Interactive Brokers is a US-based brokerage firm that offers a wide variety of trading tools and a trading platform for investors. Their platform is also available in the United Kingdom.
It is famed for its fees that are low compared to most brokers. However, it has an intricate layout that may be a drawback, especially for beginners.
Interactive Brokers UK
Interactive Brokers is a brokerage firm that operates the biggest online trading platform in the US in terms of daily average revenue trades.
This broker is also very popular in the UK and other European countries. The brokerage company deals in a wide range of instruments, including options, EFPs, bonds, stocks, futures options, funds, and forex.
|Type of broker||Online only|
|ASX products||Exchange-traded options, shares, IPOs/floats, warrants, and company issued options|
|Available markets||ASX, NYSE, NASDAQ, AMEX and London Stock Exchange|
|Standard brokerage||AUD 5 or 0.08%|
Interactive Brokers has offices in 4 different cities in the US and is headquartered in Connecticut. The company is regulated by several financial regulatory, including The Financial Industry Regulatory Authority, the US Securities and Exchange Commission, the Commodity Futures Trading Commission, and the National Futures Association.
Its parent company, Interactive Brokers Group, was established in 1997 by Thomas Peterffy. Today, the company hasUS$128.4 billion in customer equity serving over 600,000 client brokerage accounts. The parent company is an equity partner of the Boston Options Exchange and also owns 40% of the futures exchange OneChicago.
Interactive Brokers is licensed to operate in the UK and regulated by the Financial Conduct Authority (FCA).
Interactive Brokers’ platform (Traders workstation)
The brokers’ trading platform is available for both mobile and desktop. It is overwhelming at first, but once you get the gist of it, you can find your way through easily. Interactive Brokers state on their website that there TWS platform is specifically designed to cater to advanced traders.
On the bright side, the platform has several customizable options that allow you to configure it to your liking. You can set it to suit your style based on the instruments you trade. However, you’ll need to learn a few tips here and there and also know what exactly what you want.
Here are some of the features you can expect from Interactive Brokers:
- Global markets – Interactive Brokers allows you to trade stock and other securities from global countries. You get access to products from over 25 countries. IB, however, fails when it comes to conversion rates. The broker doesn’t list its conversion rates directly. When you want to find the rate offered for each currency, you have to input the details into the platform manually.
- Single account for your products – Unlike other brokers whose platforms require you to have different accounts for trading various products, Interactive Brokers offers one account that takes care of all that. Through this account, you can access and trade different products ranging from future to ETFs.
- Fractional investing – Fractional investing (available for US stocks) allows investors to trade in dollar amounts rather than individual shares. For instance, you can invest in $50 of a stock that costs $350 per share.
- Low brokerage fees – IB has among the lowest brokerage rates in the industry. Fees start at $1 for UK stocks, but this applies once you trade amounts of over $300,000,000, which makes it more of a marketing gimmick than an offer. Even so, trading fees are lower than what other brokers charge.
- Interest on idle cash – The broker claims to pay interest for idle cash in your account. However, there are several catches here, so don’t be sold yet. The interest applies only if your account has a more than a specified sum.
- Portfolio builder – You also get a portfolio builder to help you manage your investments. The builder lets you create custom strategies based on research and historical data. You can compare your portfolio and even test it against a benchmark index. In addition, you can modify your strategy to make the historical performance meet your standards.
- A wide selection of order types – IB offers an extensive range of order types to suit advanced investors. Most brokers usually offer limit and market orders. IB provides these and many more, including limit on close, stop limit market on close, and trailing stop. If you are not sure what these order types mean, worry not. The broker offers a video tutorial to give you an idea of what they are and how to apply them.
Here is an area where IB shines. It has low trading costs, but you need to be careful to avoid getting caught unawares by the hidden caveats.
Broker or commission fees
Besides the brokerage fees, traders are charged additional fees that include an exchange fee, clearing fee, subscription fee to get live data, and an inactivity fee. Note that the fees will vary based on the products you invest in, the country these products are in, and your fee structure.
IB has two payment methods you can use to transfer funds. You can move funds to your account using either BPAY or bank transfer.
My Experience With Interactive Brokers UK
Interactive Brokers (IBKR) has been an absolute game changer. I feel like I’ve unlocked a whole new world of investing possibilities, and I can’t help but rave about how amazing this platform is. So, buckle up, because I’m about to take you on a whirlwind tour of my personal experience with Interactive Brokers!
