Interactive Brokers Review 2017.
Interactive Brokers is a solid choice for active, advanced traders because of its international trade capabilities, low — and volume-based — commissions and quality trading platform. The broker isn’t a good fit for beginners or infrequent traders, as it provides little investor education, requires a high minimum investment and charges inactivity fees that will quickly eat into returns. Such investors may want to check out NerdWallet’s list of best brokers for beginner investors.
NerdWallet's rating: 4.0 / 5.
Quick facts.
Commissions: Fixed-rate and volume-tiered pricing, starting at $1 Account minimum: $10,000 Promotion: Special terms for clients 25 and younger.
Interactive Brokers is best for:
Advanced traders. Day traders. Penny stock traders. Margin accounts. Options trading.
Interactive Brokers at a glance.
• Forex ($10 million in assets required)
Where Interactive Brokers shines.
Low commissions: It’s hard to beat the stock and exchange-traded funds commission structure at Interactive Brokers, which favors frequent, high-volume traders at just $0.005 cent — one-half of 1 cent — per share. There’s a $1 minimum trade commission and a 0.5% maximum, and exchange and regulatory fees are included. The broker also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay $0.002 cent or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan.
Options trading, too, is offered at rock-bottom pricing, with just a 70 cent charge per contract and no base (minimum $1 per order), plus discounts for larger volumes.
Trading platform: Interactive Brokers’ Trader Workstation is considered one of the best trading platforms available for advanced traders. The desktop platform is fast and includes standard features like real-time monitoring, alerts, watchlists and a customizable account dashboard. An options strategy lab lets you create and submit both simple and complex multileg options orders and compare up to five options strategies at one time.
Desktop trading platform Trader Workstation.
Other tools include a volatility lab, advanced charting, heat maps of sector and stock symbol performance, paper trading and a mutual fund replicator, which helps users identify ETFs that replicate the performance of a selected mutual fund but offer lower fees. A new feature, InteractiveBroker FYIs, offers customized notifications about events that could affect a trader’s investments. Research, news and market data are also available, although in many cases there’s a premium subscription fee.
Novices will likely find Trader Workstation completely overwhelming, to the point of being unusable. But Interactive Brokers also offers a strong mobile trading app and IB WebTrader, a streamlined browser trading platform that is a bit easier to navigate.
Margin rates: Traders looking to use margin will love the rates that Interactive Brokers offers; they’re extremely low. The maximum margin rate is the benchmark rate plus 1.5%. The broker charges a blended rate based on account balance. It has a calculator on its website to help investors quickly do the math based on their account balance.
Investment selection: Interactive Brokers offers access to a huge selection of products, from standard offerings of stocks, options, ETFs, mutual funds and bonds to precious metals, forex trading and futures. In a change last year, the broker began requiring assets of $10 million or more for leveraged forex positions.
Where Interactive Brokers falls short.
Minimum investment requirement: The $10,000 minimum investment requirement is steeper than at other online brokers, which brings Interactive Brokers’ rating down a notch. The company does lower its minimum to $5,000 for individual retirement accounts and $3,000 for clients 25 or younger, which is a nice offering.
Inactivity fees: Here, too, the minimums are high for all but very frequent traders. Accounts with balances under $100,000 must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20. Again, there is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.
Customer experience: Because Interactive Brokers has a variety of commission structures and added fees, it can be hard for investors to quickly identify what their costs will be. The website and trading platforms are clearly geared toward advanced traders, and the customer service is frequently reported to be subpar.
Is Interactive Brokers right for you?
Frequent and advanced traders could see significant commission savings at Interactive Brokers, due to the discounted pricing for high-volume traders. These investors will also benefit from the company’s quality trading platform and fast trade execution.
New investors likely won’t find a home here. The low commissions don’t make up for the high inactivity fees, and the account minimum and lack of educational materials and research are high barriers to entry.
Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. : aosheanerdwallet. Twitter: arioshea.
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Naked Option Margin Calculator.
Estimate margin required for selling naked options. I use the formula at Interactive Brokers to estimate your margin.
There are two numbers calculated:
- Gross Maintenance Margin . This is what you have to keep in your brokerage account.
