16 Aug Interactive Brokers Review
Interactive Brokers – Our Verdict
Low Commissions and Margin Rates
More Markets Than Any Other Broker
Excellent Support and Security
Poor Charting and User Interface
Interactive Brokers is an all-rounder and a comprehensive electronic broker. Used by money managers and hedge funds, it supports many account types. IB account opening process, funding and ongoing support is fantastic.
For day traders it has low commissions. IB for charting is basic, however, 3rd party charting packages can connect to via IB API. Market access is unparalleled to any other electronic broker.
History of Interactive Brokers
Interactive Brokers was founded in 1978 and is one of the biggest electronic US-based brokers. The broker is regulated by several financial authorities globally, including top-tier ones like the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC). IB clients traded $100 billion worth of stocks in December 2019, which tripled to $295 billion in March 2020. That’s almost double of Ray Dalio’s Bridgewater AUM. IB’s client’s AUM is $180 billion, which is also more than Bridgewater’s AUM.
Who uses Interactive Brokers? Predominantly Professionals, Money Managers, Hedge Funds and Institutional Clients.
Affiliations and Secondary Platforms
IBKR Lite – In 2019 the company launched a second tier of their service. You get unlimited free trades of stocks and ETFs listed on US stock exchanges. However, to be eligible for IBKR Lite, advisors must be US-domiciled and must have less than 15% of client accounts outside the US.
Interactive Brokers is an all-rounder and a comprehensive electronic brokerage. IB day trading platform is suitable for money managers and hedge funds, it supports many different account types. IB account opening process, funding and ongoing support is fantastic despite what you hear on the net.
For day traders it has very low commissions and trading costs relative to other brokers. However, no serious day trader will use Interactive Brokers for charting or technical analysis. You need a 3rd party Charting package that can connect to IB allowing you to easily place orders via chart using trendlines, automation or DOM – we recommend Multicharts as a solid charting package that can easily connect to Interactive Broker IB Gateway API.
Market access is unparalleled to any other electronic broker. However, for those subscribing to basic level 1 data just be cautious if you intend to use tick data. IB uses an aggregated tick data feed which is terrible, it will never match other data feeds such as Rithmic, CQG or IQFeed tick data. Interactive Brokers also restricts historical data with historical pacing which allows a certain amount of data to be requested before they place a pacing violation and you have to wait 5 minutes before requesting more.
Be mindful of reviews on the internet as you often only hear the voice of negative reviewers, we have been using IB for Quant Savvy systems for over a decade and even with its flaws, as a standalone electronic broker, there is nobody better. If you are looking for a safe secure broker with access to lots of markets then Interactive Brokers is a great fit if run alongside 3rd party charting software.
Best Day Trading Platform Tools
Best for Market Access
Best Customer Support and Learning Resources
Interactive Brokers has achieved the above titles in Best Day Trading Platform Review, where we compared Interactive Brokers, TradeStation, eSignal, AmiBroker and NinjaTrader. Quant Savvy has compiled a comprehensive list of features, user reviews rankings, and screenshots. We also provide sources for our information and useful links to help you conduct additional research.
Interactive Brokers might be considered as one of the best day trading platforms for traders who are looking for a wide range of trading tools. While the other platforms are not designed for fundamental analysis and research, Interactive Brokers has a whole wealth of tools to perform in-depth research on companies and markets. The release of Fundamental Explorer in 2019 is light years ahead of nearly all other Online Broker and Day Trading Platforms. The Investors’ Marketplace is fantastic resource for any trader, hedge fund or professional – listed services from legal and compliance makes it very easy for bigger clients to manage their accounts.
Scanners, Screeners, Watch Lists, Software tools, Alerts
Options Strategy Lab: Allows investors more depth into the structure of option pricing and develop option combinations tailored to their views. The Option Strategy Lab allows the client to make price and volatility forecasts over time. Options Strategy Lab may be used in conjunction to the IB Probability Lab – which can be used to show what option premiums are predicting about future prospects for share prices of the underlying. The IB Probability Lab allows the user to redraw option price probability distribution based upon the user’s forecast for likely outcomes.
