Interactive Brokers

Interactive Brokers (often known as IB) is a very popular brokerage with both new and experienced traders. IB is primarily based in the US and the UK, but they offer accounts in several countries (e.g. Germany, India, etc.), 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 all of their available markets via a single account, known as their Universal Account. IB is a very Internet oriented brokerage, and almost anything that needs to be done (including trading and account management) can be done via either their trading software rader Workstation or TWS) or their web site.

An account with Interactive Brokers can be opened completely via their web site, and the application takes approximately thirty to forty-five minutes to complete. The application includes a number of questions that new traders might not understand, but Interactive Brokers can be contacted for assistance, and any incorrect answers can be corrected once the account has been opened (e.g. changing the type of account from a cash account to a margin account).

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 equity 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 account to be activated and for the initial equity deposit to clear (depending upon the method that was used for the depoait), but afterwards trading can be started immediately.

In addition to the initial equity deposit, Interactive Brokers' has minimum income and trading experience requirements for new accounts, and new traders may find it difficult to meet these requirements. 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 trading commissions and fees, especially when compared with traditional brokerages 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 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. Experienced traders can choose the commission structure that best meets their requirements (e.g. the markets that they trade, and the number of trades that they make). IB's market data fees are either free (if the market data is provided for free by the exchange) 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). Trader Workstation 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++.

Trader Workstation 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 Trader Workstation can be quite steep, but trading can be started once a few basic tasks have been learned (e.g. placing and managing orders).

Interactive Brokers also provides an API (application programming interface) in several programming languages, and this can be used to access almost all of Trader Workstation's features via other programs (e.g. via charting software). There are many compatible programs available including charting software (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 Trader Workstation.