About a year ago, I opened an account with Interactive Broker using $10,000, which is the minimum amount, required to open an account with it. To be honest, it is quite a huge sum, but I did not mind investing this sum because I have heard great reviews about this online brokerage firm and hence decided to try it out. Moreover, I was not very happy with the online brokers I was dealing with during that time and was looking for a change anyways. The process of opening an account is a bit time consuming. After the tedious application forms, I had to verify two deposits that were made into my bank account by Interactive Broker. After the verification, I had to wait for a letter, which contains security codes that are required to be typed in before commencing any kind of trading.
One thing that struck me was that mutual funds are not available because Interactive Broker does not offer these, but I am ok with it because I do not normally invest in mutual funds anyway, stocks are more like my cup of tea. To my surprise, the stock commission of this broker is reasonably low, i.e. $0.005 per trade only! They sell their stocks on a pay-per-share basis, the minimum is $1 and there is no maximum limit. Whenever I buy less than six hundred shares, it is cheaper as opposed to buying more than two thousand shares, which usually cost me around $10. For orders that are of more than five thousand shares, it can cost approximately $25.
Sometimes I also like to invest in options, the commission of these is about $0.70 for each contract, there is an additional exchange fees also, but I think it is worth it. Regarding the commissions charged, I think that it is quite cheap. I have not come across any other online brokerage company that offered cheaper commission rates than this one and this is definitely an advantage strongly in its favor.
Although there has been a lot of complaints about the ‘hidden’ costs such as cancellation fee of $1.20 per order that is charged by Interactive Broker if you chose to cancel or modify your orders, I don’t find it a big issue because I am a careful investor. I think twice before placing the order for any investment products, hence there is no scope for the fuss of cancellation for me. Till date, I have never cancelled a single order of mine, so I don’t have a problem with these hidden charges which according to some others ‘bite’ terribly.
If asked, I would say that the best feature of Interactive Broker is the trading tools that are offered by it. I think it has made trading and investment a lot easier for me because these tools are very powerful and nothing like the ordinary tools available from other online brokers. Initially, I too had a problem with the tools and the trading platform, it was very difficult to get used to it on your own without any help. Thankfully, one of my friends who also happens to be on the clients list of Interactive Broker taught me how to use the trading tools properly. It took some time, but soon I was able to do it on my own without any help. I also downloaded a Trader Workstation, which is a stand-alone application in order to work faster. What I love most about the trading tools is the presence of dynamic streaming quotes, research services, charting services and the fully customizable trading platform. All the orders that I have placed are sent to the market directly, which saves a lot of my time.
The customer service of Interactive Broker is not very good and it is not one of the strongest points of this brokerage firm. I had experienced it myself and that is why I take extra precautions with all my dealings so that I do not have to call up the customer support for any help. I think that they need to work on their customer support and improve it because there are a number of clients who might get put off due to an inappropriate response or method of handling, resulting in loss of business for the firm.
As far as execution is concerned, Interactive Broker is very impressive and scores well on this point. All my deposits or withdrawals were executed or processed speedily. I think their execution speed and professionalism deserves to be praised, it is outstanding.
Although I have not mastered the art of Forex (I still have a long way to go) but I like the fact that they give a lot of options in terms of investment products to their customers. There is a wide spread of bonds, Exchange traded funds, options, futures and international stocks. I usually invest in stocks, options and a bit of currency transactions.
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