Market Scanner: Scan multiple products around the world. Create custom scans – Variables, filters and parameters allow you to create unique, completely customized scans. For example, you may want to find the top ten most active US stocks with a price of USD 30.00 or lower, but only in the Real Estate industry. Scan parameters: High Dividend Yield, Top % Gainers and Losers, Most Active, Hot by Price and Volume, Top Trade Rate, Highest and Lowest Option Implied Volatility, 13-, 26- and 52-week High and Low, and many more.
Watch lists: can include anything from equities to individual options contracts, futures, forex, warrants – you name it. A staggering 494 data points are available for column customization.
Placing Live Trades and Trading Technology
Interactive Brokers do not have set minimum or maximum trade requirements. They may vary depending on the account type and trading instrument. More information can be found here. As IB offers ECN and STP execution, users might expect very tight spreads with more transparency over the price they’re paying to execute trades.
Interactive Brokers’ Pro pricing system: order execution engine that stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate. For multi-leg options orders, the router seeks out the best place to execute each leg of a spread, or clients can choose to route for rebates. Clients can choose a particular venue to execute an order from TWS.
Book Trader: Lets you create, modify and transmit orders for a single instrument within the book price ladder.
As a nice bonus, Interactive Brokers are one of the very few brokers that claim to have no requotes, so you don’t have to worry about slippage (your trades being ordered at a different price to what you executed them at).
As with most brokers, margin requirements do vary depending on the trader, accounts and instruments. You can see the latest margin requirements on their website.
Research and News Feeds
Fundamentals Explorer: In late 2019, Interactive Brokers rolled out Fundamentals Explorer as a new tool within Client Portal, built for everyday investors to perform traditional fundamental research on stocks. It’s light years ahead of anything Interactive Brokers had prior (the data is also incorporated into the mobile app under quotes). Fundamentals Explorer will eventually make its way into TWS, and the foundation has been laid for adding ETFs alongside Mutual Funds research. Overall, customers should expect to see improvements throughout 2020.
PortfolioAnalyst: Stepping away from traditional research, PortfolioAnalyst provides traders with hedge fund-level reporting on their portfolio’s performance and makeup. Interactive Brokers also offers a free version for non-clients where you can link all your individual accounts and run reports. It isn’t as insightful and easy to use as, say, Personal Capital. Still, it’s a compelling tool for traders with assets spread across numerous institutions.
News: Interactive Brokers has its own news domain called Traders’ Insight. It also provides integrated third-party news and recommendations to its desktop platform. Performing even basic research on stocks, ETFs, and mutual funds is nothing like a traditional full-service brokerage experience one might find at TD Ameritrade, Charles Schwab, or Fidelity. You have to learn how to navigate TWS to find the information you want; there are no streamlined views. Bottom line, while TWS checks off quite a few boxes for research, the user experience is poor.
The Investors’ Marketplace lets individual traders and investors, institutions and third-party service providers meet and do business together. This is a great resource where you can find investment advisors, brokers, hedge funds. There is programming consultants, software vendors. They even have list of accounting firms, administrators, auditing firms, compliance firms, legal firms, tax firms. Educations research such as trading publications, education and coaches etc.. Source
Portfolio, Risk Management and Software Tools
Volatility Lab: Interactive Brokers volatility lab provides snapshot of past and future readings for volatility on a stock, its industry peers and some measure of the broad market. Historic volatility measures the degree to which a security has moved over a period of time. In turn, the option market implies the expected volatility based upon the security’s prior movements and in the face of both anticipated unknown events such as earnings announcements and the movement of the broad market as well.
Risk Navigator: Risk NavigatorSM is a real-time market-risk management platform that provides a comprehensive measure of risk exposure across multiple asset classes around the globe. Assess specific risk slices of your portfolio, such as risk by position, risk by underlying, and risk by industry. Equity Portfolio Managers can use the Risk Navigator’s advanced beta analysis to build their portfolios based on key concepts of the Capital Asset Pricing Model.
IB charting is free and they offer a wide range of charting features, including 120 technical indicators. Nonetheless, the charting tool is not user-friendly.
