Interactive Brokers is a large financial trading company that has more than 39 years of experience in the brokerage industry; thereby making it one of the most experienced and established commercial brokers on the planet. Interactive Brokers started its brokerage business in 1977 and is primarily run out of its headquarters in Greenwich, Connecticut. The broker manages close to 1000 employees across its establishments situated in several parts of the world, including the UK, Switzerland, Canada, Hong Kong, Hungary, Russia, Japan, China, India, and Estonia. Therefore, Interactive Brokers regulation is presided over by the CFTC, the NFA, the SEC, the FCA, the ASIC, and the FINRA, among other regulatory agencies that are responsible for regulating financial companies in their particular geographic location.
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Trading instruments, or securities, are the various market types you can trade. Examples include CFDs, stocks, currencies, metals, and commodity futures.
Type of Brokers
Market Maker, DMA
Platform for trading Forex, analysing financial markets and using expert advisors.
Multi-asset platform for trading Forex and CFDs.
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Interactive Brokers manages a cash equity of close to $5 billion and offers different financial products such as stocks, ETFs, indices, options, futures, CFDs, US treasuries, bonds, Forex, precious metals, commodities, and mutual funds. Interactive Brokers is not to be confused with a regular Forex broker that operates entirely through an online platform. Instead, Interactive Brokers is an established company that is answerable to different regulatory agencies with regards to their brokerage practices and is held accountable for all of the transactions performed on the Interactive Brokers platform. Interactive Brokers is one of the very few companies that accept US traders along with traders from different parts of the world without any reservations. The company can accommodate all types of investors due to their regulatory licenses, and IB’s presence across Americas, Europe, Africa, and the Asia-Pacific allows it to promote its services to a wider audience than some of the modern brokers operating in the retail trading market. IB is currently estimated to be transacting more than 1 million orders per day through its representative brokers, introducing brokers, and affiliates.
What Are The Interactive Brokers Account Opening Procedures?
First of all, Interactive Brokers is a large financial company that follows the traditional brokerage model, which is designed to offer unprecedented market access to investors to trade the market as it is supposed to be traded. Unlike Forex brokers that offer a low minimum deposit option and a higher leverage, IB only offers a trading account for an initial deposit of $5000. The broker relaxes the minimum deposit requirements up to a minimum of $2000 for some countries, but in most cases, traders will be required to deposit at least $5000 for trading the markets. The CFTC limits the maximum Interactive Brokers leverage to 1:50, but the broker is known to increase the margin requirements for individual currency pairs to accommodate the volatility in the currency pair. IB offers direct market access for its traders in place of a market maker platform, which is the most popular option in the market. Since the Direct Market Access (DMA) platform works in a similar fashion to the ECN protocol, traders can enjoy tight Interactive Brokers spreads and faster execution of orders at interbank rates. The broker passes every order directly to the interbank liquidity provider, and all prices are transparent in nature without any intervention from the company or its employees. The commission for each trade can range from 0.08 to 0.20 basis points of the lots traded, which is determined according to the market conditions and the size of the order. Interactive Brokers has made it convenient for their traders to access all the financial products through a single trading account, which ultimately helps traders to choose a market according to their specific requirements. The safety of the broker is another reason that helps traders to enjoy complete peace of mind while depositing large sums of money, which seems to be the most common cause for anxiety among modern day traders. However, traders should consider the implications of opening an account, as there is an inactivity fee for maintaining an account if the trader does not meet the minimum monthly commissions’ quota. The account maintenance cost is one of the primary drawbacks of an Interactive Brokers account, since; some traders might choose to trade in smaller lot sizes or might not trade as frequently as other traders. Failure to meet the specified conditions does lead to inactivity fees, which can vary from $2 to $2000, according to the nature of trading. The Interactive Brokers trading platform is also designed in-house to offer access to the different markets through a single trading account. Ordinary traders that are familiar with the existing Forex platforms will have to face a steep learning curve to understand the various features and functionalities of the IB Trader Workstation. Traders will have to spend quite a lot of time to get familiar with the platform before actually starting to trade. Interactive Brokers mobile traders are also provided the mobile version of the IB Trader interface, which is individually customized for the iOS and Android devices. The company has put particular emphasis on developing the iOS Interactive Brokers apps, which have several advanced features such as security, in-depth chart and market information. Some of these functions are indeed missing from the Android apps, which suggest that IB is looking to capitalize only on the popularity of the Apple products. Interactive Brokers is an international Forex broker that boasts of lower disparities between winning and losing accounts. Therefore, IB sees itself as a market leader regarding client satisfaction and customer retention, which is consistently proved by the significant number of positive reviews that are left by existing Interactive Brokers clients. The trading conditions may seem out of reach for smaller retail traders, but the company does not target smaller traders due to the risk of losses due to high leveraged trading. Hence, if you are looking for more relaxed trading rules and lower entry costs, other broker options in the market may be able to fit your needs.