Interactive Brokers, perfect for the novice trader.
Interactive Brokers out of Greenwich Connecticut has been around since 1977 and survived the ‘dotcom’ bust of the nineties. The company offers the most sophisticated trading platform technology for traders globally, both institutional and individual, but in reality they are a broker for professional investors. The company’s trading platform gives direct access dealing to stock and bond markets, futures exchanges and currency exchanges.
It is a shark of a company that will incidentally swallow up small investors’ money while helping other ‘sharks’ to prosper. If you do large numbers of trades every month Interactive Brokers will enable you to do each one for a dollar. That is the cheapest dealing cost anywhere. But if you don’t use their dealing platform they will take a fee anyway. They also have a ruthless liquidation and margin call policy.
Interactive Brokers are not alone in charging for not providing their services. This practice is endemic throughout the finance sector. It is almost as if banks and brokers feel they have a right to a profit from every single customer. Where else do customers pay when they don’t use a service? But it’s OK because it’s written in the small print so they tell you up front.
Interactive Brokers rates are the lowest around for the professional trader and the trade implementation is instant and accurate. But you better know what you are doing. For the novice investor with a little IRA cash to nurture, the IB platform can be confusing. A user friendly interface it is not, but for the semi professional or full time trader it is a very good broker. Personally I do up to 150 transactions in a month and that costs me around $1 per trade and options are even less.
Certainly Interactive Brokers get good feedback when reviewed online by their users. For example on EliteTrader.com, Interactive Brokers has a 77% rating out of 348 votes. IB are the brokers of choice for the savvy investor. Their commission structure for the busy trader is hard to beat. A commission structure of $0.005 cents per share with a minimum cost of $1.00 per trade is the best around. So if you are a trader buying between 100 and 500 shares of a stock at a time, then you can save a great deal in transaction fees with Interactive Brokers.
The Interactive Brokers’ software is very utilitarian, with no distracting extras but can be personalized easily by the knowledgeable online trader. There are many add-in software packages that can be combined with Interactive Brokers that will enable all kinds of sophisticated trading such as charting packages and order entry packages, etc. Interactive Brokers is not the platform for you if you want to hit the ground running with a few select trades but it is if you want something that can be very easily customized.
Interactive Brokers ‘Universal Account’ is the thoroughbred of trading platforms allowing the user to trade in eighty markets around the World from the one account.
They also pass on savings and economies on such things as data fees. These are very cheap with Interactive Brokers. But on the downside the IB customer service does not match the performance of their platfom. Customer service at IB is really very ordinary.While the lack of built in extras may be a big disincentive to some new investors.
In summary, Interactive Brokers is the perfect trading platform for the professional or the committed amateur but they do reflect the predatory ethos of money markets and commodity exchanges. But look at it this way, no broker is perfect and they are great value if you do the volume.