Note that TWS actually has two interfaces: Mosaic and Classic. Look at the bottom-left for tabs to switch views. – Mosaic is relatively new and allows you to create a custom view of your terminal with the lock button in the upper right. – Classic is old-school and doesn’t have the bells and whistles of Mosaic, but is more transparent for many features.
Many users complain about IB charting, therefore it is recommended to use a 3rd party charting platform which can easily connect to IB to place orders. If you intend to use TWS for chart trading or any type of complex technical analysis then we don’t recommend this. Their charting is basic, historical data is fine & accurate, but don’t count on more than that.
IB is quite good with decent TWS and importantly their fills and commissions are top tier vs the competition. Also, any charges for data feed are offset if you make the minimum, I think 10, trades a month.
Nobody runs IBTWS without a separate charting and analytics platform. The option analytics are comically bad. Run a stress and it defaults to 3 sigmas and all you'll see is your risk curve as a flat line.
I do have a lot of problems with IB’s data feed and practically spending most of my time (sometimes hours per day) waiting for chart/data to show up. This is mainly for options data, for example, wanting to chart the pricing of a butterfly combo/spread over a couple weeks at mid prices. I chart various option combos all the time, and each time I wait 1-15 minutes for chart to show up, which is insane and makes it unusable.
TWS is not suitable for back testing and strategy development. TWS in itself is not a backtesting tool. You could only use it to download historical data through their API (which uses TWS for connection to their data servers). You would then have to program your own backtesting tool to handle that downloaded data. In simple cases a spreadsheet might be sufficient for your strategy development, in more complex cases you would need to write some software in your language of choice. You could try already prebuilt platforms like Multicharts, Ninjatrader, Sierra Charts, AmiBroker to run your strategy backtest and connect them to the Interactive Brokers API. IB don’t offer a real backtesting environment for your Python API. So you have to build your own backtesting environment. You should split it into 2 steps. Step 1 is collecting the historical data and step 2 is feeding your strategy with that data. You can use Portfolio Builder, It’s an easy to use tool for testing simple strategies. Check here. I think it’s very helpful for the first steps. For more advanced strategies you have to use API as mentioned above.
Live Automated Trading
Live Trading Performance: Interactive Brokers uses an aggregated tick data feed which makes trading high frequency virtually impossible. The IB Gateway API is well built but issues occur with disconnections over the weekend which is very annoying for fully automated traders.
Price cap: Interactive Brokers implements algorithms to cap the price of clients’ orders before sending them to the exchange. Although, these algorithms have multiple purposes, the main reason behind them is to prevent potential manipulation and fat finger mistakes. In simple terms, IB has a price band around the reference price: the order will be capped to the brand price limit, if someone tries to place a buy limit order above that band or a sell limit order below that band. The downside of that is with fast-moving markets. The price caps do not get updated as fast as the markets, leaving traders with either trades they cannot execute at current market prices or with positions they hold which cannot close at current market prices.
Hold option spreads: IB might hold options spreads internally until they feel they are marketable.
Auto liquidation program: Since it is not done manually, the computer makes decisions that can be extremely negative, on what, when and how they liquidate.
Failure during the crisis: Interactive Brokers platform is known to fail during certain crises or unpredicted events. The recent Coronavirus market crash was not an exemption: when crude oil day prices plunged below zero, oil’s first trip into negative pricing had broken Interactive Brokers platform. As a result, Interactive Brokers clients who traded crude oil that day reported enormous losses, as they were flying blindly, unable to see that prices had turned negative, or in other cases locked into their investments and blocked from trading. Interactive Brokers also increased margin requirements forcing position liquidation. These Interactive Brokers failures have opened eyes to many traders who lost all their capital just in one day. Quant Savvy users, on the other hand, has experienced positive results during all market crashes. If you are interested in the potential of consistent performance with low risk, feel free to read more about our algorithmic trading systems or request live performance.
Trade Management and Historical Trades
Portfolio Summary: Measure your portfolio performance with a full allocation breakdown for each account.
Portfolio Analyst: Consolidate, track and analyze your finances. Combine your IBKR account with your other brokerage, checking, savings, annuity, incentive plan and credit card accounts for a whole-portfolio view of your finances.
