Interactive Brokers: For advanced traders, IBKR really is hard to beat

Confident traders. The IBKR trading platforms can be complicated to navigate. Unless you’re a very experienced trader, you’ll need to devote some time and energy to mastering them, and even with time and energy, it will just not suit some traders. You’ll also need to pass a knowledge test to get access to the complex instruments. That’s because CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. So these products are only open to sophisticated traders.

That said, if you’re a keen learner and understand the risks, it’s worth persisting with the platform, as, once you’ve mastered the tools and technology, you’ll find you have everything you need to create and execute an advanced strategy on an unbeatable range of assets.

And, although it’s not somewhere I’d direct complete beginners, IBKR Campus does offer first-class education resources. If you’re prepared to put in the time (and it will take you some time), it’s a great platform for those looking to grow their knowledge as well as their wealth.

There’s no account minimum, and IBKR offers the tightest spreads on the UK market, so you don’t have to have huge sums of money to get going on and you can trade cheaply. But remember, if you’re trading with leverage, it carries a higher degree of risk as leverage increases the magnitude of both gains and losses. Even small market movements in the opposite direction can increase your losses, which in some cases, can wipe out your entire account balance. You, therefore, need to consider carefully whether you can afford to take the high risk of losing all your money.

Account types

As you can see from the table below, IBKR is unusual among trading platforms in that it offers a wide range of investment vehicles.

That’s great news if you want to make the most of the various tax benefits associated with each product and put more towards your income/investments.

IBUK ISA

You can open a Stocks and Shares Individual Savings Account (ISA) through Interactive Brokers – it’s known as the IBUK ISA.

A Stocks and Shares ISA is a tax-efficient investment account that enables you to put up to £20,000 into stocks, funds, bonds, ETFs and other assets. ISAs are exempt from tax on savings interest, dividends or capital gains tax on funds, and withdrawals are also not subject to income tax.

Discover our picks for the Best Stocks and Shares ISAs here.

You can transfer any current year’s, or previous year’s, cash ISA, Stocks and Shares ISA, or innovative ISA to IBKR. It is free to make a transfer.

I would say, if you’re just getting started with ISAs, and simply want to put some money away and watch it grow for the future, this is probably not the platform for you as it is primarily designed for regular and advanced traders. There are no ready-made portfolios either, so you’ll need to feel confident, not just navigating the platform, but choosing all your own investments. There are far less complex platforms available for buy-and-hold investors with ready-made portfolios offering average ISA returns as high as 54% in the case of Moneybox . It’s a simple and highly rated option for those looking for less work and good returns.

Junior ISA (JISA)

IBKR offers a JISA. A child is eligible for a Junior ISA if they’re under the age of 18, and resident in the UK.

Self-invested personal pension (SIPP)

IBKR does offer a SIPP but it’s not administered directly by IBKR. This in itself isn’t that unusual, but it is unusual to be offered a choice of administrators which you then have to contact yourself. From a choice of: @sipp Limited, Options UK, and Westerby Trustee Services Ltd, you’ll need to contact the administrators for their terms, conditions, and fees (which are separate from Interactive Brokers’), apply with them, and they’ll then onboard you to trade your SIPP through IBKR.

So, in essence, it’s a SIPP sub-account. That means you won’t necessarily get the same access to all the instruments and assets in an IBKR general trading account. I’m informed by IBKR that you can trade stocks, bonds, equity options, futures, futures options, ETFs, spot currencies and warrants in an IBKR SIPP – you’ll note there’s no CFDs on that list. It's rare to find a provider offering CFDs within a SIPP now due to FCA guidance on the issue.

Having to go through a third party administrator potentially means a lot of extra hassle compared to using a broker that operates their own SIPP, such as interactive investor or AJ Bell. As each third party provider has their own fee structure and T&Cs, it also means you'll need to devote a fair amount of time to research before you make a decision, and your SIPP account might not work out quite as cheap as your IBKR general trading account.

Joint accounts and corporate accounts

IBKR offers joint accounts for two owners who wish to share an account.

If you wish to open an account with more than two owners, you would need to open a company (corporate) account. That’s helpful for those wishing to use their limited company status to take advantage of more favourable capital gains tax rates or offset losses against their personal income.

Assets

At IBKR, you can trade a remarkable range of asset classes and derivatives including:

• Stocks
• Futures
• Currencies
• Bonds
• ETFs
• Mutual funds
• CFDs
• Forex
• Commodities
• Indices

The sheer amount of assets offered by IBKR is quite something. There are around 90,000 stocks for starters, from 86 markets in 33 countries including the UK, US, Europe and Asia.

