Introducing Interactive Brokers
Interactive Brokers (IBKR) is an American online brokerage firm that provides broad, low-cost access to stocks, options, futures, currencies, bonds, and ETFs worldwide. The company's roots go back to Timber Hill, a trading firm founded by Hungarian-born Thomas Peterffy, which transformed into Interactive Brokers in 1993. IBKR is now a member of the S&P 500 index and is considered one of the largest, most stable, international brokerage firms. The company currently has more than $750 billion in client assets.
The user base is growing steadily: Five years ago, they managed over one million client accounts, and this year, that number has already exceeded 3.8 million. Client assets are currently around ~$757 billion, reflecting the company's global scale and investor confidence. Interactive Brokers founder Thomas Peterffy remains active in the company today as chairman and major shareholder.
📒Table of Contents📒
I have created a table of contents to make it easier for you to navigate the longer articles:
- 💰Interactive Brokers costs
- (I.e.Interactive Brokers interfaces
- 💵Financial instruments available on Interactive Brokers
- 🤵What strategy is Interactive Brokers best for?
- 🆚Competitors: Interactive Brokers' opponents
- ✅Interactive Brokers Benefits
- ❌Disadvantages of Interactive Brokers
- 📝Interactive Brokers Summary
🙋♂️Interactive Brokers Basics🙋♂️
In this section, I examine the specialties of the broker analyzed, what is its position in the market, how it views itself, whether it is a traditional banking institution, a discount broker, an online broker, or a mixture of these. How well does it protect its investors, and what can you expect in the event of a collapse?
🤔I currently have 3 Interactive Brokers accounts, I have been using their platforms for over 3 years, and I am sharing my experiences with you based on these. I will not write anything marketing-related, I will try to cover everything important, but I mainly want to draw your attention to practical things that will help you decide whether it is worth opening such an account or not.🤔
Interactive Brokers is a fully online discount broker, currently the largest in the world, and one of the companies to be listed on the stock exchange. If we look a little outside the segment of online-only discount brokers, then companies such as Fidelity, Charles Swab, or the non-classic online broker, but rather fund manager, Vanguard, may also appear on your list. However, if we look only at the online segment, the following is roughly the order, based on client assets under management (May 2025, September for IB):
- 💼 Interactive Brokers: ~757 billion USD, 3.8 million customer accounts*
- 📈 Robinhood: USD 255 billion, 25.8 million customer accounts
- 💰 Trading 212: ~30–35 billion USD, 4.5 million customer accounts
- 🌍 eToro: USD 17.5 billion, 3.6 million customer accounts
- 💳 Revolut: 8.5 billion USD
- 📊 XTB: USD 7 billion, 1.54 million customer accounts
- 🚀 Lightyear: 1 billion USD
* it is not always clear in the case of sources whether they mean customer or customer account, but I suspect the latter
By perception, Blackrock is the largest in the world with approximately ~11000 trillion USD in assets under management, while Swiss UBS Group is the largest European asset manager with 3500 trillion USD. So, while Interactive Brokers is dwarfed by these, this company is the largest among online-only brokers, which gives some assurance about its stability. Another interesting fact is that one of the online brokers that was introduced to the stock exchange is Interactive Brokers (NASDAQ:IBKR) is available under the ticker.
It is basically a company registered in America, but it also serves other parts of the world through its subsidiaries:
- 🇺🇸IBKR is the parent company: serves American customers
- 🇪🇺Interactive Brokers Ireland Limited (Ireland): serves European clients (created from the merger of IBCE and IBIE)
- 🇬🇧Interactive Brokers UK Limited (United Kingdom): naturally serves UK customers
It also has subsidiaries in Australia, Japan, Hong Kong, China, Switzerland, India and Brazil. Why is this important? Because because the investors are always subject to the investor protection regulations of the country where the IBKR subsidiaryot registered. In other words, if you are an American investor, you are subject to different regulations than if you are a European or UK client, since you are not signing the contract with the same subsidiary:
- 🇺🇸 IBKR LLC (USA) clients are protected by the US SIPC (Securities Investor Protection Corporation). This typically provides insurance up to $500000 ($250000 for cash) in the event of a securities or brokerage failure.
- 🇪🇺In Ireland, i.e. for EU clients, Investor Compensation Company DAC (ICC) protection applies. According to the EU directive, this provides protection up to EUR 20000 in the event of the broker's insolvency. In principle, this only applies to cash, since securities are in everyone's name, I will return to this later.
- 🇬🇧 IBKR UK clients are protected by the UK Financial Services Compensation Scheme (FSCS). This provides compensation of up to GBP 85000.
Always check the exact contents of the legislation separately, because it is sorted by country, so there may be some small surprises. I will tell you the previous Hungarian example, because Interactive Brokers also had a Hungarian subsidiary in Hungary called IBCE, which makes it clear what the problem is. This ceased at the end of 2024 and the Irish ICC regulations now apply to Hungarian clients as well, but this was not the case before.