- Net Margin Required . This is your net cash requirement.
Broad based indexes use 15% vs 20% in the margin calculation.
Page Processing Time: 0.047 sec.
Capital Discussions, LLC is NOT a Broker Dealer. Capital Discussions, LLC engages in trader education and training. Capital Discussions, LLC offers a number of products and services via the internet at capitaldiscussions. Capital Discussions, LLC offers web-based, interactive training courses on demand.
The webinars and seminars given by Capital Discussions, LLC are for educational purposes only . This information neither is, nor should be construed, as an offer, or a solicitation of an offer, to buy or sell securities. You shall be fully responsible for any investment decision you make, and such decisions will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Options involve risks and are not suitable for all investors. Prior to buying or selling an option, you must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, by calling 1-888-OPTIONS, or at theocc. The information on this web site is provided solely for general education and information purposes. No statement should be construed as a recommendation to buy or sell a security or to provide investment advice. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs. Supporting documentation for any claims, comparisons, statistics or other technical data in this presentation is available at Capital Discussions, LLC (infocapitaldiscussions).
Past performance is not indicative of future results. Parameters relating to past performance of strategies discussed are not capable of being duplicated. In order to simplify the computations, slippage, commissions, fees, margin interest and taxes are not included in the examples used on this web site. These costs will impact the outcome of all stock and options transactions and must be considered prior to entering into any transactions. Multiple leg strategies involve multiple commission charges. Brokerage firms may require customers to post higher margins than the minimum margins specified on this web site. Investors should consult their tax advisor about any potential tax consequences. Simulated trading programs are designed with the benefit of hindsight. No representation is being made that any portfolio or trade will, or is likely to, achieve profits or losses similar to those shown. All investments and trades carry risks.
Capital Discussions is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for Capital Discussions to earn fees by linking to Amazon and affiliated sites.
For personal use only. All information on this web site is for your personal, non-commercial use only. Commercial use requires the written permission of Capital Discussions, LLC and may involve licensing fees.
Interactive Tutorial and Widget User Agreement.
This Agreement governs your right to use the IB Options Calculator and other software provided by Interactive Brokers LLC for downloading. Please read it carefully. The IB software is provided with restricted rights and is the property of Interactive Brokers LLC. By using the software, you agree to be bound to the terms and conditions set forth in this agreement.
The Interactive Brokers Options Calculator and other software, including but not limited to downloadable widgets provided by Interactive Brokers LLC ("IB") for downloading (the "Software"), is provided for educational purposes only to assist you in learning about options and their theoretical fair value. It is not designed to provide investment advice, nor should you make any investment decisions based solely on the calculations, values, or other information obtained from the Software. The calculations obtained from the Software are based on a mathematical model which incorporates a variety of assumptions, some of which may not be applicable in the markets at the time of the calculation, and resulting prices may be different from actual prices or prices calculated by other mathematical models.
This license agreement between you and IB governs your right to use the Software. The Software is the intellectual property of IB and all rights not specifically granted to you hereunder are reserved by IB. You are hereby granted the non-exclusive right to use the Software. You agree not to copy, publish, transmit, transfer, license, sell, reproduce, modify, distribute, display, create derivative works from, or exploit the Software in any way. You agree not to alter, adapt, merge, decompile, disassemble, upload, post, reverse engineer the Software or participate in any of the foregoing activities. This license may only be modified or amended in writing, signed by you and IB. This license will be terminated automatically if you violate any of its terms and may be otherwise terminated by IB for any reason without notice. This license constitutes the parties' final, complete and exclusive agreement with respect to the Software.
The Software is provided "as is" and "as available" without warranty of any kind, either express or implied, including but not limited to any implied warranty merchantability or fitness for a particular purpose, regardless of whether IB knows or has reason to know of your specific needs. In addition, neither IB nor any other person makes any representations with respect to the Software and expressly disclaim all warranties. You are solely responsible for your use of the Software. If an implied warranty may not be disclaimed under applicable law, then any implied warranty is limited in duration to a period of thirty (30) days from the date the Software is first accessed by the end-user.