You’ll also be able to trade fractional shares – in fact, IBKR was the first to bring US fractional shares to the UK market, cementing its market-leader status.

Clients can trade options on 34 market centres in 18 countries, and futures on 32 markets in 18 countries. There are 29,934 corporate bonds available and 2,813 non-US sovereign bonds available, plus 24 trading currencies. Traders of all levels will undoubtedly be satisfied.

IBKR offers an extensive choice of trading platforms across web, desktop and mobile.

One thing I really appreciate is that the team at IBKR put a lot of effort into trying to guide you to the platform you’re going to feel most comfortable. That said, for some people, it doesn't matter which interface they use; they never land on one that works for them at IBKR. Without doubt, it can be a bewildering place to try and trade if you’re used to something more user-friendly and streamlined such as the eToro or Trading 212 interfaces.

One other thing to note – despite a plethora of interface options with IBKR – is that you won’t have the option to use MetaTrader. So, if you’re an MT4/MT5 fan, you’ll need to make the switch to Trader Workstation or find yourself an alternative broker.

Assuming you’re sticking around, let’s take a look at the first of the IBKR trading platforms:

Trader Workstation (TWS)

Trading skill level: Intermediate – Advanced

IBKR’s flagship desktop platform is designed for seasoned, active traders who are looking for maximum flexibility. It comes with a comprehensive suite of tools that are designed to make trading lightning-fast and efficient.

Within TWS, you’re able to choose between ‘TWS Mosaic’ and ‘Classic TWS’. With Mosaic, you’ll get comprehensive trading, order management, chart, watchlist and portfolio tools plus options to customise your workspace. It’s best suited to intermediate-level traders.

Classic TWS is available to traders who need more advanced tools and algos.

On TWS, you’ll have access to real-time news, research, fundamentals and market data from leading providers such as Reuters, Dow Jones, Morningstar and Zacks. You’ll also be given access to data on thousands of companies through Reuters Worldwide Fundamentals and an event calendar. You can even stream general news and filter by subject.

IBKR GlobalTrader

Trading skill level: Beginner – Intermediate

New and inexperienced traders will find the streamlined experience on IBKR GlobalTrader a good fit. You’ll be able to trade across 90+ stock markets worldwide from the palm of your hand. Invest with as little as £1 and trade in fractions. Or open a simulated trading account and try IBKR GlobalTrader before opening a live trading account.

IBKR Mobile

Trading skills level: Intermediate – Advanced

Best suited to experienced traders. IBKR’s mobile platform boasts a clean and user-friendly interface although it can be complicated to navigate due to the range of instruments available. The hard work means it’s not recommended as a platform for beginners by IBKR, but it’s worth persevering with if you want on-the-go access.

Tip: It’s also worth downloading the app and registering for mobile use to gain speedier and more secure desktop access. By scanning a QR code on the screen with your phone camera, you’ll be able to instantly verify through your IBKR Mobile app. Next time you sign in, you'll receive a notification on your phone allowing you to authenticate with your fingerprint or Face ID, which is much quicker than standard two-factor authentication.

IBKR Mobile is available on both iOS and Android. On the Google Play Store, IBKR Mobile is rated 4.5 stars from more than 21.4k reviews – a very good score for such a high number of reviews.

Tip: IBKR offers a ‘Read Only’ mode. Read-only mode provides access to your IBKR account via IBKR mobile without requiring you to log in every time you launch the app. When your account is in read-only mode, you will be able to view real-time market data, account balances, and activity in your trading account without the risk of accidentally making a trade.

IBKR Desktop

Trading skill level: Beginner – Intermediate

IBKR’s newest desktop trading platform is best suited to users who prefer a more streamlined, simpler interface.

IBKR states that the recently launched IBKR Desktop is the “next-generation desktop trading application… engineered for today’s traders who demand simplicity but value Interactive Brokers’ powerful trading”.

It's available for download on Windows and Mac.

To coincide with the launch, Interactive Brokers has developed the ‘IBKR Desktop Trading Course' on IBKR Campus. It features 10 lessons covering how traders can use the platform to submit options orders, view news and research, and customize charts, columns, and views, among other topics.

IBKR APIs

An API (application programming interface) is a tool that very advanced traders can utilise to execute lightning-fast trades and automate trades in certain scenarios. By offering APIs, IBKR enables traders to write their own automated trading programs.

IMPACT

IBKR offers IMPACT; an app that “makes it easy to put your money where your heart is” by investing in companies that share your values and options. It’s available on both iOS and Android. I haven’t come across another platform that has an app dedicated to ESG investing. It’s a great sign that IBKR is genuinely highly committed to providing tailored solutions.

