Interactive Brokers is one of the largest and oldest brokers, which offers access to American stock exchanges: NYSE, NASDAQ, AMEX and Pink Sheets (OTC – Bulletin Board).
This broker I recommend particularly to those who search for a reliable broker, have a larger capital for trading, and they care about great availability of playing on short positions. Interactive Brokers also provides a low level of commissions.
If you wanna open an account with Interactive Brokers – click here. Then if you need any help with opening – contact me.
This broker enables to trade on American stock exchanges:
1. NYSE
2. NASDAQ
3. AMEX
4. OTC-BB
5. Pink Sheets
It is the whole set of instruments that may interest traders interested in shares traded on American stock exchanges. It is worthwhile to mention that IB offers a very wide list of companies on which shorts are available. This increases the possibility of trading – beside longs, you have the option to trade on declines. It is particularly important in periods of corrections or reversal trend on the stock-market.
Amongst advantages of opening an account the particular attention deserves:
1. Very attractive level of charges – which was divided into FLAT and TIERED rate. Depending on chosen level of charges, traders may be entitled to significant discounts dependent on generated monthly scale. The maximum level of charged commissions is 0.005$ per share. Minimally, for particularly active traders, this level drops up to 0.001$ per share. I.e. with 1000 shares your maximum level of commission is 5$, and minimally you can pay only 1$.
How does it work?
FIXED rate – i.e. fixed commission rate. It is 0.005$/share (minimum 1$ per transaction, in which all payments are already included, ECN fee/rebates, etc.) or 0.5% of transaction value (in this case the stock exchange payments, ECN fee/rebates will be charged).
TIERED rate – i.e. commission rate, which depends on generated turnover. The broker determined five levels of generated turnover in monthly scale, which is conditional to the level of paid commission. In this case, apart commission, trader must pay additionally: ECN fee/rebates, stock exchange payments, regulatory fee and clearing fee. In case of Tiered rate – the commission is a maximum of 0.0035$/share.
I recommend you to fill out a questionnaire form in order to get help in selection of appropriate settling accounts.
2. ECN fee/rebates – depending on chosen commission form (Fixed or Tiered) the trader can fully use from available ECN on the trading platform. Use of full ECN range is particularly profitable for traders, who make a lot of orders with the limit (they add flow to the market), which results that receives from stock exchanges so-called rebates (credit). E.g. for ECN NASDAQ it is 2$ for every 1000 shares ordered with a flow to the market.
3. ETB list – list of companies, on which it is possible to trade on declines. At such a huge number of companies listed on American stock exchanges, the possibility of trading on declines also gives the trader much more opportunities to earn.
4. Safety of your funds – quite important issue that determines the security level of your funds in the broker. In case of Interactive Brokers account are protected by SIPC (Securities Investor Protection Corporation) up to 500 000$ (including cashes limit of 250 000$).
5. Large number of products – Broker has a really wide investment offer, which isn’t limited only to American stock exchanges.
6. Professional trading platform – Trader Workstation – one of the most professional trading platforms in the industry.
Amongst disadvantages that characterize the broker I will point out:
1. Pattern Day Trade Rule – that is requirement of 25 000$ deposit in case of accounts that meet the objectives of daytrading account.
2. Minimum deposit – 10 000$ in case of accounts which aren’t subject to PDT Rule regulations.
3. ADR fee – fee for trading on companies simultaneously listed on the French stock exchange – it is an extra charge of 0.01-0.03$ per share.
4. Minimal activity level in a month scale – Interactive Brokers rewards active traders. This can be recognized partly as an advantage, but it is certainly a disadvantage for beginners.
This payment amounts 10$. If the trader reach a commission level of minimally 30$ in a month scale – the payment is canceled.
5. Payments for stock market data – data non-pro (that is for individual traders) it is a cost of 10 $ per month. From this fee are exempted traders who make a minimum turnover which will generate 30$ of commission in a month scale.
Conclusions
I think that the account in Interactive Brokers is particularly good for traders, who have experience in trading. It results above all from all formal issues that affect opening an account, required level of deposit (particularly in case of daytraders).
In case of beginner traders, who conduct transaction on a smaller number of shares up to 1000 maximum 2000 shares to the position – this account is also an adequate solution. Of course, everything depends on your capital, which in case of Interactive Brokers is crucial – a minimum level of payment to account is 10 000$. When you plan day trading investments this capital rises to a level of 25 000$ (in shares or cash, which must be maintained, otherwise your account will be blocked and the payment will be required in order to invest). 25 000$ regards accounts under the regulations of PDT– trader contains (opens and closes in the same session) 4 or more transactions over 5 consecutive sessions of stock exchange.
I also recommend this account to traders who open a much higher position. The only solution is to open an account, which is based on a Tiered fee – i.e. fees dependent on generated turnover.
If you wanna open an account with Interactive Brokers – click here. Then if you need any help with opening – contact me.
