Interactive Brokers Good for Beginners?

Are you looking for an online broker? You must have heard about Interactive Brokers (IBKR) – the popular stock, options, and futures brokers. But is it really a good choice for beginners?

Beginner reviews of Interactive Brokers (IBKR) are mixed, as the platform can be overwhelming for new investors with its complex user interface with few explanations, the need to get trading permissions in each market, and fees for live prices. However, many beginners appreciate the wide range of investment options and low commission fees offered by the platform.

The truth is, there are advantages and disadvantages to choosing Interactive Brokers as your first broker. Whether or not it’s the right choice for you will depend on your individual needs and trading goals.

Low Commissions Fees

One of the biggest advantages of Interactive Brokers is its incredibly low commission fees. In addition to low stock commissions, they also offer some of the most competitive options and futures contract fees on the market. This makes them a great option if you’re just starting out in the markets since high costs can quickly eat into your profits.

You might think low commission fees are worse than no-commission brokers. It's important to note that while no-commission brokers may not charge trading fees, they may still charge other fees, such as account maintenance fees, withdrawal fees, or fees for certain types of transactions.

  • The most notable one is that there is payment for order flow whereby the no-commission brokers receive payment for order flow from market makers or high-frequency trading firms. This can result in fee-saving for the broker, but some critics argue that the market makers could arbitrage your trades. 
  • Another reason no-commission brokers might not be the best is because of the worst spreads. You could be offered a no-commission trade to buy Tesla at $100 vs paying $1 to buy Tesla at $99. It can also happen on the other end whereby you are offered a no-commission trade to sell Tesla at $99 vs paying $1 to sell Tesla at $100.

These reasons are good enough for most professional traders to trust its great execution engine (even for options) and use it instead of no-commission brokers alternatives, as your brokers that rely on your trades to make money somehow.

Great Selection of Markets

Interactive Brokers is well-suited to active traders since they provide access to over 135 markets in 31 countries around the world including U.S., Canada, Europe, and Asia Pacific countries. This wide selection gives you access to a huge range of different stocks and commodities that other brokers don't provide.

However, IBKR does not actively activate your permission for different markets and instruments. Instead, you will have to actively do it by filling up forms or quizzes to ensure you have sufficient knowledge and experience. This is probably very frustrating when you are ready to buy only to find out you need a few days to get permission. I also shared an article on prior permission before buying securities in IBKR.

User-Friendly Trading Platforms For Expert

For a beginner, Interactive Brokers offers the most complex user interface on both desktop and mobile devices. There are almost no useful guides or handholding for new users. In fact, it is intimating to many beginners.

  • This includes their popular Trader Workstation platform which features real-time quotes, order execution tools, and advanced charting capabilities geared toward day traders and active investors alike.
  • While mobile apps like IBKR Mobile allow you to trade anytime from anywhere similar to other brokers, it provides many types of orders, stops losses, etc that confused someone who is parting their first dollar in investment.

The main reason why IBKR don't have a simpler interface is that these extra options are important to different groups of traders that require and know what they want exactly to manage their risks.

Weak Customer Service

One downside of using Interactive Brokers is that its customer service can be weak at times. While they offer helpful resources in their education center, there's been reports that customer service has come off as distant or unhelpful when people try to contact them directly regarding issues with their accounts or orders.

This could be a serious issue if you need help resolving problems quickly while trading live markets! Compared to the newer brokers, I tried Asian MooMoo where live chat is readily available, and for IBKR it is definitely harder to get someone to talk to.

Interactive Brokers (IBKR) is one of the world’s largest and most popular discount brokers. It offers trading in stocks, options, futures, forex, and other financial products with competitive commissions. It has a wide range of assets under management which makes it quite popular amongst investors.

But what would happen if IBKR were to suddenly become bankrupt? This article will discuss how this scenario could affect investors who have their money invested through IBKR, and how they can protect themselves from potential losses in the case that the unthinkable does occur.

Sky Hoon. Read Full Bio
Website Owner, Twitter-er
He has been trading since 2008. He started this blog to share the journey about option trading. He dabbled in stocks, bitcoin, ethereum (in Celsius Network), ETF (lazy Dollar Cost Averaging) and also built websites for fun. He used this as a platform to share my experiences and mistakes in trading, especially options which I just picked up.

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