💭Hungarian investors are insured by BEVA, the Investor Protection Fund, if an investment service provider registered in Hungary (e.g. a brokerage firm) becomes insolvent and is therefore unable to issue the client's securities or funds. So, the protection applies to technical and legal losses, up to EUR 100000, but:
- 💰 100% refund of the first 1 million HUF (roughly 2500 EUR),
- ⚖️ for stocks above 1 million HUF (≈ 2500 EUR), it only returns 90%, meaning the investor's risk is 10%,
- 🏦 but up to a maximum of 100000 EUR, which is ~40 million HUF!
From the above, it can be seen that Hungarian regulation is completely different from the US SIPC or UK FSCS regulation, but even from the Irish ICC, despite the fact that Hungarian clients are European Union citizens. So I can't emphasize it enough: always check your local regulations to see if something different applies to you.
What are investor protection regulations good for? These are the legal and technical obstacles mentioned above, if the broker treats the assets in bad faith or if they go bankrupt and cause damage to their clients, i.e. you.
❗However, it does not apply to any stock market losses you suffer, as you are solely responsible for them.❗
💰Interactive Brokers Costs💰
In this section, we examine how much it costs to use a broker's services and what types of transactions will put a strain on your wallet. Who should open an account: short-term or long-term investors?
Interactive Brokers is one of the cheapest discount brokers on the market, but its fee structure is quite complicated. Each broker basically charges two types of fees:
- 👛commission: i.e. a commission that is collected after transactions, usually as a fixed fee
- 🪙spread: The difference between the buying and selling price. This applies to stocks, ETFs, and currency exchange.
The above can be calculated in two basic ways:
- 📊band cost: It primarily applies to traders with a short-term, trader mentality, and pricing is based on volume and there are many more instruments that are only worth holding in the short term,
- 💰fixed cost: It primarily applies to clients investing for the longer term, and the pricing is transaction-based, primarily the cost of assets that are held for the longer term (e.g. stocks, bonds) is important.
This is not an either/or situation, but you have to decide when opening an account. Generally, investors choose the fixed rate and traders choose the band rate. The choice is not final, it can be switched in the Interactive Brokers interface. If you are not a trader, leave your accounts at fixed costs, because you will be better off that way. The table below shows both rates.
You can open all tabs if you're curious about the detailed rewards, but the gist is this:
- 💵If you choose the fixed cost, the fee for buying shares is: $0.005/share. There is a minimum fixed cost of 1 USD/1EUR/1CAD per purchase, depending on which market you buy which stock.
- 💸if you choose a banded cost, the fee for buying shares: variable, depends on the quantity. Here too there is a fixed cost, which 0.35 USD.
I mentioned this example because in the picture above it is not visible without opening the tabs, and there are quite a few such little things with every broker that are worth knowing about. What fees are there in addition to the above:
- 💱 currency exchange cost, also known as FX fee,
- 📈 ETF maintenance fee,
- 💹 the already mentioned spread,
- 🧩 if you buy something special, e.g. you hold an investment fund, buy options, etc.
If you have savings accounts that depend on your tax residency (e.g. ISA in England), then there may be a fee for that. As an example, I can mention the Hungarian TBSZ, which is the Long-Term Investment Account:
- 🧾TBSZ account fee: 2000 HUF/month, but trading costs are deducted from this, so it could even be zero.
However, Interactive Brokers does not charge a fee for the following:
- ✅no minimum referral fee
- ✅no main account management fee
- ✅no inactivity fee
- ✅no stock fee (which is the biggest letdown in the world)
💰Based on my experience over the past year, I can say that as an investor who holds stocks in savings accounts for a longer period of time, which of course means extra fees for me as well, my annual cost compared to my portfolio size was around 0.18-0.2%. This is extremely low, practically comparable to the maintenance fee of ETFs, so Interactive Brokers is considered a particularly cheap service provider on the market.
In most cases, they only charge a fee if there is a real service behind it. I can mention one exception: the holding fee for ADR shares. ADR shares are securities that are listed on the American market by foreign companies. It is more advantageous to buy these in the American market because there is liquidity here, and therefore the order will definitely be filled, plus the spread fee is lower. There are quite a few global companies whose ADR versions are traded on American stock exchanges, we have analyzed more than one of them, but here are some of them:
- 🇩🇰 Danish Novo Nordisk: NOVO.B Stock Analysis
- 🇵🇱 the Polish Dino Polska: DNOPY stock analysis
- 🇩🇪 the German Porsche AG: P911.F stock analysis
- 🇫🇷 French Kering: PPRUY Stock Analysis
- 🇨🇦 Canadian Constellation Software: CNSWF Stock Analysis
The problem with this is that Interactive Brokers charges a fee of 0.2 USD for each ADR share, which is not a problem if you spend 5000 USD on a 2500 USD Constellation Software, but for example, the price of Dino Polska is 9 USD, where this can be a hefty cost. Especially if a stock split occurs that the owner has no control over, they still suffer the cost of the increasing number of shares. This is probably the only award that I don't think is truly justified, so I definitely wanted to draw attention to it. Apart from that, Interactive Brokers' costs are very reasonable.
