Interactive Brokers Review: Accounts, Account Opening Process and Safety Analysis

Interactive Brokers Overview

Headquartered in the U.S., Interactive Brokers (IBKR) is a Nasdaq-listed brokerage with over 40 years of history, known for pioneering global electronic trading. It offers commission-free trading for stocks and ETFs listed on U.S. exchanges. IBKR provides a wide range of global financial products, including stocks, bonds, options, futures, ETFs, mutual funds, indices, and CFDs, making it a popular choice for professional traders. In addition to low commission rates and cutting-edge technology integrated into its mobile and online platforms, IBKR offers an educational suite and access to 150 markets across 33 countries and 27 currencies.

With such a broad offering, you may find it overwhelming to decide where to start. But don't worry, we have outlined the key points to help you determine whether IBKR is the right choice for you. Let's explore the pros and cons of this online brokerage.

Advantages

• Highly competitive forex spreads: Major currency pair trades as low as 1/10th of a PIP, offering competitive entry prices and lower rates for active forex traders.
• Forex trading via smartphone: Trade forex on IB's award-winning platform with just a smartphone.
• Deep liquidity and real-time quotes from 17 of the worlds largest forex traders.
• Over 100 currency pairs available for trading.
• Professional forex trading tools.
• Low commission starting from $0 with no additional spreads, order fees, platform fees, or minimum account commissions.

Disadvantages

• Exchange, regulatory, and clearing fees.
• IBKR desktop version does not support Linux.
• The account opening process is complex.
• Fee structure is more suitable for large capital trades (recommended trade amount is at least a few thousand to tens of thousands of dollars).
• IBKR's advantages are not obvious for small capital clients.
• Multiple features and products, but the interface is complex.

Is Interactive Brokers Safe to Trade with?

One of the key concerns for investors is whether Interactive Brokers (IBKR) is safe and reliable. IBKR is not only strictly regulated but also provides investor protection and additional security measures, such as identity verification, to safeguard investor funds.

Regulatory Compliance

Additionally, IBKR adheres to strict regulations set by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These regulatory bodies ensure that IBKR operates in compliance with industry standards and maintains a secure environment for investors.

Investor Protection

To enhance investor security, Interactive Brokers (IBKR) goes beyond regulatory measures. The company is a member of the Securities Investor Protection Corporation (SIPC), which provides insurance coverage of up to $500,000 per client, including a cash claim limit of $250,000. This protection is crucial in the event of a brokerage firms insolvency.

Financial Stability of IBKR

IBKR maintains a strong financial position with over $15.2 billion in equity capital. Its financial strength, along with its decision to avoid high-risk investments such as foreign sovereign debt, ensures that IBKR remains one of the safest brokerage firms globally. Additionally, IBKR holds client assets in segregated accounts, ensuring they remain separate from the company's own liabilities.

Security Measures – Two-Factor Authentication (2FA) for Account Protection

To further secure accounts, IBKR implements Two-Factor Authentication (2FA), which helps prevent unauthorized access even if the primary password is compromised. Users can enable 2FA through either the IBKR mobile app or a physical security device.

• Mobile App: Requires users to enter a dynamic verification code upon login.
• Physical Security Device: Generates a unique, constantly changing password for each login attempt.

These measures effectively protect accounts from phishing attacks, keyloggers, and other hacking threats, ensuring a high level of security for IBKR users.

Account Types

Editor's Comment:

ThinkMarkets offers a variety of account types, including individual, joint, trust, IRA, and UGMA/UTMA accounts, catering to the needs of different investors. Individual accounts are suitable for personal investors, providing full control, while joint accounts are designed for two individuals to manage assets together, offering greater flexibility. IRA accounts are available for U.S. tax residents and provide tax advantages for retirement savings. UGMA/UTMA accounts are specifically designed for minors, allowing easy management of investments for underage individuals. Different accounts come with various margin options, offering significant flexibility, especially for active traders, with choices such as cash, Reg T, and portfolio margin.

How to open an Interactive Brokers (IBKR) account?

To open an account, follow these steps:

1. Click the “Open Account” button at the top right corner.
2. Select “Start Application” to begin.
3. Complete the registration by filling in the required details.

1. After creating the account, a verification email will be sent to your email address.

1. Log into your email and click the link from IBKR.
2. Log into your IBKR account to begin the account setup.

1. Make the appropriate selection. Use the image below for assistance.

1. If you are a Singaporean citizen, you can log in with your Singpass. (If you do not have a Singpass, you will need to manually fill in all the information required in Step 10 and Step 11.)