Reporting: Quickly generate account activity or performance statements. Use Flex Queries to create sophisticated analyses of your account and quickly generate Risk, TCA and other reports. Supplemental Tax information and reporting is available for your record keeping.
Data Stability and Speed
Tick aggregation delay which means strategies relying on Milliseconds are wasting their time. IB’s streaming data is sampled so you get updates at 250ms intervals. Your quote could be that old by the time you get it regardless of where your connection to IB is.
At Quant Savvy we have multiple Interactive Brokers accounts running on our servers – we find the tick data feed to be completely unpredictable. Many times one platform will have different tick data to another Interactive Brokers platform. At the end of the day when you load the actual historical data, you will find many discrepancies from the live day session. Algo trades have been missed due to this poor tick data feed where one platform price is hit and filled and on another, it is not.
Portfolio Testing and Trading
Interactive Brokers is not designed as a backtesting tool – you can use a 3rd party or build your own software and use IB as the data feed.
Interactive Brokers API has official bindings for several programming languages: C#, .Net, Java, C++, VB and Python.
Clients can build their own trading applications, obtain market and chart data and view IBKR account detail using API solutions.
Ease of Use: Offers sample application for less experienced programmers: they can develop and hone their applications using Excel before migrating to a more robust language. Ability to link your system to their TWS demo for testing.
IBKR API Software: IB API solution supports a number of languages, including Java, .NET (C#), C++, Python, ActiveX or DDE. We also let you use a demo account to back-test your setup and test trade ideas before going live. Java – Most popular API technology; C++ (POSIX-compliant); Python; .NET (C#) – You can use the C# library with any .NET supported language; C++ (MFC); ActiveX – Integrate our ActiveX control into other programs such as Excel and Matlab; DDE – Use our Excel sample application to get you started, or any DDE-aware program. Source
Interactive Brokers API Setup Guide: API connecting via TWS is powerful but awkward. IB has an API for TWS and IB Gateway which can program to executes any type of trade depending on the user expertise. IB Gateway: View and manage API orders, and connect to your account data and IB market data in a seamless experience with a minimal interface.
Many users like C++ because a dynamically typed language such as python will hurt performance. Java would be a close runner up. Python is easier to learn than C++ but it still times a lot of time to master. Having a complex system does not make it a winner. For High-frequency trading C++ is preferable as you need to process a lot of data quickly. For swing trading Pythons popular, I don’t see why you couldn’t get similar results with JS, but you’d have to ask what the benefit of using it over Python would be. Interactive Brokers offer FIX CTCI solutions let you create your own trading system that takes advantage of our high-speed order routing and broad market depth. Source
Limitation to data requests: IB throttles data requests pretty hard. For instance, Amibroker is limited to 200 RT streaming from IB. Since each options contract is a symbol, the cap gets hit quickly. So we do not recommend to use any 3rd party software with IB data.
Support:Interactive Brokers systems development can take a long time due to the API being poorly documented. For advanced user who knows Python, C# etc. you will be able to figure out… it is simply hard work. It is not geared to users new to the programming world.
Learning: If you’re focused on the currency markets or only trading CFD’s, then see Metatrader 4 or Metatrader 5. It has a low learning curve and has several solutions built-in. There is even a third-party open-source bridge available if you’d like to use Python with Metatrader.
Videos: Interactive Brokers Youtube channel is extensive. It not only is updated with learning videos but also expert market commentary which will help the active day trader
We've been throttling all brokerage API's for a few years now. Its a running joke in QuantConnect that we find the bugs in brokerage API's as algo trading at scale touches every corner of an API. Although its clunky and old tech the IB gateway is one of the more reliable and best modelled API's we've seen. Rather than downloading and installing zips etc, I'd recommend using the QuantConnect docker container. We maintain it, and run it in production across thousands of headless live trading machines.
Apple Store Rating: 2.9 Android Rating: 3.4
Functionality:Mobile trading with Interactive Brokers is well supported across all devices. From lightning-quick streaming data to full-featured order entry and portfolio management, Interactive Brokers includes everything professionals require to go trade on the go. IBKR Mobile, Interactive Brokers’ mobile trading platform, is available both for iOS and Android.