🤑There is a trick to avoid the costs for a while, and that is if you open an account through a recommendation, which is what I did at the time. Then your reward will be 200 USD, as I recall, for this you need to have a balance of 2000 USD and you need to make a single send or buy operation. ❗You can take advantage of the discount here❗
🎢Interactive Brokers interfaces🎢
In this section, I examined what the service provider's interface is like. Where and in what form can their applications be used, how complex are they, are they outdated or modern? Do they provide any special services compared to their competitors that you have to pay extra for elsewhere?
Like most brokers, Interactive Brokers has multiple interfaces. There are generally three ways to manage your portfolio:
- 🌐 in a web browser
- 📱 from Android or iOS app
- 💻 via a web client, of which Interactive Brokers has two
They're all for different purposes, but before I explain which one to use for what, it's worth knowing that you need to authenticate your login in the phone app. For most brokers, this works by getting a pop-up message on your phone, asking you to authorize login on a second device, either with a code or some kind of biometric identification, in addition to the usual username and password. This is called two-factor authentication and it is highly recommended to enable it, as brokers store sensitive data, to put it mildly.
🌐Interactive Brokers web browser
The web browser interface is actually required to open your accounts. Most citizens can open an Interactive Brokers account, I don't know about the exceptions, but it's worth making a pilgrimage to the site that serves your region. Basically, the web client is suitable for all kinds of operations, but I mainly use it to handle administrative things. In the top bar you can search not only for tickers, but also for subpages, for example, if you type the word "deposit", it will bring up the transfer deposit option, so you can move money between your bank accounts and Interactive Brokers accounts, which everyone will need at some point in their life. You can also access this from the "Transfer&Pay" menu item in the top menu in the same way.
One of the most important menu items is the little figure in the top right, here you can set up your accounts, open new ones, and find your basic information. There are three types of accounts you can open at Interactive Brokers:
- 🪧Demo account (paper trading account): you can practically practice with play money, not a live account,
- 💵cash account: you can buy instruments with the cash you transfer,
- 🫰margin account: the broker lends you a certain amount of money to invest. It is usually used for options trading.
There is also a Long-Term Investment Account, or TBSZ, for Hungarian tax residents, and an ISA for UK citizens.
The Interactive Brokers interface is also quite simple, with the options grouped together in the top menu. In the first one, you can see the instruments under your accounts, practically acting as a simplified portfolio manager. What's good about it is that you can switch between accounts with a single click. I have 3 accounts with Interactive Brokers, and I never know which one has what, the key data here is the account name and the account identification code, these are worth remembering. Another useful feature is that you can see the different currencies available on your accounts.
I have never used the "Transaction" menu item in my life, PC clients are much better for this, while "Research" is interesting, practically providing options and data for stock analysis. Those who use fundamental analysis will love it, as there are mountains of different indicators. And here comes perhaps the biggest advantage of Interactive Brokers over all other providers: They brutally integrated the data of many service providers into their interface. These are also quite expensive if you are not an Interactive Brokers client, so you might want to factor this into your costs. A few, in my opinion, more important providers:
- 💫Morningstar (~35 USD per month, 249 USD per year): they provide pretty good fundamental analyses, which you can see the history of, plus company data, and you don't have to pay for that at Interactive Brokers. They are available for download in PDF format, and I use them regularly for my stock analyses.
- 🔎EVA Equity Research: institutional data provider, normally you wouldn't have access to these as an individual, but Interactive Brokers gives this away for free. It can also be used for fundamental analysis. I use it regularly for my stock analysis.
- 💯Estimate ($99/month): I've never used it, but it's basically a forecasting platform. Since I don't particularly believe in these, I have no experience with it.
- 🥇TipRanks ($15 per month): as the name suggests, a forecasting platform where experts predict upcoming events, but also, for example, mood elements, blogIt also shows mentions and the like, a typical crowd wisdom type interface. I don't use it, but the sentiment section is interesting anyway, because it's good to know what the market and the blogcommunity about a share.
- 🛍️Tradingcentral (non-public): basically a platform intended for corporate analysts, I don't think it's very useful, mostly similar to TipRanks.
They have integrated a lot of analytical services that you won't find anywhere else. These are quite complicated systems, and this is where the one-time investor may start to feel like they need to take a pilot test with the Interactive Brokers interface, and they are not far wrong.
The "Performance&Report" menu item is very important because on the one hand, here you can view the composition of your portfolio, its riskiness, and similar things, but there is an even more important element, the "Statements" tab. Here you will find all the statements you may need if you need to file a tax return or if you want to prove what securities you have in your name. This is worth mentioning a little separately, as not everyone may know how Interactive Brokers stores financial instruments.
📜How does Interactive Brokers list securities?
Basically, when buying a security, brokers do nothing more than help clients access the market and act as an intermediary agent, purchasing the appropriate instruments on behalf of and with the clients' money.
💡After the transaction has taken place, the broker displays the type, name, number, purchase amount, and other data of the purchased instruments on the client's account. In this case, the owner is the client, and the papers are transferred to his name.
