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?
|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|
|Trader workstation TWS||Yes (except Broker clients)||Yes|
|IBKR Web trader||Yes|
|Algos||Yes (fees may apply)||Yes|
|Condition & Advanced Orders||Yes||Yes|
|Mutual fund / ETF replicator||Yes||Yes|
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!
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
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:
Available live or recorded.
IBKR Short Videos Courses and Tours
- 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.
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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