Charting: Charting is robust, including 70 optional indicators and easy customizations; however, panning isn’t as smooth as newer HTML5 charting applications. Additionally, some features one would expect are not included, such as stock and/or index comparisons. Negatives include that stock alerts cannot be delivered via push notification. Instead, alerts are delivered via email.
This App is full of extensive info, but is still “half-baked”. What a struggle to navigate around just to find one’s trading history!! It takes multiple steps!!
This is a good app just needs to be more user friendly. But when it comes down to how it works. It's a pretty amazing app.
IBKR offers Individuals with the option of opening an Individual, Joint, Trust, IRA, UGMA/UTMA, Friends and Family, Family Office or Small Business Account. Institutions may choose from Advisor, Money Manager, Broker & FCM, Prop Trading Group or Hedge Fund accounts. IBKR also offers specialized accounts for Compliance Officers, Administrators, Educators, Referrers or Hedge Fund Allocators.
Without a doubt, Interactive Brokers is the best day trading platform for access to different markets. Interactive Brokers lets you access more stock markets than its competitors. This includes major stock markets like the NASDAQ, the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE), but also minor ones such as the Warsaw Stock Exchange in Poland or the Mexican markets. Other than regular stocks, penny stocks are also available. Besides stocks, you can also trade with more than 13,000 ETFs at IB.
US markets, European, 250 Markets worldwide. Offers to buy and sell stocks and other securities in 135 markets in 33 countries.
IB Spot Gold, IB Spot Silver to gain long and short exposure to the gold and silver markets.
CBOE, CBOT, CME, CME Crypto, ICE Bakkt Bitcoin, ICE Futures, NYMEX, NYSE, OneChicago, SMFE , Montreal Exchange, Mexican Derivatives Exchange
Traders worldwide use futures to easily reduce risk or seek profits on changing markets. To maximize your profits, trust algorithmic trading systems that can trade multiple market strategies simultaneously without making any errors.
Equity, index and currency. Option contracts might be traded on the major exchanges in North America, Europe and Asia. Options markets: Chicago Board Options Exchange (CBOE), CME Group, as well as smaller markets, such as the Korea Stock Exchange (KSE) or the Mexican Derivatives Exchange (MEXDER).
Only clients from Interactive Brokers (U.K.) Limited are eligible to trade with CFDs. Compared to other products and competitors, IB offers an average range of CFDs, mainly stock and stock index CFDs.
Forex trading is unavailable for US customers.
Mutual Fund Marketplaces provides access to 25,982 countries and territories and includes many prominent fund families, including funds from Allianz, American Funds, BlackRock, Fidelity, Franklin Templeton, Invesco, MFS and PIMCO. Therefore, IB does not charge custody fee.
Interactive Brokers clients identified as Accredited Investors and Qualified Purchasers under SEC rules can view information about independent Hedge Funds available through IBKR’s online Hedge Fund Marketplace.
Access to US government securities, 25,696 corporate bonds, 862,018 municipal securities and 25,571 CDs. Out of all government and corporate bonds available at IB, 1.4 million are so-called municipal bonds: these are fixed income investments issued by local US governments, cities, states or counties, but they are tradable only for US residents.
Equity and bond indices on 28 exchanges in 14 countries, including ETFs and leveraged ETFs.
Bitcoin and Ethereum ETNs and Bitcoin Futures: Bitcoin and Ether ETNs are traded on the Stockholm Stock Exchange and the US OTC (Pink) markets Bitcoin Index is available on the New York Stock Exchange (NYSE) and on the CME Group and Chicago Board Options Exchange (CBOE) Bitcoin futures are available on the CME Group and Chicago Board Options Exchange (CBOE)
IB monitors for upcoming IPOs and provides customers the ability to enter orders in advance of the day at which trading begins in the secondary market. The list of currently active IPOs are available in Account Management
Online, Telephone, Email and Account Services Support
Brokerage service is excellent. Interactive Brokers support a wide range of languages including English, French, German, Spanish, Italian, Russian, Mandarin, Cantonese, and Japanese. Interactive Brokers has a BrokerNotes triple AAA support rating because they offer a wide range of languages and support options. Live chat is responsive and we managed to quickly connect to a representative. Call-back service. Customer support through Knowledge Base
IBot: uses a foundation of artificial intelligence to quickly service customer requests via chat (or voice in the iPhone app). Portfolio information, orders, quotes, and more are all supported. Think, “What’s the last price of GOOG?” or, “Chart AAPL vs. MSFT” or, “Buy 100 shares of FB.” Only TD Ameritrade can go toe-to-toe with IBot.