The problem occurs when the broker takes the side of the market as a seller or buyer in a buy-sell transaction, and thus acts not as an intermediary but as a counter-party to the client. To prevent this from happening, Interactive Brokers manages these instruments separately from its own assets, on paper. This means that:
- 🇺🇸 In the USA, IBKR LLC is regulated by the SEC and FINRA
- 🇬🇧 In England, the FCA supervises IBKR UK
- 🇪🇺 IBKR Ireland is supervised by the Central Bank of Ireland in the EU, which includes European clients
- 🇭🇰 there is also IBKR Hong Kong, where the local SEC controls the same
The report is received by the supervisory authorities at the end of each day, which is also regulated by the MiFID II regulation for EU and EEA clients. In addition to the above, there is an audit every year, where they check whether the reported and actual assets match, and whether client assets are in segregated custody accounts and match client records.
🧾 In summary
So the guarantee does not come from the fact that you actually receive a paper with your name on it, but from the fact that:
- 🛡️ IBKR operates under strict regulation,
- 📑 creates monitoring reports for all client positions,
- 🏦 the securities are in a segregated escrow account and cannot be mixed with the broker's own assets,
- 🔍 A multi-audited system ensures that the IB cannot "overwrite" ownership.
So, in principle, the authorities have this data, but you, as private individuals, cannot request it directly from them. Since Interactive Brokers displays investments in its own name, but for the benefit of its clients – this is the street name – it could theoretically happen that the IB database is damaged or the broker acts in bad faith, or the data is inaccessible due to some hacker attack. What is the solution to this and how does this relate to the “Performance&Reports” tab? So that you can save what Interactive Brokers has displayed under your name under the “Accounts Summary” menu item.
❗In other words, anyone who is concerned that Interactive Brokers may make a mistake, misrepresent data, or become a victim of bad faith should back up their data.❗
There are thousands of other data that can be generated here, and these are also worth looking at, especially with regard to the reporting of costs. What Interactive Brokers is also great at is the education section, it's called IBKR Campus and you'll need it. If you watch the courses, which include hundreds of videos, you can easily guess which instruments IB is strong in: You will find stocks, options, futures markets, bonds, Forex, but also other materials here. Use it because it's a great opportunity to learn.
📌In practice: The truth is, no matter how much the web interface can do, I tend to spend very little time there. Mostly when I have to fill out a declaration, authorize something, or Interactive Brokers starts nagging me about something. Why don't I use it much? Because the PC clients are much more transparent and that's what you'll need for investing.
📱Interactive Brokers app
In my opinion, the Interactive Brokers app is not a particularly good app, especially considering how competitive Revolut, Lightyear, or any of the discount brokers are. However, it is clear that this interface is aimed more at experts than the aforementioned competitors. However, it is not transparent enough for this, but it is understandable that 6.5 inches cannot solve the same problem as if you were looking at an interface on a 32-inch monitor.
The application itself can run in both read-only and normal mode. The former occurs when you enter another interface where the connection is active, but you can still monitor events from the app, but you cannot place orders. For which the Interactive Brokers app would be very good, as it could send alerts, for example, about stock prices, but you have to provide an email address. But how much easier would it be to send a pop-up, right? But you can't set this in the app, it sends emails, which I don't think is nearly as effective in today's spam-filled world. I also disabled Gmail app notifications, and IBKR app alerts would mix with them, so this isn't that useful in practice.
I also complained that the interface is quite tabloid in places, throwing out news and all sorts of investment ideas, but in a rather random way, plus sometimes an annoying banner pops up, so there are better solutions than this. What I used the app for at the time:
- 〽️Sometimes I look at the movement of my portfolio
- 🔎possibly on watchlists
but for everything else there is the much better desktop client.
💻Interactive Brokers PC client
Interactive Brokers also has two clients, which is not unusual among older, more well-known brokers. They are as follows:
- 🖥️Trader Workstation (TWS), which is available for both Windows and MacOS
- 💻IBKR Desktop (NTWS), which is the new 2023-2024 interface
🗓️Trader Workstation
The two products can be easily confused, and that's how I downloaded IBKR Desktop, which is the more modern of the two. However, I use Trader Workstation, mostly out of habit. This is a great, but overcrowded interface, highly customizable, with only one problem: if you put it full screen, it won't adjust to your display. Apart from that, there are no problems with it, updates are released regularly, and when you start it, the news and the trading interface itself appear in a separate window, so you can easily close the former without the entire client shutting down.
I really like Trader Workstation because it is highly customizable. As I have experienced, no one in my circle of acquaintances knows the interface 100%, they know so much, but everyone puts together the environment for themselves that suits them. Although I almost only invest for the long term and use fundamental analysis, I have an acquaintance who trades on a technical basis, but Trader Workstation is good for him too. But what does almost everyone use for technical analysis? TradingViewThen I have friends who trade options, they have also put together a suitable look for themselves, even though option traders often prefer Thinkorswim or Tastytrade, but Interactive Brokers knows this too.
When I created my own layout, I was able to add basically all kinds of watchlists to the interface, accessible with the click of a button. It has a good search interface where you can select between indicators, but I missed the fact that more specific or unique indicators, such as ROIC, ROCE, etc., cannot be defined.
I also really like that the functions are arranged quite logically on the interface, it's relatively easy to figure out what's where. If you type the name of a stock into a field, all available tickers will immediately appear, along with ADRs and what you can do with them. Plus, it also assigns services to the given instrument, so if you click on a stock, you can access fundamental data, analysis, analyst expectations, EVA data, practically everything.
