Interactive Brokers

Interactive Brokers (often known as IB) is a very popular direct access brokerage. IB is primarily based in the US and the UK, but they offer accounts in several countries, and they will accept traders from almost any country. Interactive Brokers is a direct access brokerage, and offers access to exchanges in the US, Europe, and Asia and allows trading of their markets via a single interface known as their Universal Account. IB is a very Internet oriented brokerage, and almost anything that needs to be done (either trading or account management) can be done via either their trading software or their web site.

An account with Interactive Brokers can be opened completely via their web site, and only takes approximately fifteen minutes to complete. The initial equity deposit needs to be at least $10,000 (or its equivalent in a variety of other currencies), and this can consist of either cash, or securities (e.g. stocks), or both. The initial deposit can be deposited electronically as part of the account opening process. Once an account is opened, there is a small delay (usually a few days) for the initial deposit to clear, but afterwards trading can be started immediately.

In addition to the initial deposit, Interactive Brokers' has minimum income and trading experience requirements for new accounts, that new traders may find difficult to meet. New traders should therefore consider all of their income and trading experience (e.g. even that disastrous buy and hold stock trade they made five years ago) when they are answering the income and trading experience questions.

Interactive Brokers has some of the lowest commissions and fees, especially when compared with traditional and retail online brokerages. IB offers two different commission structures, including a bundled option where the exchange fees and brokerage commissions are combined into a single flat fee, and a separate option where the exchange fees and brokerage commissions are charged separately. For most new traders, the bundled option is the better option, as it is the easiest to understand, and still offers very low commissions and fees. IB's market data fees are either free (if the exchange is free) or very low, and some market data fees are waived if at least $30 in trading commission is generated each month.

Interactive Brokers provides trading software called Trader Workstation (often known as TWS). TWS is programmed in Java, so it will run on Windows, Mac, and Unix systems, which can be useful, but it is not as fast or as stable as it would be if it was programmed in C or C++. TWS allows trading of all of the markets that IB offers via a single interface, and also provides some account management features. The learning curve for TWS can be quite steep, but trading can be started once a few basic tasks have been learned (e.g. placing and managing orders). TWS also provides an API (application programming interface) in several programming languages, and this can be used to access almost all of TWS' features via other programs. There are many compatible programs available including charting (such as Sierra Chart), and order entry software (such as VisualStation), so traders can use a trading interface that they prefer without learning everything about TWS.