IBKR Top 3 Strengths
Advantages for high volume forex traders Interactive Brokers offers the:
- Lowest forex fees with ECN type spreads and commissions from $1 USD
- Most advanced forex trading platform (TWS) for desktop/mobile trading
- Largets range of financial products including CFDs and stockbroking
IBKR Top 3 Weaknesses
For those new to CFDs or low volume traders issues of Interactive Brokers are:
- High Minimum Deposit requirements from $10,000 USD
- The active requirements requirement with inactivity fees applying
- Relatively low leverage that varies based on the CFDs traded
View the full Interactive Brokers review below for more details on each of the key points above.
Strength 1 = Low Commissions And Spreads
The two main trading fees for any forex broker are commissions and spreads. For high volume active traders, Interactive Brokers (IBKR) has the lowest commissions. The table below details how a high volume forex trader can achieve a low commission multiple of just 0.08 basis points.
Low Commission Example
To provide an example scenario of the highest traded tier (USD >$5b), if $1,000,000 units of EUR/USD were traded the total calculation would be $1,000,000 EUR * 0.00001 = $10 EUR. This Euro amount would then be converted to USD at real-time value set by IBKR. At lighter monthly trading volumes a broker like Pepperstone or IC Markets may have lower commissions but for active traders, IBKR has low costs.
The second main element that impacts trading costs are spreads. Our Interactive Brokers forex review rated the spreads as an ‘ECN broker’ as they quote prices based on the sixteen largest exchange dealers. This is 60%+ market-share of the interbank market-making EUR/USD spreads from 0.1 pips. To clarify, spreads are not marked-up and the foreign exchange broker makes its money from commissions.
What Type Of Trader Gets The Best Our Of Interactive Brokers Fee Structure?
Our Interactive Brokers forex review found the CFDs provider offers ECN broker spreads (market-based spreads) and the lowest commissions for high volume traders. If your predicted future trade value and you’re looking for a low-cost broker then you should consider IBKR.
Strength 2 = Forex Trading Platform
As one of the largest forex brokers in the world, Interactive Brokers (IBKR) has created its own forex trading platform including:
- Desktop TWS designed for active traders with the most advanced forex trading tools and algos. This includes news, risk analysis tools and technical analysis. Trading can occur across all markets using the TWS trading platform.
- IBKR Mobile which includes apps for android mobile devices and for iPhone/iPad devices making is deal to monitor and make foreign exchange trades while on the go.
- Client Portal and WebTrader offering non-download versions of the trading platform that have reduced functionality but still have the ability to trade and monitor existing trades.
The biggest advantage of IBKR trading platform is you can trade more than just forex and CFDs. This means you don’t need a separate stockbroker platform or platform to trade futures or bonds.
Alternative Interactive Brokers offers an FX Trader offering:
- A clear price display (currency pairs have their own cell with market/order data).
- Price data with the best available bid and ask prices available displayed.
- The ability to inert any forex quote to cross trade with Globex forex futures.
- Review functionality prior to making trades or one-click fast trading.
- The ability to make 20+ trades from trailing stop limits to one cancels all.
- Functionality to show average cost, positions and even profile & loss data.
- Customisations from trading cell displays, layout to colour schemes used.
The table below shows the range of markets including Stocks, Options, Futures and even Bonds.
|Client Portal/Web||Mobile Apps||Desktop TWS|
The disadvantages of IBKR platform is that that existing forex traders will need to learn the unique platform and that switching fx brokers later will be difficult with the need to switch platforms. This is compared to the most popular forex trading platforms like MetaTrader 4, MetaTrader 5 and cTrader which are offered by a large proportion of CFD providers. Another issue comes to sharing information and tools such as forex bots with more choice available on popular platforms compared to IBKR.
What Trader Is Suited For The Interactive Brokers Platform?
The IBKR platform (especially TWS platform) is the best forex platform for traders looking for an all-in-one solution. If you want to trade shares, CFDs and foreign exchange without switching platforms while having powerful features, IBKR is right for you. Only if you’re looking to more focus on CFDs or forex and be closely connected with the majority of traders worldwide should you consider another platform like MetaTrader 4.
Strength 3 = Range Of Markets From Shares, ETFs to CFDs
Interactive brokers are one of the only online brokers’ providers to offer a full range of financial service. Using the IBKR Universal Account™ to professional can trade a plethora of services across the globe including:
- Stockbroking services across 125 markets with unique order types and trading tools
- Options trading with a fixed flat rate or tiered active trader model for high volume rebates
- Futures trading across 30 financial markets with the ability to hedge positions
- Currency trading (forex) across 22 currencies from USD, EUR, AUD to JPY
- IB Spot Gold/Silver trading for pairs such as XAU/USD (not available for residents in Australia, Canada, Hong Kong, Japan or the U.S.
- ETFs (Exchange-Traded Funds) across both bond and equity indices on 28 exchanges across 14 countries
Who Benefits The Most By Trading With IBKR?
Those looking to trade more than just forex across the globe across multiple markets with the single interface are ideally suited toward IBKR. Our Interactive Broker review strengths clearly signal that it’s appropriate for professional traders who are active traders (higher volume traders).
Weakness 1 = High Minimum Deposit Requirements
Interactive Brokers has one of the highest minimum deposit of $10,000 USD. It also has limited funding methods depending on the country they operate with the exception of a bank wire transfer which is accepted globally. In Australia, they accept bPay in AUD, in Canada they accept EFT initiated by IB and for IRA trading accounts direct rollover and trustee-to-trustee methods are accepts. In some locations, online bill payment checks and automated clearing house transfers are also accepted.
What Online Traders Does This Minimum Deposit Rule Out
IBKR positions itself as a low-cost broker for professionals only. Most forex traders won’t be willing to deposit over $10k USD initially and want the convenience of payment methods such as a credit card or Paypal. Such traders should view the review of Pepperstone that has a minimum deposit of $200 and convenient funding methods.
Weakness 2 = Inactivity Fees
Interactive Brokers charges a maintenance fee (often termed Inactivity Fees) if commissions don’t meet the required active trading requirements as shown below or if the trading account equity does not exceed $100k USD for the calendar month.
What Traders Do Inactivity Fees Rule Out?
Traders looking to trade intermittently or just for special events (eg elections) may want to consider a forex broker like IC Markets who don’t charge inactivity fees. It needs to be emphasised that Interactive Brokers want high-volume active traders only.
Weakness 3 = Low Leverage Levels
Interactive Brokers offers leverage (margin rates) on forex trading that is lower compared to competitor forex brokers. This depends on the regulation the resident falls under and can range from 1:5 to 400:1. While in locations such as the UK where the Financial Conduct Authority sets the maximum leverage for non-professional traders, in other countries the IBKR leverage offering is substantially lower.
Leverage increases individuals exposure to markets. This means that losses can be substantial and traders should know the high risks of online trading and consider a demo account first. In countries such as the United States and Japan, leverage is heavily restricted.
What Traders Does Low Leverage Rule Out?
Traders who are looking to make a low deposit but have high exposure to currency markets should view our best forex broker table. This can include algorithmic traders who often require the highest leverage available. Those with higher trading account funding though that Interactive Broker targets will in most cases be content with the margin rates offered which will provide sufficient market exposure.
Conclusion Of Who Should Trade With Interactive Brokers
If your a high-volume active trader looking for the lowest fees (brokerage), a range of financial products and an advanced trading platform then Interactive Brokers is the best forex broker for you. The broker is not suitable for those new to trading, looking to trade small amounts or to infrequently enter markets. With over $7 billion in equity capital, Interactive Brokers is the right forex broker serious high-end forex traders.