📊IBKR Desktop
Compared to Trader Workstation, IBKR Desktop is not very different, but its overall effect is more modern. Things are arranged more nicely, but the logic is a little different. The reason for this is that this is a 2023-2024 interface, not so overcrowded, more like a phone app, as users have moved in that direction over the years. What's also good about it is that it uses less RAM, which makes it faster and doesn't lag at all, so it's worth trying this out too.
What can be a problem is that if you are used to Trader Workstation, you will get lost in it because everything is different, so there will be a kind of learning curve to it. What is very good about it is that:
- ⭐ You can highlight your financial data if you want to take screenshots,
- 📦 works with a box model, you can drag and drop the elements on the surface,
- 📊 There is also a fundamental explorer here that can be used for fundamental analysis, but for some reason the EVA data is not connected here, instead there is a service called Investment Themes, which I could not find in Trader Workstation,
- 📰 the interface for managing news is much better, there is a huge amount for all kinds of instruments,
- 📈 According to my friends who use technical analysis, the charts in Trader Workstation are ugly, they are much better in IBKR Desktop, but otherwise a lot of people use TradingView anyway (TradingView),
- ⚡ I think IBKR Desktop is faster than Trader Workstation and it seemed less buggy to me, although there aren't many problems with the other one either.
What I don't like about it is that I have to come out of the "Portfolio" menu, where I see my investments, and go to the "Watchlist" section to add a new instrument and then place an order for it there. But what's great is that it knows what watchlists you had in Trader Workstatin and can import them. This logic takes some getting used to, but I like it in the end. I'm still learning, but it looks promising.
🧩Reflexivity: Investment Themes
Reflexivity is a service available within IBKR Desktop, which is not so easy for the average person to access, especially as a foreigner, and the price is not made public. The name of their service can be used to analyze Investment Themes and companies' market positions, for example:
- 🏢 what services does a company have,
- 🌍 in which markets and regions are they present,
- 📊 how much exposure do they have and who are their competitors, and I could go on and on.
It's a good service, try it out, it's free and there are a lot of other options waiting to be explored.
💵Financial instruments available on Interactive Brokers💵
In this section, I examine what instruments are available on the broker's platform, in what form you can purchase them, and how wide their range is.
With my previous brokers, before I opened my Interactive Brokers account, my experience was that certain instruments were either not available at all, or I had to beg customer service to please add the one I wanted to buy to the list. Moreover, there is often a fee for this, or the service provider simply does not do it. This is very true for brokers with a large banking background, at least in Europe, they are incredibly rigid and bureaucratic.
On the other hand, I have never encountered an instrument that I couldn't buy at Interactive Brokers. What are the problems with other brokers?
- 🚫 Some markets are unavailable. Except for stocks locked due to special events, I have never encountered this problem with IB.
- 📉 The broker does not allow you to buy OTC, pink sheet stocks. For example, Chinese stocks whose ADRs are listed on the US market. Any Chinese company I wanted to buy so far, such as Alibaba (BABA), Tencent (TCEHY), Anta (2020), Li-Ning (2331), etc., he always let me buy it.
- 💹 ADR and small market stocks: there are some securities that offer up to 3-4 options, you can buy all of them on IBKR (but expect there to be no liquidity, but that's not the broker's fault).
- 💵 I was able to buy American T-Bills, i.e. very short-term securities, but you can also buy government securities from other countries.
- 📈 If you have a margin account, you can trade options on almost anything you like.
There are probably instruments that you can't buy here, but you can buy them elsewhere, but I haven't come across anything like that yet. If you look at the newer brokers, like Lightyear or Revolut, they're missing a lot of markets, the former added the Hungarian market a few weeks ago, for example. They're coming up fast, but there's still room for improvement. So for those who want to achieve everything, Interactive Brokers is the best choice.
🤵What strategy is Interactive Brokers best for?🤵
In this section, I examine which financial service provider or broker platforms are suitable for which strategies and which are not. Many service providers have specialties with which they want to attract a specific group of investors, and I will also cover these.
Almost everything. Since the broker has 4 interfaces out of the box, there is plenty of choice. I don't want to overcomplicate things, but IB doesn't have access to all instruments, especially the exotic ones, but let's start with what it does.
✅What Interactive Brokers achieves
- 👆You can access 150 stock exchanges in 30 countries in 25 currencies for stocks, and you can also buy fractional shares
- ☝️NYSE, NASDAQ, AMEX (American, Canadian)
- ☝️Xetra, Frankfurt (German)
- ☝️LSE (English)
- ☝️TSE (Japanese)
- ☝️Hong Kong Exchange (Chinese and Asian)
- ☝️small European exchanges (Danish, Swedish, Polish, I already bought these at IB)
- 👆ADR shares: securities of foreign companies listed on the US stock exchange (e.g. Chinese companies, Alibaba, Tencent, etc.)
