Interactive Brokers
Encyclopedia : I : IN : INT : Interactive Brokers
Interactive Brokers LLC is a United States-based deep discount online brokerage firm, operating on most major worldwide stock, futures, bonds, forex, and options exchanges.
Interactive Brokers' claim to fame is their low fee structure, universal direct access architecture, and exclusive reliance on electronic methods for order entry, processing, statement delivery, margin calls and account management. it has stirct and conservative margin policy. Customer services is limited. It is not a firm for hand-holding.
US Equity
Most US Equity purchases or sales, 200 shares or less, can be accomplished through Interactive Brokers for a commission of $1. [link]Account minimums
In order to open a new account, one must deposit $5,000. A minimum commission of $10/month is normally charged. [link], and strict account eligibility criteria are enforced [link].Interest Earned Rates
Interactive Brokers offers apparently attractive interest rates. It is charged at the benchmark rates minus 50 basis points for accounts over $10,000 (Tier I amount in USD) [link]. However people tend to forget they NEVER gain any interest for the first specified amount (Tier I). In that case, it's $10,000. Interactive Brokers doesn't state this clearly in the website.Interactiver Brokers use pro-rata basis to calculate interest earned and commission charges which is in its own favour. Each tier of money has its own interest rates. For money which is not over Tier I (ie it's $1-$10,000), no interest is earned.
It was once small losses when the interest rates was low in the US. Now the interest rates has been rising a lot higher. This loss becomes serious. it may cost one about $400-500 per year. One need to take this factor into consideration when comparing its rates with others.
Margin Lending Rates
Margin lending rates are one of the most competitive in the industry, with a typical account charged the Federal funds (or LIBOR) rate plus 150 basis points on outstanding debit balances with progressive discounts for larger balances. Unlike many other brokers, interest credit is also made for cash pledged as collateral for short selling (but for larger balances only and charged pro-rata). [link]Traders Workstation
The Interactive Brokers interface, Traders Workstation (abbreviated TWS) is primarily designed for daytrading, although buy and hold investors use it with great success. Inexperienced users/investors will be faced with a significant learning curve -- free demo accounts and papertrading accounts are available. As the interface software is coded in Java, it is highly portable. The same version and interface runs on MS-Windows, Macintosh, and Unix-based computers. A web-based alternative interface is available, and the company will accept verbal orders (at a substantial commission) to close positions.Nevertheless there are some instability issues related to Traders Workstation, which is discussed in [Elite Trader]
References
[independent review of Interactive Brokers by Elite Trader]
External links
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