First off, let’s talk fees – or should I say, the lack thereof!
I’ve dabbled with other investing platforms before, and I’ve always been frustrated by the sneaky fees that seem to pile up. But with IBKR, I’ve been able to keep more of my hard-earned money thanks to their incredibly low fees. I mean, come on, who doesn’t love saving a buck or two? This alone had me practically jumping for joy.
Now, you might be thinking, “Sure, low fees are great, but what about the interface?”
Well, let me tell you, IBKR’s interface is slicker than a greased pig at a county fair. It’s intuitive, user-friendly, and visually appealing – and that’s coming from someone who’s picky about their digital experiences. Navigating the platform is a breeze, and it’s easy to find everything I need in just a few clicks. It’s like they read my mind and designed the perfect interface just for me.
But the cherry on top? The sheer number of ETFs available through Interactive Brokers!
It’s like walking into a candy store with unlimited choices. I’ve never seen such a massive selection in my life! And the best part is that I can choose from multiple exchanges to buy from, like London or Amsterdam. It’s like having an all-access pass to the investing world’s greatest hits.
Now, even the best platforms can have hiccups, and I’m not going to pretend that everything has been smooth sailing. I did run into an issue at one point – but the support I received was nothing short of legendary. I hopped onto the online chat, and I kid you not, I got a response within seconds. The support agent was friendly, knowledgeable, and resolved my problem in no time flat. It was like having my own personal investing superhero in my corner.
Joining Interactive Broker account
Opening a trading account with Interactive Brokers is straightforward, but there are a few hurdles. You need to have liquid net assets exceeding $20,000 and be an experienced trader i.e. have executed 100+ trades before.
If you can’t confirm this requirement, you have an option to carry out simulated trades using the demo platform. You’ll also need to provide your personal information and other documentation such as a passport or driver’s licence.
IB has five primary account profiles that traders can choose from based on their trading experience.
The most basic account profile is the Investment account. Requirements here include:
- A minimum liquid net worth of $20,000
- A minimum deposit of $2,000
The trading account profile is almost similar to the Investment account except that it has fewer restrictions. However, you need:
- An income of over $50,000 on top of a minimum liquid net worth of $20,000 or a net worth of $100,000
- The minimum deposit here is $10,000
The leveraged trading account is exclusively reserved for company or wholesale investors. The requirements here are:
- A minimum deposit of $10,000
- A liquid net worth of over $100,000
The professional trading account is available for traders with:
- A minimum deposit of $100,000
- A net worth of over $1 million.
The highest account profile is Self-Managed Superannuation Funds account that’s explicitly for SMSF trustees.
Pros and Cons of Interactive Brokers
- Interactive brokerage fees for trading are low compared to what its competitors charge
- The broker’s rates for margin lending are low
- The company also has a user-friendly and readily available chat-bot with voice activation on its trading platform. The bot helps respond to inquiries made by the traders on issues such as market queries, placing orders, executing trades, and general company questions.
- Although it’s more of a marketing strategy, Interactive Brokers pays interest on idle cash so long as the balance exceeds the specified amount.
- Traders also get a wide range of securities and order types to fit their trading style and preferences.
- IB has a robo-advisor that offers several portfolio options, many of which require $1,000 to invest in.
- A single account that allows investors to trade different products such as stocks, forex, ETFs, and CFDs without having to switch or register a second account.
- The trading platform is mainly geared for the US market. Users looking to invest in products available in other countries such as UK will have to scroll through a lot of US market-relevant data.
- It has an elaborate layout and trading platform that makes it generally suited to professionals. Newbies will feel out of place using IB.
- IB has a confusing fee structure that has hidden caveats. For instance, the company charges low fees but attaches some conditions and other costs that aren’t obvious. It almost looks like the broker intentionally hides these additional costs.
- Although features such as live data feed, customisable notification, and real-time data are all available, the broker charges additional fees to offer these boons.
- The minimum amount of liquid assets before opening an account is high. The lowest profile, for instance, requires a liquid net worth of $20,000
Is Interactive Brokers good for UK investors?
Interactive brokers is ideal for active and professional traders as they’re likely to benefit most from the complex platform and advanced execution.
In addition, they’ll be attracted by the low fee charged and a wide selection of tradable securities. However, we can’t recommend it to beginner investors as it doesn’t offer hand-holding or educational resources that may suit them.