Andy,
This is a really good review and will help a lot of beginners when they go into trading, and what the best platform is to use. I am very much a beginner so I am going to need to carry out a few more reviews of platforms before I start investing any money into trading.
I’ll need to rely on your research to help me make a decision. I’ll let you know when I do make a decision, especially with the world being in a global pandemic.
Thanks for sharing, and keep up the great work on your site.
All the best,
Tom
Hi Tom. I reviewed five other trading platforms on this site from the perspective of the beginning trader. There is indeed a lot of technical information here that I felt was necessary to do justice to all their services. I will be doing another post comparing them all side by side again from the perspective of the beginning trader only leaving out any complicated technical information. Thanks for the comment and best regards, Andy
Hello, great article on trading platform. For beginners, the article can be a little confusing, but overall I would say a good review. I used the Libertex platform for a while, purely as a beginner with “imaginary” money just to see how does it work an I can say it was even fun. Keep up the good work.
Hi Tom, Libertex looks interesting especially for cryptocurrencies and a lot of people want to trade cryptocurrencies these days. I agree there is a lot of technical information here. Thanks for the encouragement. Best regards, Andy
Great post, you really have a lot of valuable information in there!
I’ll need to read it one more time cause it was a lot to take in, but keep up the good work!
Thanks Martine. Interactive Brokers really is more suited for advanced traders but it is a big player so a beginner may still want to check them out. Thanks for your comment. Best regards, Andy
That’s good that you’ve divided the material into levels, which makes it easier for beginners to start. Something always good to know also is to check if their price signals (price tick) are good also. I’d say that if you’re a pro and operating with bots, the platform should provide you with the fastest (as possible) price ticking.
By the way, do you know what are the margins of leveraged ratio they are currently operating during this corona crisis? An investor, friend of mine, didn’t place orders for 2 weeks in a row because his broker was requesting a bigger loss margin to be guaranteed Forex for mini index.
Hi Daniel. I agree with you. A pro using bots should get fast price ticking on this platform. I guess if you have a background in coding and have done some trading and know that you want to go that route this would a be a good broker. They charge blended margin rates combined from tiers. In USD tier I is $0 to $100,000, tier 2 is $100,000 to $1M, tier 3 $1M to $3M and tier 4 $3M to $200M tier 5 is above $200M. The benchmark rate is currently 0.05%. Tier 1 is charged at benchmark + 2.5% for Lite and benchmark + 1.5% for Pro. Lite margin rates stay at 2.5% plus benchmark whereas Pro rates go down as you climb up the tiers. They have a calculator for margin trading as much depends on your circumstances. Best regards, Andy
https://www.interactivebrokers.com/en/index.php?f=24176
Lot more to know before starting trading, and you have done very good research on how to start trading and taking it to next to next level. Lots of terminology to remember. One can get well in dept knowledge on trading before starting it.\
Great work.
Regards
Rajiv
Thanks Rajiv. Yes it is an area dominated by specialized terminology and as this is a platform designed for advanced traders there are a lot of technicalities. Thanks for your comment and encouragement. Best regards, Andy
This is such a great source of information. Which one is the best to start to test with a small amount of money?
Hi, Most of the major online brokerages reviewed here have no account minimum e.g. Ally, TD Ameritrade, Robinhood, Fidelity. If you check out the other product reviews here https://badinvestmentsadvice.com/category/reviews/single-product-reviews/ you will see which of them has a service offering that is more to your liking. They all have different flavors and cater for different clientele. If you just want to be trading stocks then all of these would be good. With most of these you can access at least some of their educational materials before you open an account. I’ve heard some comments that the Interactive Brokers platform is not the easiest to navigate but it is angled towards the advanced trader. On the other hand their educational materials are excellent. So if you have serious ambitions to get into advanced trading then it may be best to start with them. I hope this helps, Best regards, Andy