Interactive Brokers is a dominant player in the world of professional trading. It has become prominent by pushing the industry standards in providing robust services with minimal fees.
Provides direct market access to all types of securities from one account.
Need access to international markets? You can trade over 100 markets in 24 countries and in 20 currencies.
Its platform is great for those serious about trading. It provides extremely low margin fees, low costs for trades and great easy-to-run portfolio analysis reports.
Take a look at the details below - you will see the awesomeness I am talking about. Of course with everything there are also cons which I will go through, but out of all my research, this online broker is ...dare I say it....the top broker?
Have a look for yourself and see how it fits your needs and style of trading.
Asset Classes Commissions Account Minimum Customer Service |
Stocks / Options / Bonds / Futures / Forex 5/5 High - $10,000 USD 3.5/5 |
STOCKS $0.005/share; MIN: $1.00 MAX: 0.5% of trade value
OPTIONS* $0.70/contract MIN: $1.00
FUTURES† $0.85/contract + exch./reg. fees
FOREX‡ 0.2 bps * Trade Value MIN: $2.00
BONDS 0.1% * Face Value (10bps)
GOLD/SILVER 0.15 bps * Trade Value Min: $2.00
MUTUAL FUNDS $14.95 / Transaction
Note: All prices above are per Interactive Broker's North America fixed pricing structure and are in USD. For a full breakdown of their commissions please click here.
* Note that commissions are not charged for US exercise and assignment.
† From my experience exchange/regulatory fees were roughly $3 round trip for popular contracts such as the ES (a.k.a S&P 500 emini)
‡ Interactive brokers has some of the tightest spreads in the industry . It combines quotes from 13 of the world's largest FX dealers so spreads can sometimes be even lower than 1/2 PIP. It passes this discount to the client but charges a separate low commission. (Unlike other brokers who don't charge commission but take a huge cut by charging large spreads).
You might have noticed by now that for brokers that provide really cheap commissions you need to subscribe to a data feed. You might at first think - so what's the point, whatever I save in commissions I now have to spend on data.
Not true!
It's still cheaper going this route. For regular level 1 data at Interactive Brokers (a service typical big broker names provide for 'free') I pay $13.00/month. That's about the same price as one commission charged by these big brokers such as TD Ameritrade/Charles Schwabb/etc.
Interactive Brokers offers a $10/month bundle which includes:
BATS exchanges, US Mutual funds, Dow Jones Indices, CME Lvl 1, OTC Markets Lvl 1, U.S. Bonds.
To get AMEX, NYSE, or NASDAQ exchange market data access you need to add $1.50/month for each of those.
So minimum all in Level 1 data for trading in all securities is $14.50/month. (Still less than a round trip trade in a stock at a regular broker dealer assuming $10 commissions per trade).
If you are an active trader, the $10/month bundle is actually free if you generate at least $50USD in commissions per month.
For further details you can view all additional data pricing and services here.
NERD DETAILS: For executions, Interactive Brokers uses what they call Smart Routing in order to lower your costs as much as possible. I have experienced a noticeable difference in favorable fills compared to other brokers I have used.
For instance with options, IB looks at exchange fees/rebates in deciding where to route an order. It may route an order to an exchange not currently posting the NBBO (National Best Bid and Offer) but it may be willing to step up to NBBO to avoid/reduce exchange fees for executing the order. Ultimately, this results in a lower execution fee for the customer and a fill at the NBBO once trade goes through.
Trader Tip: If you have no experience trading an asset class, IB forcing you to take an asset class test is not a disadvantage in my opinion. If you can't answer the questions correctly, you should not be trading that asset class. They are actually helping you.
"Risk comes from not knowing what you are doing" - Warren Buffet
Very true statement as even "risky" assets like futures have much smaller risks if you have proper knowledge of how the asset trades and how to protect yourself with proper risk management tools.
These guys have the lowest fees and trading costs in the industry. They offer great international access and an enormous amount of securities. You can trade all asset classes from one platform.
Just keep in mind they aren't there to hold your hand and get ready to dedicate some time to learn their trading platform.