Monday, September 27, 2010

Interactive Brokers

About Interactive Brokers
Interactive Brokers. The company’s initial operations started in 1977 by Thomas Peterffy, a former computer programmer who purchased a seat on the American Stock Exchange and founded T.P. & Co. in 1978. Since then, the company has engaged in various stock, futures and bonds exchanges worldwide. Interactive Brokers went public on the Nasdaq stock exchange in 2007, nearly 30 years after Peterffy began his brokerage firm. The company’s ticker symbol is “IBKR”.
Contact Information at a Glance:
  • Phone Number: 877-442-2757 (US Toll-free)
  • E-mail Support:
  • Online Support/Live Chat: Available to existing customers via Account Management
Account Funding Information
Interactive Brokers has several options for both depositing and withdrawing account funds. These options currently include:
  • Wire Transfer
  • Checks denominated in U.S. funds
  • Online Bill Payment Check
  • U.S. Automated Clearing House
These methods take at least 4 business days to arrive in your account. With some deposit methods, you cannot withdraw your funds for 3 business days after a deposit. Note that Interactive Brokers does not accept credit cards for depositing funds.
Minimum Deposit Amounts
The minimum deposit amount for a live account at Interactive Brokers varies, depending on who opens an account. Individuals that are 21 years of age or younger can open an account, provided that they can meet a $3,000 minimum deposit. Advisor and broker clients are required to deposit a minimum of $5,000, while all other individuals are required to deposit at least $10,000. Those who wish to trade a margin account must deposit at least $2,000.
These minimum deposit mounts are steep compared to other online brokers. Beginners who want to start trading online but don’t want to deposit a lot of money into their account may be better served elsewhere. It should also be noted that accounts that show no balance for 45 days or more are usually closed, requiring a minimum deposit of $10,000 to reopen.
Demo and Live Account Software
Interactive Brokers uses the Trader Workstation (TWS) platform in order to facilitate trading. This platform is a Java-based application with an open application programming interface (API). This means that third party applications can be combined with TWS in order to improve the platform’s overall functionality and speed. You can also use the TWS platform to trade in multiple financial markets, while taking advantage of Interactive Brokers’ fast data feed. New traders may be intimidated at first by TWS, since it does not come with step by step instructions like some other trading platforms, but it is relatively easy to get the hang of.

For those who wish to trade on the go, the MobileTrader platform is available for smartphones and PDAs. There is also another platform based on TWS designed for developers and papertraders. The PaperTrader platform can not only be used to experiment with trading at no cost within a virtual marketplace, but developers can also use this platform to test third-party applications designed for TWS. A free demo of the TWS platform is available to those who want to test drive it before opening an account.
Commissions and Leverage Limits
Trades involving stocks, ETFs and warrants only cost $0.01 per share, with a $1.00 minimum per order. Trades involving options are priced according to monthly contract tiers. “Smart Routed” orders below 10,000 monthly contracts cost $0.70 per contract, with the cost per contract reduced as the number of monthly contracts rises. A minimum of $1.00 per order is required. Direct Routed orders cost $1.75 per contract, with a $1.75 minimum per order. Interactive Brokers also offers trailing stop orders, with a detailed explanation of how these orders work and the benefit they offer to brokers.
Website Navigation and Account Setup
Navigating the website is relatively easy, and the website itself features vast amounts of important information located within reach of the browser. The website also has an options trading desk available for those who require the assistance of experienced brokers, especially when it comes to large or complex trading orders. Customer service via email, telephone and live chat is readily available, although it lacks the 24 hour, 7 days a week service that other online brokers offer.

Applications are available for individuals and those who wish to act as an advisor for friends and family. The application process is performed online, but paper documents may be required in some cases. Fully completed applications are normally reviewed within 48 hours of completion. The minimum age to open a cash account is 18 years of age, while those who wish to open a margin account must be 21 years of age or older.
Bottom Line
Interactive Brokers affords full access to a variety of exchanges, allowing traders to engage in several markets using one single trading platform. However, the entire process may be daunting to beginners and the minimum deposit requirements may keep those who are limited in resources away from this particular brokerage.
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