- 👆bonds: more than 1 million types of government securities (I have bought US T-bills several times on the platform)
- 👆several thousand ETFs (UCITS)
- 👆options
- 👆term products
- 👆foreign exchange transactions (Forex also automatically exchanges base currencies if you buy shares denominated in another currency)
- 👆special products: investment funds, structured products, gold-silver spot transactions, etc. (I've never tried)
- 👆limited crypto, see below
❌What Interactive Brokers does not achieve
- 👇some OTC/pink sheet stocks: e.g. very small cap US companies
- 👇SPAC warrants (this is a special stock exchange structure for acquiring startups)
- 👇Buy broken ETF (shares can also be purchased in fractional form, this may be interesting in the case of Constellation Software or Berkshire Hathaway, for example)
- 👇Leveraged ETFs (maybe there is, but I've never seen it)
- 👇USA, so not UCITS ETFs (the reason for this is EU regulations, so there are no SPY, QQQ, VOO, ARK, etc. ETFs, but I know this can be circumvented with options, and there is also a European version of these)
- 👇Commodity CFDs (no derivatives, only real assets)
- 👇As far as I know, you can't even register an IPO on the platform (this is the first issue of shares)
- 👇It's not typical, but you can also buy crypto on the platform, which is served by Paxos and Bitstamp, so the purchase is indirect, but IB is weak in this. You can't buy all coins, only the better known ones like Bitcoin, Ethereum, Litecoin or Bitcoin cash.
From the above, it is clear that Interactive Brokers behaves more like a traditional, online discount broker than a new wave provider. Perhaps the biggest heartache for the user is the lack of crypto assets. If I were to hold crypto assets, I'm not very likely to choose IB, because for example, you can't withdraw them to a cold wallet, plus a lot of exotic cryptos aren't available. As far as I know from my experience, for example, Binance has 350+ crypto assets available, while Coinbase has 200+, but Kraken may also have a similar amount.
As far as I know, there is no staking, meaning that Interactive Brokers does not provide returns on crypto assets, and you can only use fiat money as collateral, there are no stable coins. Interactive Brokers is not familiar with smart contracts, so don't look for DeFi tokens on the platform. The same goes for NFTs, you can't buy such instruments directly or indirectly on Interactive Brokers, while you can with the aforementioned crypto providers.
☝️So the answer to the question is: Interactive Brokers is good for almost everything, but it only reaches institutional instruments, not DeFi-type ones, so don't expect CFDs, crypto, or NFTs.
🆚Competitors: Interactive Brokers' opponents🆚
In this section, I examine who the analyzed broker's competitors are, what their pricing is compared to them, and who it can be recommended to and who it cannot.
General considerations when choosing a broker
My experience is that many people only look at the cheapest broker when choosing a broker. Some check what tools are available, but that's about it. However, it's worth considering the following:
📊 Technical differences in favor of IBKR
- ✅ Real stock market orders (not CFDs or internal order-matching)
- ✅ Trading on own markets (Direct Market Access, i.e. the IB forwards orders directly to the exchange's order book)
- ✅ Professional tools: TWS, IBKR Desktop, API, Algo-trading
- ✅ Institutional fee level, interbank FX exchange (currency exchange is very cheap, much cheaper than elsewhere)
- ✅ Available bonds, options, futures, ETFs, FX in one place
- ✅ Very heavily regulated US broker, low institutional risk
A lot of things that are not trivial at first glance, but that most people wouldn't even think of. For example, eToro is a CDF broker that shows non-real stocks to clients, and Lightyear is registered in Lithuania and is protected by Lithuanian authorities. (not to mention they border a country at war). As far as I know, Trading212 is a market maker broker, meaning they match buy and sell orders within their own system, so they give the price, which has a spread, meaning both fee payment and liquidity risk.
☑️ Advantages of fintech brokers
- ☑️Faster and simpler interface (no need to learn TWS)
- ☑️Card top-up payment, instant purchase (money must be transferred as a deposit to IB or there is Wise API integration)
- ☑️Beautiful mobile interface, graphs, dark mode
- ☑️Lower entry barrier (starts from 1 EUR, everyone gives fractional shares)
- ☑️Community trading (e.g. eToro CopyTrader)
- ☑️Crypto and stocks in one app, easy portfolio management
The above fintech brokers do have a few advantages, which it would be a shame to downplay. The simple interface is a real salvation, especially for beginners. Trading Workstation can often be a drag, and the interface is not exactly lightning fast. Most neobrokers, as fintech brokers are also called, have top-ups, meaning you can add money from your bank card to your brokerage account with just one click.
Which brokers you consider rivals to Interactive Brokers depends primarily on what you do in the market. My experience is that stocks, government bonds and crypto assets are the most popular, while options, for example, are used by far fewer people. Quite a few people burned themselves out with Forex at the time, so currency trading is not that common, while CFDs are considered money-sucking by many. The reason for this is that many notorious brokers have scammed their clients in the past, for example, it is worth looking towards Cyprus and other offshore countries for those who are more interested in the topic.
📈Stocks
Let's start with stocks. If I consider this as a basis, then pretty much all the providers available in the market are competitors of Interactive Brokers, since you can buy stocks everywhere:
- 🏦service providers with a banking background: I have had a pretty bad experience with them, they are expensive and cumbersome, but in return you can rely on the strong institutional background and regulation. In return, they are all very bureaucratic and expensive, and IB surpasses them in both pricing and service quality. I have had experience with Erste and KBC, I would definitely choose Interactive Brokers.
