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Interactive Brokers Review (2024)
By
Will Ellis
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Last Updated on January 2, 2024
The stock market is not that simple, though it is easy to think that it is. The real trick of it is that the stock market is easy to learn and understand, but hard to master.
The challenge is not the complexity of any given facet of it, but the complexity of all those straightforward things working together.
The thing about it is that many stock trading platforms try their best to make the stock market seem more simple than it is. Why? Well, because the reality of the matter would dissuade customers.
Stock market apps and trading platforms all want the same thing: For people to use their platform rather than other platforms. To this end, they are willing to credit you money you do not have, host giveaways for computers and other electronics, and recommend you stock after stock after stock.
In short, they are willing to do anything for you… Except actually teach you how the stock market works. Because if they did that, then you would not be reliant on any one platform. You could go anywhere.
Interactive Brokers is a stock trading platform with an accompanying app that focuses on giving you the most comprehensive trading experience it can give you. This means it can ask a lot of you at times; its interface is far from perfect, and at times the trade tools it has on offer can feel dated and complex.
But in exchange for learning it, you are rewarded with a suite of free learning materials. There is limitless depth to what they offer, from articles describing fundamental aspects of the market, to research on modern trends, and even web seminars that give insights and opinions on the market.
You are not here because you want to know if Interactive Brokers is good, however. You are here because you want to know if it is good for you. So, let’s talk about that in more detail.
Table of Contents:
- Who is Interactive Brokers For
- What Does Interactive Brokers Give You
- What are Interactive Brokers’ Weaknesses
- Is Interactive Brokers Good for You
Who is Interactive Brokers For? 🤔️
It is tempting to say that Interactive Brokers benefits “advanced traders” more than anyone else. But what is an advanced trader? The easy answer to that question is that an advanced trader is someone that knows the ins and outs of trading. They know what to buy when to buy it, and how to do it.
But that answer is a bit too easy, isn’t it? One could definitely argue that a beginner trader gets more out of Interactive Brokers than an advanced trader does since it will provide them with more information that they do not already have.
What this really shows is that the dichotomy between “advanced” and “beginner” is not very helpful here. Rather than saying whether or not Interactive Brokers benefits a trader of a particular skill level, it is more accurate to say that it benefits a trader of a particular commitment level.
Interactive Brokers is rewarding for people who are willing to invest the time into getting something out of it. More importantly, it is more rewarding on that axis than other trading apps.
What Does Interactive Brokers Give You?
Earlier, we listed a bunch of features that Interactive Brokers provides. Let’s talk about those in greater detail.
The most important, obviously, are the tools that help you trade. What tools are involved here?
Tools for Buying and Selling 💰️
Straight away, it is worth mentioning that Interactive Brokers lets you do the “necessities” of a trading app. That means buying shares, buying shares in bulk, and buying fractional shares. Naturally, selling in exactly the same way goes along with that. It would not be a trading app without these features.
It also has additional tools that are starting to become more commonplace (though they are not found everywhere). Things like stop losses, limit orders, and so on. For those who do not know, these are tools that allow you to automatically sell a stock at a certain price to cut losses or maximize value.
It is worth noting that Interactive Brokers does not natively support bots. That means while you can set up your shares to sell automatically (you are essentially putting up a “for sale” sign on your holdings and waiting for someone to buy) you cannot set up automatic purchases of any stock.
Tools for Research and Analysis 🔎️
Market research and analysis is one of the biggest discussion points in stock trading. Some people are simply unconvinced that the market can be predicted with any degree of accuracy. After all, the most impactful events on the market, such as the coronavirus pandemic, were completely out of the blue.
But while this is true, it must also be said that the most successful people in the stock market tend to be the most educated. While Interactive Brokers can be criticized for not offering you much direction, no one is going to complain about the sheer volume of research they give you to work with.
This is especially good since most people conceptualize the stock market as being responsive to the kinds of things Interactive Brokers’ research articles focus on. This creates a positive user experience where traders’ expectations line up with the most financially rewarding parts of the platform.
Tools for Tracking and Graphing 📊️
These are the tools that make people dizzy. Research is intuitive because it delves into the connecting tissue between the market and the real world which surrounds it. Tracking stocks and studying graphs is far less concrete. But while the abstract world of graphs is essentially absurd, it can still be grasped.
Interactive Brokers helps you with this by offering the most complex tools for understanding what is going on with a stock’s price. From VWAP, to MACD, to basic plotting tools and guides on graph analysis.
If you are lost as to what those might mean, do not worry; their research articles are there to help you with that. It is also not necessary to understand what those things are to understand that they are good.