1. Make your selection based on your preferences. If you wish to trade stocks and bonds, choose “Securities.”

1. Fill in all the required information.

1. Fill in all the required information.

1. Fill in the “Source of Wealth” and base currency. (You can change the base currency in your account settings after your account is approved.)

1. These 3 security questions are designed to protect your account in case you lose your account password or for future verification purposes.

1. Confirm your phone number (this step is optional) and choose the relevant option that suits you.

1. Fill in the required information. Please note your declared investment experience, as certain products may not be available to you if you report minimal or no investment experience.

1. Confirm your tax residency details. Once verified, sign and select “Continue.”
2. Double-check the information you have provided in the previous steps. After reviewing, sign and click “Continue.” Your application will be processed.
3. Next, you will upload and submit the required documents to IBKR online.
4. Wait for IBKR to approve your application. If any documents are missing or incomplete, IBKR will request them.
5. Once your account is approved, you'll receive a confirmation email from IBKR. Congratulations!

Fees

Editor's Comment:

IBKR's fee structure is overall highly competitive, especially suited for high-frequency traders and investors who make large trades. For example, stock and ETF trading with IBKR Pro has a fee range of $0.0005 to $0.0035 per share, which is significantly lower than the fees of traditional brokers. The spreads in forex trading are also very tight, making it ideal for day traders. Commission-free ETFs and mutual funds provide additional flexibility for investors, particularly with a significant cost advantage.

However, for smaller-scale bond and mutual fund investors, IBKR's fees may seem relatively high, especially when trading smaller amounts, as it can result in a larger cost burden.

Trading Platform

Editor's Comment:

ThinkMarkets offers a diverse range of trading platforms, catering to traders of various levels and needs.

For beginners, IBKR Lite and IBKR GlobalTrader are ideal choices, providing a low-cost trading experience and supporting global stocks, ETFs, and options trading, making them perfect for small investments and learning how to trade.

For more experienced traders, Trader Workstation (TWS) and Mobile IBKR offer advanced features that help active traders adapt to complex market conditions, supporting diversified trading across 160 global markets. For professional users seeking customization, the IBKR API provides a powerful interface suitable for building personalized automated trading systems.

IBKR ForecastTrader allows users to engage in predictive trading based on global economic data and events, supporting advanced trading strategies.

Interactive Brokers (IBKR) Deposit & Withdrawal Guide

IBKR supports multiple deposit and withdrawal methods. Below is a detailed step-by-step guide.

How to Fund your Account?

IBKR offers multiple convenient and fast deposit methods, varying by region. You can also choose the currency you wish to trade in.

Key Takeaways:

• Fastest Method: Bank Wire – Funds available within one business day.
• Most Convenient: Direct ACH Transfer / Linked Bank Transfer – Simple online transfers, no fees.
• Low-Cost Option: ACH, Linked Bank, or Online Bill Pay – Typically free but slower than wire.
• Best for Multi-Currency Transfers: Wise Transfer – Converts to IBKR-supported currencies.
• Slowest Options: Check Deposits – Takes up to six business days.

Tip: Choose Bank Wire for urgent deposits, ACH or Linked Bank for ease of use, and Wise for multi-currency funding.

How to Deposit Money from Interactive Brokers (IBKR) ?

1. Log in to Your IBKR Account
1. Recommended: Desktop (Web) platform for best functionality.
2. Mobile app supports deposits but does not allow withdrawals.
2. Access the Transfer & Payment Section
1. Navigate to “Transfer & Pay” > “Transfer Funds” and select “Deposit”.
3. Select Your Deposit Method
1. Bank Wire Transfer (Recommended for most regions).
2. Other options: ACH Transfer (US), SEPA Transfer (Europe), etc..
4. Enter Deposit Details
1. Select your deposit currency (e.g., USD, SGD, AUD, EUR).
2. Enter the deposit amount and confirm.
5. Complete the Bank Transfer
1. Use your banking platform to transfer funds according to IBKR's instructions.
2. Important: Include the IBKR deposit reference code to ensure proper crediting.
6. Wait for Funds to Arrive
1. Deposits typically take 1-2 business days to be credited.
2. You can track the status under Account History.

How to Withdraw Funds from Interactive Brokers (IBKR) ?

1. Go to the Transfer & Payment Section
1. Navigate to “Transfer & Pay” > “Transfer Funds” and select “Withdraw”.
2. Enter Withdrawal Details
1. Choose your withdrawal method (Wire Transfer, ACH, SEPA, etc.).
2. Enter your bank account details (must match the IBKR account holders name).
3. Specify the withdrawal amount and confirm.
3. Submit Your Withdrawal Request
1. IBKR typically processes withdrawals within 1-3 business days, depending on the bank.