- 🏢Discount brokers: I'm thinking primarily of eToro, Revolut, Lightyear, Trading 212, XTB and similar brokers. They are all very cheap, work with low costs, but none of them are registered in the USA. eToro is a CFD broker, Lightyear, Trading 212 and XTB can compete with IB in terms of price, but not in terms of services. However, I would open an account with them for diversification purposes, since I already have Interactive Brokers accounts.
⚙️Bonds
Although I'm not particularly familiar with the bond market, I think it's pretty hard to compete with Interactive Brokers' roughly 1 million bond instruments. However, most people buy their own nation's government bonds because citizens usually have free accounts, so they often just walk into their local branch and that's it. The situation is different with corporate bonds, which IB is perfectly suited for, but this is typically not the playground of retail investors.
💵Options
Interactive Brokers is particularly strong in options, but quite a few people in my circle of acquaintances use Tastyworks, which is now called TastyTrade and is made up of the ex-Thinkorswim team. Thinkorswim is also a great platform for advanced traders, but as far as I know it only serves US clients. There is also TradeStation, but again it is only for US clients, so the best solution that can be accessed from almost any country, here again Interactive Brokers seems to be. But, in this case, I would definitely ask an options specialist what they use.
🪙Cryptos
If you want to trade crypto, don't choose Interactive Brokers. There are platforms specifically designed for such tools, it's a completely different world, with different logic and rules. Cryptocurrencies, smart contracts, stable coins are often still unregulated markets, but obviously this doesn't bother new wave investors at all. There are a lot of crypto projects that use special platforms, I have a friend like that. This is a fast-changing world, big brokers like IB are not flexible enough for this.
Interactive Brokers has a very strong institutional background, which provides not only stability but also commitment. Binance or Coinbase are much better for such purposes, and the latter is also an S&P 500 member. I would basically separate my traditional investments from my crypto-based ones, so if you have both, open two accounts.
📌In practice: When I buy or sell stocks, I have been using almost exclusively the Interactive Brokers platform for years. I have brokerage accounts with several providers for diversification reasons, but I almost always come back to the fact that IB is the most flexible and I can do most things with them, and all stocks are available here. In addition, Interactive Brokers also exchanges currencies very cheaply, which is usually one of the hidden costs with brokers, and when I buy Canadian, Swedish or Polish stocks with USD, it automatically does the process for pennies. Of course, I have accounts with other providers, but the reason for these is solely for diversification, and not because they are better than Interactive Brokers, at least from my point of view.
🇭🇺Section for Hungarian investors (and others)🇭🇺
🧮TBSZ at Interactive Brokers
🔢Dividend-paying companies
📊FX exchange
✅Interactive Brokers Benefits✅
In this section, I will examine the advantages of being a financial service provider or broker.
Actually, I've already mentioned it before, but let's summarize again what the biggest advantages of Interactive Brokers are:
Rewards and financial benefits
- ✅The world's largest online broker, with a very strong institutional background, low risk
- ✅Registered in America, but some of its subsidiaries are in other countries
- ✅One of the cheapest brokers on the market, low spread, very low minimum fee
- ✅The cheapness also includes the fact that a lot of services have been integrated into the interface, which you get for free: Morningstar, EVA, Tipranks, etc.
- ✅They have reached a brutal number of markets and stocks from the platforms
- ✅ Available bonds, options, futures, ETFs, FX in one place
- ✅ Institutional fee level, interbank FX exchange (currency exchange is very cheap, much cheaper than elsewhere)
Technological advantages
- ✅ Real stock market orders (not CFDs, so you don't get a derivative product)
- ✅ Trading on your own markets (Direct Market Access, i.e. orders are sent directly to the exchange's order book)
- ✅ Professional tools: TWS, IBKR Desktop, API, Algo-trading
📌In practice: I would like to mention one more advantage, and that is: integration with Wise accounts. Interactive Brokers can read the balance of Wise accounts, so you don't have to deposit the money, but IB can transfer the amount you want from Wise directly to your brokerage account. This is not such a big deal anymore, since many fintech brokers offer bank card top-ups, but it's worth loading up your currency this way and then having the broker withdraw it.
❌Disadvantages of Interactive Brokers❌
In this section, I will examine the disadvantages of a financial service provider or broker.
Interactive Brokers has a couple of drawbacks due to its structure, which sometimes annoy me. They lag behind their competitors in terms of appearance and simplicity, but I'm not sure how this wealth of features could be solved in any other way. Let's see what IB is weak at!
- ❌Longer learning process, you have to learn the Trading Workstation
- ❌No card deposits like with fintech brokers, only Wise integration and remittance
- ❌Their mobile app is crappy, I don't even like using it, Revolut or LightYear are much better in this regard
- ❌It doesn't have many fancy features like social trading (e.g. eToro CopyTrader) or Revolut-like safe deposit boxes
- ❌Weak in crypto
- ❌It's not transparent in places, sometimes I don't know what it does (but there are tutorial videos and help)
📌In practice: Interactive Brokers' interfaces take some getting used to, it seems like they were designed for PCs and not mobile. IBKR Desktop is a much more intuitive program than TWS, but you can't do everything there. At first I wondered why I couldn't find anything, but then I got used to it, but will a Generation Z or Alpha individual suffer through this? Probably not, and today Interactive Brokers' advantage over the others is not so great that this should be the decisive argument.