Client portal

Interactive Brokers’ improved web-based Client Portal is easy to use for forex trading, and includes integrated news headlines and an economic calendar.

Demo account

A demo account (paper account) is available for free for three months. It is easy to toggle between a live account and a paper account on IBKR. Simply select which account you want to use when logging in.

Users are given £1,000,000 virtual cash to start trading on the paper account and you can reset it any time you wish.
There are a few minor differences between the paper trading account and the live account, such as no support for a few order types, but it is otherwise a great way to build your strategies and test the platforms.

IBKR does not charge:

Platform fees
Custodian fees
Monthly activity fees (except for ISAs)
Account opening fees

So, what will you pay?

• Commission

You have a choice of how to pay your commission with IBKR. UK traders can choose between a fixed-rate pricing and a volume-tiered pricing plan. You can switch between the two pricing structures at any time in your client portal which means you can use the best-priced plan that works for your current needs, although, in some instances, you won’t get a choice about which model you can use. (For example, with share CFD trades you’ll be required to use the volume-tiered pricing structure.)

Commissions are low across the board and, as there are no added spreads on top of commission, it’s possible to keep costs really low at IBKR. In fact, you’ll struggle to find lower anywhere as these examples of current rates show:

• Currency conversion (FX) fees

IBKR reigns supreme here.

While it’s not possible to designate more than one base currency on your IBKR account, you can hold cash balances in multiple currencies. As a UK resident, you’ll need to manually convert one currency to another using IBKR’s currency conversion tool but it’s straightforward to use.

FX commissions are currently 0.002% on top of the base rate, with a minimum of USD 2.00. That is the lowest FX fee in the market by a considerable amount as the below table illustrates.

• Research apps

The choice of news, data, and research and market commentary tools available through IBKR is remarkable – there are more than 200 different providers of tools to choose from.

You will need to pay additional fees to get access to some of IBKR’s research apps, however, but many are provided completely free of charge. If you choose to access the more advanced, valuable ones, however, you could be looking at several hundred pounds per month for some apps.

• Inactivity fees

There is an inactivity fee of $10 per month. To avoid inactivity fees, you just need to execute at least 1 trade within a 2 year period.

• Withdrawal fees

IBKR allows one free withdrawal request per calendar month. After the first withdrawal (of any kind), IBKR will charge £7 per bank transfer and £1 for a BACs transfer.

• Overnight fees

Traders using the tiered commission structure for futures may be subject to an overnight carrying fee, which is relative to the account's level of excess equity. Accounts maintaining excess equity above 3x the margin requirements will not be charged an overnight position fee. Customers on the fixed structure for futures are not subject to this fee.

Stocks and Shares ISA fees

There is a minimum monthly activity fee of £3 for IBUK Stocks and Shares ISAs. If you generate £3 in consolidated commission per month, then the fee is scrapped. If you generate less than £3 in commission, then the difference is charged.

One withdrawal per month is free. After that, a £7 withdrawal fee is applied.

JISA fees

A £1 per month minimum activity fee applies. As with the S&S ISA, JISA clients are entitled to free withdrawal per month, after which a £7 withdrawal fee is applicable.

Minimum deposit

There is no minimum required deposit to open a Cash Account at Interactive Brokers. A minimum deposit of £2,000 is required for a Margin account.

To be a Pattern Day Trader, a minimum deposit of £25,000 is required.

Deposit fees

IBKR doesn’t charge for electronic deposits in any currency other than MXN.

Interest paid on cash

Accounts with a Net Asset Value (NAV) of £8k or more are eligible for interest payments. Interest rates are comparatively high: 4.73% on an IBKR Pro account, and 3.73% on an IBKR Lite account. However, that £8k minimum is a bit of a kicker. Trading 212 doesn’t have any minimum, and neither does interactive investor or AJ Bell.

For comparison:

Interactive Brokers offers an unparalleled menu of research tools and tools to customise your charts with technical indicators such as Bollinger Bands, SMA and EMA.

Of course, it depends on what platform you opt for, and which research tools you’ll have access to. The more advanced the platform, the greater the number of tools you’ll be able to utilise. This breakdown helps explain what you’ll find on each platform:

On TWS, you’ll get access to comprehensive news, research, fundamentals and market data including real-time news from leading services such as Reuters and Dow Jones, and analysis from the likes of Morningstar, and Zacks.

IBKR Desktop is currently in preview mode with many features still in development. Currently available features include:

Rapid order entry: Quickly enter orders and create rapid orders from within Watchlists and Option Chains.

Advanced charts: With multi-chart layout mode (see up to eight different charts) with optional synching for instrument, time periods and intervals and crosshair.