Neither IB nor any other person will be liable to you for damages in any circumstances including, without limitation, any loss of profits, loss of savings, damage to data or other incidental, direct, indirect, incidental, special, punitive, consequential, or other losses or damages of any kind arising out of the use or performance of the Software, even if IB or any other person has been advised of the possibility of such damages or claim by any third party.
Results and values obtained from the Software are examples of theoretical value calculations for options contracts and cannot be reproduced without duplication of all assumptions used in the examples. For simplification, the calculations do not include tax considerations, margin requirements, commissions, transaction costs or other factors. These considerations may significantly affect the economic consequences of any transaction and should be carefully considered before trading in options contracts. In addition, before buying or selling options, determine whether the specific transaction is right for your financial situation, investment objectives, experience, and risk tolerance.
No statement on this site should be construed to be a solicitation or recommendation to purchase or sell any security or to provide any investment advice. Options involve risk and are not suitable for all investors. For more information, read the "Characteristics and Risks of Standardized Options". For a copy, click here.
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
Interactive Tutorial and Widget User Agreement.
This Agreement governs your right to use the IB Options Calculator and other software provided by Interactive Brokers LLC for downloading. Please read it carefully. The IB software is provided with restricted rights and is the property of Interactive Brokers LLC. By using the software, you agree to be bound to the terms and conditions set forth in this agreement.
The Interactive Brokers Options Calculator and other software, including but not limited to downloadable widgets provided by Interactive Brokers LLC ("IB") for downloading (the "Software"), is provided for educational purposes only to assist you in learning about options and their theoretical fair value. It is not designed to provide investment advice, nor should you make any investment decisions based solely on the calculations, values, or other information obtained from the Software. The calculations obtained from the Software are based on a mathematical model which incorporates a variety of assumptions, some of which may not be applicable in the markets at the time of the calculation, and resulting prices may be different from actual prices or prices calculated by other mathematical models.
This license agreement between you and IB governs your right to use the Software. The Software is the intellectual property of IB and all rights not specifically granted to you hereunder are reserved by IB. You are hereby granted the non-exclusive right to use the Software. You agree not to copy, publish, transmit, transfer, license, sell, reproduce, modify, distribute, display, create derivative works from, or exploit the Software in any way. You agree not to alter, adapt, merge, decompile, disassemble, upload, post, reverse engineer the Software or participate in any of the foregoing activities. This license may only be modified or amended in writing, signed by you and IB. This license will be terminated automatically if you violate any of its terms and may be otherwise terminated by IB for any reason without notice. This license constitutes the parties' final, complete and exclusive agreement with respect to the Software.
The Software is provided "as is" and "as available" without warranty of any kind, either express or implied, including but not limited to any implied warranty merchantability or fitness for a particular purpose, regardless of whether IB knows or has reason to know of your specific needs. In addition, neither IB nor any other person makes any representations with respect to the Software and expressly disclaim all warranties. You are solely responsible for your use of the Software. If an implied warranty may not be disclaimed under applicable law, then any implied warranty is limited in duration to a period of thirty (30) days from the date the Software is first accessed by the end-user.
Neither IB nor any other person will be liable to you for damages in any circumstances including, without limitation, any loss of profits, loss of savings, damage to data or other incidental, direct, indirect, incidental, special, punitive, consequential, or other losses or damages of any kind arising out of the use or performance of the Software, even if IB or any other person has been advised of the possibility of such damages or claim by any third party.
Results and values obtained from the Software are examples of theoretical value calculations for options contracts and cannot be reproduced without duplication of all assumptions used in the examples. For simplification, the calculations do not include tax considerations, margin requirements, commissions, transaction costs or other factors. These considerations may significantly affect the economic consequences of any transaction and should be carefully considered before trading in options contracts. In addition, before buying or selling options, determine whether the specific transaction is right for your financial situation, investment objectives, experience, and risk tolerance.
No statement on this site should be construed to be a solicitation or recommendation to purchase or sell any security or to provide any investment advice. Options involve risk and are not suitable for all investors. For more information, read the "Characteristics and Risks of Standardized Options". For a copy, click here.
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
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