InteractiveBrokers

Interactive Brokers LLC is an American multinational brokerage firm. The company was founded in 1977 and launched its investment services in 1994. The firm is headquartered in Greenwich, Connecticut. And there are offices all over the world, in countries such as Switzerland, the UK, Australia, Hungary, Japan, Singapore, Ireland, and Estonia. IBKR is the largest subsidiary company of Interactive Brokers Group Inc. founded by Thomas Peterffy.

Investors have access to stocks, ETFs, CFDs, bonds, funds, futures, options, etc. in 33 countries and can invest in 25 currencies.

The broker is popular among professional traders and institutional investors. However, the company is gradually improving the conditions for smaller traders and even beginners. Especially, it is worth noting the reduction of the minimum deposit amount and the abolition of the fee for inactivity.

At the end of March 2021, IB had 1.3 million client accounts and $331 billion in clients’ assets. The growth in recent years has been impressive. Since 2013, the number of accounts has grown by an average of 25 percent a year and clients’ assets grew by as much as 32% a year. In terms of client distribution, 61% are individual investors.

Demo account

Like most competitors, IB offers a free demo account. You can find it under the title “free trial”. To open it, just enter a username, your e-mail and password, and confirm the registration with an e-mail.

After creating a demo account, you will be credited with one million virtual dollars for an indefinite period of time. You can immediately start using funds for test trading without the risk of losing real money.

With a demo account, you can fully test the behavior of the trading platform before you start trading for real. The availability of virtual “money” will not only serve you to get acquainted with the platform but also, of course, to test possible investment strategies.

This option is especially recommended to try for beginning traders who have almost no idea about the concept of trading on the market. The trader will be able to hone his trading skills. He/she can also use this type of account to recall forgotten trading concepts.

Open an Interactive Brokers account

The broker offers different types of accounts for both individuals and corporations. Individuals choose the type of account based on the intended use:

• Individuals – an account used by only one person;
• Joint – an account for two people to use;
• Friends and Family – an account for a group of up to 15 people;
• Advisor – an account through which you manage the assets of a third party.

Be careful when choosing your account type in Interactive Brokers, as it affects how exactly you will invest. If necessary, simply change the type of account. It can be changed even after registration, it’s easy enough to do in the account settings, in a couple of clicks.

Registration takes place over the Internet, but the process is quite complicated and protracted. Opening an account consists of 5 steps. The broker will need personal information, contact information, and a filled investment questionnaire. In it, you will answer questions about your previous trading experience. It will take approximately 30 minutes to review all documents and fill out the necessary forms.

You will also need to confirm your completed information by providing a copy of two personal documents and a selfie with your passport. Documents can simply be photographed, but the images must be clear and well readable. You will need the following:

• Valid ID: passport, driver’s license or ID card
• Proof of address no more than 3 months old: utility bills, goods or services bills, letters from government agencies, bank statements, etc.

Why do I have to provide confidential data? Customer verification is required by European directives and anti-money laundering laws. Therefore, you will find this type of verification at any regulated broker.

Deposit and withdrawal

Many investors are still of the opinion that it was necessary to start trading in IB with the minimum amount of $10,000, but this is no longer true. There is no minimum in Cash account. But if you have a Margin account the minimum deposit will be 2000 dollars.

One of the disadvantages of Interactive Brokers LLC can be considered a way of depositing. Deposit and withdrawal methods are limited, as it is not possible to deposit money into the account with a credit card or e-wallet. Money can only be deposited to the IB account by bank transfer or transfer of funds from another broker.

To receive a transfer from your bank account, you will need to wait a little bit, the waiting limit is 4 days. Another way to start using a trading account virtually is to transfer securities to Interactive Brokers from another broker, this transfer takes 2-8 days.

The deposit can be made in 25 currencies, it is worth choosing the currency of the account depending on what assets you primarily want to purchase. If you plan to trade US stocks, you should choose a dollar account and deposit the money in dollars. You have the option of depositing in other currencies as well, but then you cannot avoid currency conversion fees.

Fees

Fees in Interactive Brokers are low and transparent. Almost the only drawback was the $10 monthly account maintenance fee, but the broker canceled it in 2021. Thus, the account maintenance is currently free of charge.

Trade fees

As far as trading fees are concerned, you will surely find a better broker for your occasional investment. The broker distinguishes between 2 commission structures: Tiered (depending on the amount) and Fixed. There is also a Free commission structure, but it is only available to U.S. customers.

After registering, your account will automatically be set to Fixed. However, they only make sense if you plan to invest thousands or tens of thousands of dollars. For small trading volumes, it is preferable to use Tiered. You can easily change the type through the settings.

The amount of commission depends on the plan you use and the investment product you trade. For the Tiered plan, monthly trading volume is also a factor. For its undoubtedly high-quality services, IB charges a number of small fees. It should be emphasized that the number of commissions may be different for each trading product. Therefore, we recommend that you read the “Pricing” section of www.interactivebrokers.com before opening an account.

Other charges

• Deposit – deposits by bank transfer are free;
• Withdrawals – one withdrawal per month free of charge, for each additional withdrawal you will pay 8 euros or 10 US dollars;
• Account maintenance or inactivity fee – no, canceled from 2021.

Unfortunately, you will not receive free asset purchases in IB. Expect a minimum commission of $1 for buying a position and $1 for exiting a trade.

Trading platforms

Interactive Brokers offers three types of trading platforms:

Desktop Trader Workstation (TWS)

This is Interactive Brokers’ own technological solution. It was developed in cooperation with professional traders. This is a downloadable platform that is appropriate for your desktop. Suitable for professional traders with extensive experience with trading tools. It has a number of advanced features.

There are two versions in the app – TWS Mosaic and TWS Classic. Mosaic is a convenient workspace that provides quick access to full trading and configuration of each component. Classic TWS allows you to create orders with a single click on the bid/ask price.

Within Interactive Brokers’ desktop version, an investor can trade virtually any asset, including global equities, options, CFDs, option trades, etc. The platform is connected to almost all digital exchanges in the world, so its customers can really trade everything.

The difference with Interactive Brokers compared to many other brokers is that orders are executed in the real market, so execution is at the real market price. The IBKR platform is linked to over 30 market centers and executes an order at the best price at the moment.

IBKR Client Portal trading platform

Client Portal is a platform that allows you to make transactions through a browser. The web platform is somewhat simplified compared to the desktop version, but this is rather an advantage, given the level of complexity of Trader Workstation.

Practically, its basic functions satisfy 95% of traders. Within the web platform, investors can delve into specific stocks or create screenings based on their own requirements. You might find some flaws with prolonged use, but the platform is constantly being worked on since it was only introduced in late 2019.

IBKR Mobile

The mobile app has been available for both Android and iOS since 2022. In particular, the mobile app offers the same features as the web platform – analysis, stock screening, order purchasing, etc. Of course, technical analysis will be more difficult because of the size of the phone, but no one expects anyone to do it on a mobile device.