Options: Easily create options orders with Option Chains, and multi-leg combinations with the Strategy Builder. Elect to mirror option chain columns with a click and toggle the display between List and Tab views.

Derivatives: Other derivatives tools including Performance Profile, Option Rollover, Exercise/Lapse Options tool and support for trading options on futures.

News and research: Customizable news and research tools.

Column customization: Create custom views or select pre-defined system views.

Hotkeys: Use keyboard combinations to complete common order creation and platform actions.

Notification centre: Create market and price alerts.

Configuration

IBKR offers an unbeatable menu of configuration options including:

Holdings: Value and performance of portfolio holdings, also summarised by asset class, account and account type.

Key statistics: Portfolio net asset value and return, along with deposits and withdrawals. Period, best and worst returns are included as well as distribution of returns.

Performance: Cumulative and time period returns by date, broken out by long and short, or compared with up to three benchmarks.

Portfolio movers: Performance of individual portfolio holdings, also summarised by financial instrument.
Allocation: Portfolio value and weight broken out by long and short and summarised by asset class, sector, financial instrument, region and country.

ESG: ESG portfolio ratings, includes portfolio scores, controversies, and top and bottom ESG performers.

Planning: Portfolio actual vs target. Goals can be by value or percent.

Attribution vs Benchmark: Portfolio sector allocation and securities selection effect on performance when compared to a benchmark.

Third-party News/Research Tools

The choice of news, data, and research and market commentary tools available through IBKR is remarkable – there are more than 200 different third-party providers of tools to choose from.

Many are provided free of charge, but some will cost upwards of a couple of hundred pounds per month to subscribe to.

Even with the free or basic packages, however, you will not be lacking when it comes to insight, ideas, analyst ratings and sentiment, and news feeds.

You’ll be able to access breakdowns of stock ownership by top holders and types, as well as their recent sentiment among insiders. Social sentiment scores can help identify tradeable opportunities by, for example, mining millions of X (Twitter) messaging streams.

There’s available data on the amount of short interest shown, providing insight into whether a stock price is up/down because of short sellers.

The opportunities are endless and unrivalled. If you are a professional or advanced trader, that creates a hard-to-beat case for IBKR. For the less experienced, however, it creates a barrier to entry which may mean a less overwhelming and complex provider is a better choice.

When selecting a provider for your investments, it is very important to first ensure they meet certain minimum safety standards. We judge Interactive Brokers to meet the threshold for a ‘safe’ provider because:

• Interactive Brokers (UK) is authorised and regulated by the Financial Conduct Authority.
  IBKR is listed on the NASDAQ.
• It holds a strong capital position: On a consolidated basis, Interactive Brokers Group LLC exceeds $13.3 billion in equity capital, over $9.4 billion in excess of regulatory requirements.
• Automated risk controls help to protect IBKR and clients from large trading losses.
• Up-to-date financial statements for Interactive Brokers can be viewed online.
• The company reported $2.0 billion of pretax profit for 2022.
• It has no long-term debt.
• IBKR is rated “A- Outlook Stable” by Standard & Poor's.

Warning: It’s important to be aware that all investing involves risk and IBKR’s products are only covered by the UK Financial Services Compensation Scheme (FSCS) in limited circumstances. If you want to find out more about which investment products are protected by the FSCS, you can check here.

Account security

IBKR Mobile Authentication provides two-factor authentication if you choose to access your IBKR account via the IBKR Mobile app. Alternatively, a Secure Login System security device can be requested to perform two-factor authentication.

The IBKR Mobile app times out after a certain period of inactivity for security purposes.

You’d be hard-pressed to find a more comprehensive education offering than IBKR Campus and Traders’ Academy. All levels of traders will find something to help them advance their knowledge and understanding.

Traders’ Academy

• Free online courses on the concepts and tools of financial trading.
• For active traders, investors and students
• Notes and quizzes to help reinforce each lesson
• A huge collection of lessons on a massive range of topics including: the IBKR Desktop, different asset classes, strategies and investing principles
• Tutorials are available in a range of languages
• Traders’ Glossary

IBKR podcasts

The two or three in-house podcasts that IBKR produces per week ensure no subject is left uncovered and is another way to boost your understanding and become well-informed before placing trades.

IBKR webinars

IBKR provides access to free trading webinars from leading financial services companies and research providers across the globe. The live webinars allow you to listen and ask questions on trading, world finance and current trends in the stock market. You can also listen again thanks to a library of recorded events.

IBKR Quant

The IBKR Quant Blog serves quantitative professionals who have an interest in programming. Discussion topics include deep learning, IBKR API, and data science.

