Interactive Brokers

An independent review by our team of experts.

Review summary

Interactive Brokers

Interactive Brokers Group, Inc, was founded as a Broker Dealer in 1977. Consolidated equity capital is at approximately $6 billion, and the firm’s founder, Thomas Peterffy, continues as chairman and CEO.  The firm and its affiliates execute nearly 1,000,000 trades per day.

Interactive Brokers Group and LLC are rated investment grade by Standard & Poor's (BBB+). 

Overview

In 2017, Barron’s rated Interactive Brokers as the Best Online Brokerage, Best for Option Traders, Best for Frequent Traders, Lowest Cost Broker Rating, and Low Cost for the 16th year in a row.  

Interactive Brokers has a broker dealer agency business, as well as providing direct access online trade execution and clearing services to individual clients. 

Interactive Brokers is headquartered in Greenwich, Connecticut and has over 1,100 employees in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Hungary, Russia, Japan, India, China and Estonia. 

Interactive Brokers is regulated by the SEC, FINRA, NYSE, FCA and other regulatory agencies around the world.  However, FCA regulation does not extend to offshore clients because of territorial limitations in the FSMA 2000.

Interactive Brokers’ platform based in the US comes under US Securities and Exchange Commission, and the Commodity Futures Trading Commission regulation.

The company’s service is extremely comprehensive, providing direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs from a single IB Universal Account.  It covers 100 markets, 24 countries and 22 currencies.

However, the service is more geared towards professional traders, investors, advisers and fund managers rather than retail clients.

Not all of these instruments may be legally available however, due to foreign fund marketing rules and local licensing requirements to residents in certain countries.   Professional advice should be sought if you are unsure regarding local compliance rules.

The trading platform is mobile, web and desktop compatible, offers research, news and updates, as well as boasting algorithm and trading tools.  Other features include portfolio margining and watch list tools.  The platform allows easy viewing of holdings, but not simplified viewing for retail investors.

International investors can open accounts online, and pricing is competitive. Interactive Brokers claim that their charges are 87% lower than their competitors.

Full details of the charging options and structures can be found HERE.

The platform charges a complex commissions structure, with trade costs dependent on your country of residence.  Broadly, ETFs and stocks can be traded at a minimum of $4-$8 under the fixed pricing structure.

High volumes of trades are rewarded, but on average, the occasional trader is likely to pay $20 per month according to the site. However, their definition of ‘occasional’ is 8 trades per month - which is fairly high for the long-term passive investor!

The pros

  • Wide range of investments
  • Low Cost
  • Excellent DIY platform

The cons

  • Complex choice of instruments
  • No advice
  • Dealing commissions
FAQs
What can I trade with Interactive Brokers?

Trade stocks, options, futures, forex, bonds, ETFs, CFDs and more from a single IB Universal Account.

The full list is: -

stocks, options, futures, forex, bonds, ETFs, CFDs , mutual funds, metals, spreads and combinations, hedge funds and EFPs.

What are the main benefits of choosing an account from Interactive Brokers?

Interactive Brokers say there appraoch is "Integrated Investment Management..."

You can borrow, earn, spend and invest worldwide from just the one account.

"An IB account is not just for investing; it's an all-in-one financial management account that gives you the power to borrow, earn, spend and invest, as well as view the performance of all of your financial accounts in one place."

Borrow = Borrow against your account at rates lower than 2.66%

Earn = Earn market rate interest on your idle balances and earn extra income by lending your fully paid shares

Spend = Spend and borrow directly against your account with Debit Mastercard®. Use your card to make purchases and ATM withdrawals anywhere Debit Mastercard is accepted around the world.

Invest = Invest in stocks, options, futures, forex and bonds on over 100 global exchanges at lower cost.

Customer reviews
Very happy with my IB account

This is the most flexible, cost effective account I've found.

I researched plenty...

I was looking for the ability to match my trading ambitions (which are diverse) and I got so much more with the Interactive Brokers account.

They add new functions and features all the time as well - I recommend this to all my friends who enjoy dabbling too.

Expert verdict
Expert Assessment of Interactive Brokers

Given the trading charges are typically lower than DBS Vickers, Saxo or TD International, we think Interactive Investor is the pinnacle of low cost trading and investment platforms.   

However, there are two potential risks:

1) Check your situation with an international accountant before trading.  As an American firm, all securities are held in the USA, and you want to ensure withholding taxes or estate taxes don’t erode your returns.

2) The danger of a professional trading platform is that in signing up it's like being given tokens in a casino.  There is huge temptation to trade based upon the information and special deals this platform fires at you.

If you ever eat pizza or skip exercise sessions you may not have the discipline required to tune out the Interactive Brokers’ attempts to tempt you into their web!

The evidence shows that the average individual investor in stocks earned a 3.8% annual return over 30 years, while the S&P 500 returned 11.1% annually during the same period.  Individual investors under-performed the market by approximately 7.3% per year - largely as a result of behaviour such as trying to time the market or chase returns.*

Trying to resist this temptation to do it yourself (and fall into the traps we are hardwired to make) can be hard, and our advice is to only go down this route if you are sure you know what you are doing (and are happy to live with the consequences).

If you want us to review your overall portfolio, benchmarking performance and checking fees and charges, request a free X-Ray Review™ and we'll get you all the information you need to make an informed decision about whether your money is performing as well as it could be.

*Source: 2015 Dalbar study of US equity investors

“Thank you AES International for helping me and my family with your low cost no-nonsense approach. It is refreshing!”

Kristian Petersson

“With this sort of service you also expect to be paying very high fees, but it’s just not the case. I would definitely recommend AES.”

Jake van den Dries

“In the short time that I’ve been using AES I’ve made nearly ten thousand pounds and couldn’t be happier!”

Jackie Pym

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