The two things that make these features stand out is the fact that they are not found in many other trading apps, and they are highly integrated with the advanced mathematics side of stock trading.
What are Interactive Brokers’ Weaknesses? ❌️
We have put a lot of positive spin on Interactive Brokers’ features. But rest assured, we are not writing this review with stars in our eyes: It is not the perfect trading app to come to save us from poverty.
Interactive Brokers has three main weaknesses. Some are more obvious than others.
#1: It is based in the United States 👎️
This has as much upside as it does downside. The upside is that it has a massive scale, connecting to tons of different markets. But the downside is that it is beholden to American regulation, not Australian regulation. America is notorious for lacking the consumer protection laws that Australia has in place.
#2: It is extremely complicated to use 👎️
While we advised abandoning the notion of “advanced” and “beginner” traders, it must be said that you will have a rough time using Interactive Brokers if it is the first trading app you have ever used. The main reason comes down to the interface: It is simply built off of how real-world trading works.
The most obvious example of this comes from the actual execution of trades. When you want to execute a trade on Interactive Brokers, you have to use a separate interface than the one you use to find the stock on the market. This creates a clunky experience where you use two windows for one task.
This extends to their app to an even greater degree. Interactive Brokers allows you to customize their app heavily. On the surface, this is purely a good thing. But if you do not know what information is valuable to follow, then how can you customize the app optimally? It could do with a tutorial.
#3: It has unintuitive account options 👎️
This is another artifact of it being based in the United States. What makes account creation so strange with Interactive Brokers is that, unlike most other trading apps, the circumstances of your account creation can heavily impact what you are able to do on the app. Specifically, with day trading.
If you list your available assets as below a certain threshold, Interactive Brokers will limit how much day trading you can do. This is especially surprising to Australians, who do not have any law limiting day trading like that. Why is this? Well, the body that makes this rule is not a legal body.
It is a rule made by the United States’ self-governing trading organization FINRA. American stock trading platforms will not let anyone day trade more than a few times a week unless they have enough income to do it. Because this is purely an agreement and not a legal requirement, they stretch it over borders.
Luckily, unlike some trading platforms, Interactive Brokers does not require you to prove that you have the money you say you have. Therefore, you can lie and say you have enough capital to day trade with.
Is Interactive Brokers Good for You? ⚖️
The final verdict on Interactive Brokers is ultimately yours to make. So, let’s approach the question from two different angles: First, the practical. Is it good for making money? Is it good to use?
And second, the theoretical. Does it breed good habits? Will it be around for a while?
Is Interactive Brokers Good in a Practical Sense?
When we ask this question, we are essentially focusing on what Interactive Brokers provides for you in the most material sense. Does it make you money? That answer is easy: Yes. It makes you money, or at least can, because it connects you to the places where financial value is created.
When you think of the physical experience of Interactive Brokers, the answer is more ambiguous. Is Interactive Brokers good to use? Well, it is certainly not fun to use. Its interface takes getting used to. It is dry, bright white, and not made with modern graphic design in mind.
All of this makes it feel like work to use, and no one is running to Interactive Brokers for the “love of the game”; if it did not make people money to use the platform, no one would be using it.
The other side of the coin relates to its features. While none of them is fun to use, or even easy, they all fulfil an extremely important purpose individual to them. And there is something satisfying about knowing that the platform you are on was made to make money, not to be fun.
Is Interactive Brokers Good in the Theoretical Sense
When we say, “the theoretical sense”, we are mostly talking about whether or not it is good for you as a trader. Is it teaching you to invest your money in risky ways? Is it limiting the scope of your understanding? Is it, in any way, creating bad habits that might lose you money?
All of these are important things to watch out for, as they are immaterial losses that can result in material losses. But luckily, the answer is no. Interactive Brokers do not produce bad habits.
This goes hand in hand with its lack of accessibility. Because it is harder to do anything on Interactive Brokers than on other platforms that are easier to use, you do not get into a habit of doing anything too “automatically”. You cannot make a trade without thinking if the interface is hard to use.
Conclusion 👀️
Interactive Brokers offers you a lot to help you on your journey of making a profit while trading.
From making your first trade to learning about the stock market to help you make future trades, to the different methods and strategies for making money in the long term, Interactive Brokers is there.
Undoubtedly, the interface of the platform may not be intuitive for everyone, potentially discouraging some users. Paradoxically, this seemingly poor interface design actually works in its favor. Patience is key when navigating the platform, as it ultimately offers significant rewards.
Considering these factors, we wholeheartedly recommend it as one of the top trading platforms available. Its unique approach, though initially challenging, can lead to substantial benefits for those who are willing to invest the time and effort to understand and utilize it effectively.
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