IBKR has not incorporated any social trading features such as the ability to copy-trade, or live discussion feeds, into its interfaces.

However, as a client, you'll have access to the IBKR Forum which is a more old-school chatroom. The IBKR Forum lets you access the knowledge and experience of the IBKR client base – essential support when you're dealing with such a sophisticated platform.

Support at IBKR is available via:

• Live chat
• Phone – IBKR provides 24-hour customer service each business day
• FAQs, ‘Knowledge Base’ and ‘Quick Tips’

Human customer service can be difficult to access, with long hold times. When you get through, customer service is a bit hit-and-miss: I’ve experienced both faultless and extremely frustrating experiences. IBKR have recently stated that they are “actively making investments in customer service to reduce wait times” which would be very welcome.
IBKR does not offer trading advice, investment guidance or tax advice.

IBKR does not offer trading advice, investment guidance or tax advice, so you won't be able to get advice personalised to your circumstances and goals.

Interactive Broker has an ‘Average’ score on Trustpilot – 3.6 at the time of writing – based on 2,450+ reviews. That’s comparatively low. Most complaints relate to the complexity of the platform, delays and too much bureaucracy, and poor customer service experiences.

Account opening

To apply for an IBKR account, you'll get asked questions that are a bit more in-depth that some other investing/trading apps.

You'll be asked questions about your employment and your income. And you'll be asked about your investing background and knowledge. With complex instruments and advanced trading features on offer, IBKR are doing their due diligence in ensuring what you gain access to, is suitable for you. So don't be tempted to cheat on the questions! The questions are designed to match you with the instruments and tools you are equipped to handle at this stage in your trading journey. You will be given the chance to apply again for anything you don't qualify for at present.

Then you'll be given a choice of different account types: margin, and cash. A cash account is a regular investing account where you'll fund trades with the cash in your account. A margin account allows you to trade with margin. To be accepted for a margin account, you'll need to show that you are an experienced trader with a high risk tolerance and a detailed understanding of the risks that trading with leverage brings. You'll also need a minimum of £2,000 cash in your account.

You'll be asked what assets you want to trade – again, you'll get the chance to add to this in future so you don't have to think of everything you'll ever want at onboarding.

You'll also be asked if you want to take part in the Stock Yield Enhancement Programme. For details of what this involves, check out my summary in the ‘Additional Services' section further up this review.

It's not the quickest account opening process but it's detailed for a good reason.

Closing your account

You have two options: liquidate your account, then cash out. Or transfer your positions to another provider (subject to whether the other provider can facilitate this and offers access to all the assets you currently hold).

There is no fee for closing your account and it can be done entirely from the ‘Account management' section of your portal.

Interactive Brokers offers an extremely impressive range of free trading tools that covers all bases. You’ll be able to effectively spot market opportunities, analyse results, make informed decisions and manage your account.

Tools include:

• Historical trend data
• Comparisons of companies within the same industry
• Key ratios
• Forecasts and ratings
• Interface and UX

IBKR mobile trade execution is easy to follow and intuitive, although more complicated than the Client Portal as it includes a greater choice of tools.

Order types

Clients using Trader Workstation have access to a staggering 100+ order types and algos – from simple limit orders to complex algorithmic trading – to help you execute any trading strategy.

*Images

IBKR also offers algorithmic order types from some of the most innovative algo providers around, including Fox River, Jefferies and Quantitative Brokers (QB).

Risk management tools

IBKR’s trading platforms ensure you have every opportunity to measure, manage and model risk. Experienced traders will appreciate that everything here is designed to help you make instant decisions in response to market movements.

You’ll have access to Risk NavigatorSM, which measures your risk exposure across multiple asset classes globally.

Funding your account

IBKR clients can select any one of 24 different currencies as their base currency. That means you can potentially avoid FX fees by trading in the same denomination as you hold currency. For comparison, Plus500 offers 15 base and deposit currencies, Saxo offers 18, and an eToro account will only allow you to hold GBP (if you’re a UK customer) or EUR (if you’re in Europe).

IBKR also provides direct access to interbank currency trading quotes, with no hidden price spreads and no markups, deliver price quotes in 1/10 of a PIP and provide more than 60% of global market share.

Leverage

UK traders are limited to a maximum of 30:1 leverage on Contracts for Difference (CFDs).

Please note: Margin borrowing is only for experienced investors with high-risk tolerance. You may lose more than your initial investment. Before trading, it’s important to understand that with margin, trading losses can be greater than the value of your initial investment, and there may be additional costs incurred from margin interest rates.

Have a question about Interactive Brokers that we haven't covered? Ask it here and we will get back to you as soon as possible!