📝Interactive Brokers Summary📝
Summary of the analysis, drawing lessons.
In my opinion, Interactive Brokers' brokerage interface is not the easiest to use among the market solutions, but it is the most knowledgeable. For those who are serious about investing, it will be an unavoidable player, because a lot of instruments can only be accessed here at low costs. If you delve a little deeper into the topic, you will start to miss the data, the functions, the free services that you have to pay for elsewhere, the institutional background that provides great security, and I could list more.
What is it not good for? It is primarily weak in CFD and crypto solutions, and is not suitable for very specialized investment forms, such as NFT. It should also be remembered that although fintech brokers provide fewer services than Interactive Brokers, their interface is much simpler and more transparent. With Interactive Brokers' applications, you will have access to almost all of the stock markets, they list more than 1 million bonds, there are plenty of ETFs, but IB is also perfect for options trading.
Regardless, it is worth opening a brokerage account elsewhere for diversification purposes. Our secret tip after IB is the very intuitive and easy-to-use Lightyear, but your first brokerage account should be with Interactive Brokers. IF YOU CLICK ON THE IMAGE LINK BELOW, you will receive a 200 USD bonus when opening an Interactive Brokers account, which will definitely cover your expenses for a while!
Frequently Asked Questions (FAQ)
What should you know about Interactive Brokers?
Interactive Brokers (IBKR) is one of the largest and most trusted international brokerage firms, with over 40 years of experience. It serves over 2 million clients worldwide and offers access to over 150 exchanges. IBKR is popular with professional and institutional investors, but is now also available to retail clients, with a modern and transparent interface. Clients particularly appreciate its reliable platforms, such as TWS and IBKR Desktop, and its low fees.
What competitors does Interactive Brokers have?
Interactive Brokers' biggest competitors include classic, banking-based brokers such as Saxo Bank, DEGIRO or Swissquote, as well as modern fintech-based providers such as Revolut, Lightyear, Trading 212 or eToro. The main difference lies in the fact that IBKR executes real stock market orders, not CFD trading, so it plays in a completely different league.
What makes Interactive Brokers better than bank-backed brokers?
Most bank brokers charge high fees and have limited asset offerings. IBKR, on the other hand, offers access to a global market with institutional-grade fees and extremely low currency conversion costs. Users can hold their portfolios in multiple currencies, there are no hidden conversion costs, and they get direct access to the exchanges, not through a bank intermediary.
What makes Interactive Brokers better than fintech brokers?
Most fintech brokers, e.g. Revolut, eToro, Lightyear are simple and user-friendly, but technically limited. IBKR, on the other hand, provides real stock market access, there is no internal order matching, no spread manipulation, and the client actually owns the shares on paper. In addition, it offers professional features such as options, futures or bond trading, which are completely missing from most fintech apps.
What financial instruments can be purchased on Interactive Brokers?
IBKR offers practically everything that is available on the stock exchange:
- 📈 Stocks
- 💹 ETFs
- 📉 Options and futures products
- 💰 Bonds
- 💱 Currency pairs (FX)
- 🏦 Funds, commodities and more
These are all available from a single account, on the same interface, so there is no need for multiple providers. However, for diversification reasons, we recommend opening an account elsewhere.
Is Interactive Brokers considered cheap or expensive in the market?
Not the cheapest, but by far the most professional. IBKR's fees are low compared to the services it offers, with stock trading fees around $1-2, and currency exchange rates at institutional rates with minimal markups. Most users say IBKR is a true value-for-money champion: not the cheapest, but in the long run the most reliable and transparent.
Is there an option to open a tax-advantaged account, such as a TBSZ, on the Interactive Brokers platform?
Currently, Hungarian clients are served by the Irish subsidiary (IBKR Ireland), and this arrangement allows the opening of a TBSZ account. In the United Kingdom, IBKR offers the possibility of opening an ISA (Individual Savings Account) type investment account. In other EU member states, such as Germany, France, Spain or Austria, IBKR does not offer its own “tax-free” account to the best of my knowledge. In these countries, local tax rules apply and Interactive Brokers only provides reports for tax purposes.
How safe is Interactive Brokers?
IBKR is one of the safest brokerage firms in the world. It operates under multiple regulators (e.g. US SEC, UK FCA, Irish Central Bank) and keeps client funds in segregated accounts. European clients are protected by the Irish deposit insurance scheme, and IBKR also has extra insurance. The company has been a stable, publicly traded company for decades, with equity exceeding $10 billion, which is rare in the sector.
Legal and liability statement (aka. disclaimer): My articles contain personal opinions, I write them solely for my own entertainment and that of my readers. The articles published here do NOT in any way exhaust the scope of investment advice. I have never intended, do not intend, and am unlikely to provide such in the future. What is written here is for informational purposes only and should NOT be construed as an offer. The expression of opinion is NOT in any way considered a guarantee to sell or buy financial instruments. You are SOLELY responsible for the decisions you make, and no one else, including me, assumes the risk.
