Best Online Stock Broker. Deciding to take the plunge and start investing is a pretty big choice in itself. But the next step is often almost as important – choosing a broker to handle all your investing.
There are a lot of misconceptions about brokers, both digital and brick-and-mortar. It’s generally not an exaggeration to say that online brokers generally provide a simpler, more user-friendly experience for new investors – as long as you find the right one.
The real key is figuring out exactly which brokerage service is best-suited to your level of skill, your approach to trading and the resources you have available.
Finding different options is never the challenge. There are dozens of online brokers available and a simple web search will turn up countless lists of services or sites designed to compare online brokers. Instead, new investors need to decide what they intend to base their choice upon. Choosing a stock broker it’s a difficult question to answer, much like choosing a bank or an insurance company. Luckily, we are here to help make this process easy.
Best Online Stock Broker for Stock Trading
Founded nearly 40 years ago, Interactive Brokers (IBKR) is known for its industry-leading commissions schedule, margin rates, and support for international trading. By presenting one universal portal through which clients can trade on more than 100 market centers in 24 different countries and in 22 currencies, and deal direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs from a single IB Universal Account. Access market data 24 hours a day and six days a week to stay connected to all global markets.
Why Trade Online with Interactive Brokers?
#1 in the Best for International Traders category, their breadth of product offering is unrivaled.
Lower Cost and Best Execution. Lower your costs to maximize your return.
Direct market access to stocks, options, futures, forex, bonds, ETFs and CFDs.
Access market data 24 hours a day and six days a week to stay connected to all global markets.
Convert currencies at market determined rates as low as 1/10 of a basis point, or create a position collateralized by a non-native currency.
Fund your account in multiple currencies. Trade assets denominated in multiple currencies from a single account.
Traders from North America, Europe, and Asia-Pacific сhoose for online trading Interactive Brokers.
Low commissions: It’s hard to beat the stock and exchange-traded funds commission structure at Interactive Brokers, which favors frequent, high-volume traders at just $0.005 cent — one-half of 1 cent — per share. There’s a $1 minimum trade commission and a 0.5% maximum, and exchange and regulatory fees are included. The Interactive Brokers also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay $0.002 cent or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan.
Traders looking to use margin will love the rates that Interactive Brokers offers; they’re extremely low. The maximum margin rate is the benchmark rate plus 1.5%. The broker charges a blended rate based on account balance. It has a calculator on its website to help investors quickly do the math based on their account balance.
Interactive Brokers offers access to a huge selection of products, from standard offerings of stocks, options, ETFs, mutual funds and bonds to precious metals, forex trading and futures. Access market data 24 hours a day and six days a week to stay connected to all global markets.
Desktop: their market maker-designed Trader Workstation (TWS) lets traders, investors and institutions execute online trading of stocks, options, futures, forex, bonds and funds on over 100 markets worldwide from a single account.
Web: IB WebTrader, their HTML-based online trading platform, is the perfect solution if you prefer an uncluttered, easy-to-learn trading interface but still want to use advanced trading features and tools.
Mobile: IB provides a family of mobile solutions that allows online trading from your IB account on the go from just about any iOS and Android mobile device.
Third Party Integration: Das Trader Pro, Sterling Trader Pro, RealTick.
Cash account, Margin account, IRAaccounts.
They offer a cash account which requires enough cash in the account to cover transaction plus commissions, and two types of margin accounts: Margin and Portfolio Margin. New customers must select an account type during the application process and can upgrade or downgrade their account type at any time.
A Portfolio Margin account can provide lower margin requirements than a Margin account. However, for a portfolio with concentrated risk, the requirements under Portfolio Margin may be greater than those under Margin, as the true economic risk behind the portfolio may not be adequately accounted for under the static Reg T calculations used for Margin accounts. Customers can compare their current Reg T margin requirements for their portfolio with those current projected under Portfolio Margin rules by clicking the Try PM button from the Account Window in Trader Workstation (demo or customer account).
They also offer an IRA Margin account, which allows you to immediately trade on your proceeds of sales rather than waiting for your sale to settle. You can trade assets in multiple currencies and trade limited option spread combinations. IRA margin accounts have certain restrictions compared to regular margin accounts and borrowing is never allowed in an IRA account. Futures trading in an IRA margin account is subject to substantially higher margin requirements than in a non-IRA margin account. Margin rates in an IRA margin account may meet or exceed three times the overnight futures margin requirement imposed in a non-IRA margin account.
Requirements and supported products for each of these accounts are detailed in the Account Types section on the Choosing and Configuring Your Account page on the website IB.
Margin has a different meaning for securities versus commodities. For securities, margin is the amount of cash a client borrows. For commodities, margin is the amount of cash a client must put up as collateral to support a futures contract.
Required Minimum Deposit
The following minimums are required to open an account:
Individual Accounts (unless listed below): USD 10,000 (or non-USD equivalent).
Trading Group Masters: USD 10,000 (or non-USD equivalent).
Broker Masters: USD 10,000 (or non-USD equivalent).
Indian residents trading with an IB India account: INR deposits only, equivalent to USD 2,000.
Indian residents trading with an IBLLC-US account: USD 5,000 (or non-USD equivalent).
IRAs: USD 5,000 (or non-USD equivalent).
Individuals age 25 or younger: USD 3,000 (or non-USD equivalent).
Advisor and Broker Clients: USD 5,000 (or non-USD equivalent).
To trade a margin account you must maintain at least USD 2,000 or non-USD equivalent. For details on margin requirements, see the Margin page on the website IB.
Pattern Day Traders have higher minimum requirements, which are defined in the Day Trading section of margin requirements.
Individual (employee) accounts linked to an EmployeeTrack account have no minimum balance requirement.
Financial Strength and Stability
Their strong capital position, conservative balance sheet and automated risk controls protect IB and their clients from large trading losses. Interactive Brokers Group (IBG LLC) equity capital exceeds $6 billion. 16.6% of IBG LLC is owned by the publicly traded company, Interactive Brokers Group, Inc. and the remaining 83.4% is owned by their employees and affiliates.
How They Handle Customer Assets
Customer money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of customers of IB. This protection (the SEC term is “reserve” and the CFTC term is “segregation”) is a core principle of securities and commodities brokerage. By properly segregating the customer’s assets, if no money or stock is borrowed and no futures positions are held by the customer, then the customer’s assets are available to be returned to the customer in the event of a default by or bankruptcy of the broker.
A portion of customer funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IB does not currently invest any customer money in money market funds.
As a practice, IB holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all customers.
Interactive Brokers LLC is a member NYSE – FINRA – SIPC and regulated by the US Securities and Exchange Commission and the Commodity Futures Trading Commission. Headquarters: One Pickwick Plaza, Greenwich, CT 06830 USA.