Forum and Community Support
IBKR Traders’ Insight: a key resource for market participants seeking timely commentary directly from industry professionals on the front lines of today’s fast-moving markets. Discussion topics cover Fixed Income, Forex, Futures, Macro, Options, Securities Lending, Stocks and Technical Analysis. Commentary from nearly 120 contributors covering markets in the Americas, Europe and Asia. Source.
IBKR Quant Blog: serves quantitative professionals who have an interest in programming. Discussion topics include deep learning, artificial intelligence (AI), Blockchain and other transformative technologies influencing modern markets. Commentary from nearly two dozen contributors covering markets in the Americas, Europe and Asia. Discussions about R, Python and other popular programming languages often include sample code to help you develop your own analysis. IBKR Student and Corporate blogs are also available.
Opening an Account
For the UK: Interactive Brokers is regulated by the Financial Conduct Authority, the new client must pass a few compliance checks to ensure that you understand the risks of trading. Opening an account you require: A scanned colour copy of your passport, driving license or a national ID, utility bill or bank statement from the past three months showing your address
Deposits, Withdrawals Process
Cash management: Cash sitting idle beyond $10,000 will earn interest. For clients with high cash balances, cash management with Interactive Brokers is a great perk. Difficulty creating an account: The majority of users complain about the long review period of new accounts.
4 Stars - I had some problems creating an account but good think they helped me. Execution is very good. I also like the commissions. I'm happy with interactive brokers.
Monitoring: account monitoring, customer alerts, withdrawal limits. State-of-the-art transaction monitoring systems and maintain a dedicated security team that is responsible for detecting suspicious activity. If an unusual or suspicious transaction is noted, a member of this team may contact you to confirm the validity of the transaction. While the Interactive Brokers team is doing its best to monitor all suspicious activity, they cannot protect traders from any errors or server crashes. In this case, Quant Savvy users have an additional layer of protection, as our team monitors all servers 24/7.
Unique usernames and strong passwords: IBKR restricts account access following a specified number of failed login attempts. App authentication required to login adds an extra layer of security.
Encrypted communication: Secure Socket Layer IBKR deploys 2048-bit EV Certificates, TLS 128-bit or higher encryption to establish a secure connection and ensure the confidentiality and integrity of information passed between your computer and IBKR. Activate SSL by checking the “Use SSL” box on the TWS login dialogue. Using SSL may impact the performance of your PC depending on its capabilities. Automated monitoring systems to ensure only strong encryption algorithms are used. Source IBKR enforces all website traffic to use encryption. Built-in an auto-logoff feature that logs you out of the application after a specified period of inactivity.
Firewalls: Advanced hardware and software firewalls help to prevent unauthorized parties from gaining access to the system and personal information.
Safety of Funds
Interactive Brokers (U.K.) Limited (“IBUK”) is authorised and regulated by the Financial Conduct Authority (“FCA”) as an investment firm and a participant in the Financial Services Compensation Scheme (“FSCS”). Certain eligible clients qualify for compensation under the FCA Compensation rules.
Customer securities accounts at IBLLC are protected by the Securities Investor Protection Corporation (“SIPC”) for maximum coverage of $500,000 (with a cash sub-limit of $250,000) and under IBLLC’s excess SIPC policy with certain underwriters at Lloyd’s of London for up to an additional $30 million (with a cash sub-limit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities.
Two-factor authentication: Factor One: Each account requires a unique username/password combination for access. Factor Two: Secure Login System. Participants receive a personal security device which provides a randomly-generated security code. This code is used in conjunction with the username and password to access secure areas. Click here for additional details on the Secure Login System.