Advantages for active forex traders Interactive Brokers offers the:
- ECN broker spreads and commissions from $1 USD per lot
- Most advanced forex trading platform (TWS) for desktop/mobile trading
- Largets range of financial products including CFDs and stockbroking
- Most regulation in most key locations across the world
- A $0 Minimum Deposit requirement for traders
For those new to CFDs or low volume traders issues of Interactive Brokers are:
- Monthly account activity fee requirements for low activity traders
- The active requirements requirement with inactivity fees applying
- Relatively low leverage that varies based on the CFDs traded
View the full Interactive Brokers forex review below for more details on each of the key points above.
Strength 1 = ECN Broker Spreads And Low Commissions
The two main trading fees for any forex broker are spreads and commissions.
ECN Broker Spreads
Interactive Brokers forex offering is the only true ECN broker with direct access to interbank quotes. This means:
- No markup
- No hidden price spreading
- Direct access to liquidity providing banks or other IBKR clients
While the online broker doesn’t publish their average spreads (for comparison to other brokers) you can see their real-time quotes on their website that are set by the market.
IBKR has low commissions which get lower based on volume making it excellent value for high volume traders. 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, 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).
Strength 4 = No Minimum Deposit Requirements
Interactive Brokers forex accounts have no minimum deposit requirements as shown below. This is across both trading accounts for individuals. As mentioned in the next section, there are inactivity charges to consider which are partially set on the trading account balance.
Strength 5 = IBKR Is The Most Regulated Broker
Interactive Brokers is regulated in the following regions:
1) United Kingdom
Based in London, Interactive Brokers (U.K.) Limited has FCA number 208159. Based on this regulation there are ESMA restrictions and requirements unique to the region. As of February 2020, 60.5% of retail CFD trading accounts lose money which is lower than other large brokers:
In 2020 IBKR launched their Singapore operations under MAS regulation. Their licence number is CMS100917 and they are located at 8 Marina View #40-02A Asia Square Tower.
3) United States
Based in Connecticut (USA), Interactive Brokers LLC is regulated by the Commodity Futures Trading Commission (CFTC). The United States subsidiary is also regulated by the Securities and Exchange Commission (SEC). It should be noted that just a handful of brokers are regulated in the USA giving Americans an opportunity to trade forex and CFDs.
Based on Quebec, Interactive Brokers Canada is regulated by the IIROC (Investment Industry Regulatory Organization of Canada). In the region IBKR only offers trading services (eg CFD trading) and not advisory services.
Based out of Sydney, Interactive Brokers Australia is regulated by ASIC with an Australian Financial Services Licence 453554. In the region, IBKR offers global stockbroking, CFD trading and many other services unlike most other brokers in the region.
Based in Mumbai, Interactive Brokers India is a member of several organisations including SEBI, BSE and NSE. The SEBI registration number INZ000217730 for the region.
Interactive Brokers Securities Japan Incorporated is both members of The Financial Futures and Japan Securities Dealers Association. The Japanese subsidiary has registration number 187.
8) Hong Kong
IBKR trades as Interactive Brokers Hong Kong Limited and is members of both the HKFE and SEHK.
9) Europe (Luxembourg)
Regulated by the CSSF (Commission de Surveillance du Secteur Financier), IBKR Europe SARL is based in Luxembourg and is a member of the Système d’indemnisation des investisseurs.
Weakness 1 = Inactivity Fees
Interactive Brokers charge an activity fee for low trading or low balance accounts. An activity fee can be:
- $10 USD if the account is $2,000 USD or above
- $20 USD if the account is below $2,000 USD
These fees become $0 if commissions for the month reach USD $10 or higher. This inactivity fee is $USD 3 when the account holder is either 25 years old or under. Market data subscription data is also removed from an account where the balance is lower than $500 USD.
Traders who plan to trade infrequently and with low volume may want to consider another broker such as OANDA who only charge an inactivity fee after 12 months. It should be noted that OANDA in our analysis has higher spreads and commissions when trading.
Weakness 2 = Low Leverage Levels
Interactive Brokers offers leverage (margin rates) on forex trading that is at the lower end of the market. Leverage is also set by the regulation an individual falls under with the standard 30:1 on forex within the UK (FCA maximum leverage for retail traders).
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 regions such as America, Europe and Japan, leverage is heavily restricted. Traders looking for higher leverage should view the best forex broker table. This can include algorithmic traders who often require the highest leverage available.
Interactive doesn’t offer higher leverage to reduce exposure to the market with additional automated risk controls in place. This is backed by the broker’s conservative balance sheet and capital controls.
Conclusion Of Who Should Trade With Interactive Brokers
Interactive is suited for traders looking for an ‘all-in-one’ broker offering more than just forex trading but also stockbroking, mutual funds and even have a hedge fund marketplace.
Active investors looking to trade a range of products with low brokerage should consider IBKR.
With regulation across the globe, Interactive Brokers can offer most individuals with the trading solution to meet their needs.