After using Interactive Brokers for a number of years, I feel that it’s a good a time to write a review on the popular online discount brokerage.  In late 2014, IB finally delivered on their promise to offer RRSPs and TFSAs to Canadians.  Although it comes with a $50/year maintenance fee, the low trading fees will be attractive to many investors.

2020 update: While IB are going strong, i personally still prefer using Questrade. IB is more geared towards daily trading, offering leverages and low commissions for forex trading. However, Questrade is much better if, like me, you prefer passive income through ETF trading instead. You can read my Questrade review or visit their site before deciding which company is the better solution for you.

Trading Platform(s):

  • The TWS software trading platform is extremely powerful, but a bit tricky to use. Once you get accustomed to the GUI, you will wonder how you ever traded without it. They have demo software on their site so that you can give it a test run before you commit.
  • They also have a web based trading platform which is not as powerful but extremely user friendly. The web based platform is convenient when away from your main computer.

Low Trading Commissions

  • $1USD/200 shares (US), $0.005 / share > 200 shares (0.05% max)
  • $1CAD/100 shares (CAD), $0.01/share > 100 shares (0.05% max)
  • Example: 400 CAD shares @ $5/share, commissions cost: 400 x 0.01 = $4, or $5 x 400 = $2000 x 0.05% = $10, whichever is less.
  • Commissions can get expensive if trading penny stocks.

Low Margin Rates

  • Prime – 0.23 on balances < = $115,000
  • Prime – 0.73 on balances > $115,000
  • Prime – 1.23 on balances >= $1,150,000 (big wigs)

Low Foreign Exchange Rates:

  • Where the big banks will charge up to a 1.25% premium (each way) on top of the exchange rate, Interactive Brokers charges the going exchange rate x 1 basis point.
  • 1 basis point = 0.0001 (0.01%) with a min. commission of $2.50USD.

Real time Quotes

  • NASDAQ quotes are free providing that you trade at least $30USD/mo worth of commissions. Otherwise they are $10/mo, level II quotes are $20/month
  • TSX I quotes are $10/mo, level II quotes are $14.50/mo.
  • You can find the rest of the data fees here.
  • I personally use my bank brokerage and Questrade for my real time quotes.

Fees

  • Min commissions are $10USD/mo. If you don’t trade at least this amount per month, they will take the difference from your account.
  • EFT deposits are FREE, along with the first monthly withdrawal. Fees apply after first withdrawal.
  • $50/year maintenance fee for RRSP/TFSA.

Opening an Account

  • Requires $10,000 initial deposit.
  • Fairly lengthy initial paper work.
  • Deposits take 5 days to get approved (through EFT).

Who is this brokerage suited for?

  • Active traders looking to reduce their trading commissions.
  • Not suited for penny stock traders as there are cheaper alternatives than Interactive brokers. For example, 8000 shares of a stock @ $0.50/share will cost 8000 x $0.50 = $4000 x 0.05% = $20 in commission + ECN fee on venture exchange.
  • You could make the same trade above with E-Trade or CIBC for $9.95 or $6.95 respectively.
  • Suited for investors who pay more than $120USD / year in commissions which works out to be around 4 trades / year with the big banks.

Conclusions:

  • I personally use and recommend Interactive Brokers for active traders as it will save most traders a bundle of money in commissions. The powerful interface along with fast execution times make it an extremely competitive brokerage for traders.
  • This platform is not only for traders, long term investors who spend more than $120USD/year in commissions should also consider this brokerage.
  • If you are interested in stock trading, check out some of the free stock trading tools that I use.

106 Comments

  1. cebolao on January 12, 2008 at 8:25 pm

    where is the extra 10 coming from?

  2. Jacky on January 13, 2008 at 6:31 pm

    $10 min charges:
    -> comission or usage (subscritpion data) less than $10, u will be charge the diff

    $10 (the other one):
    -> your account (stocks + cash) is less than USD$2,000

    i have checked with them, subscribing the data is fine.

  3. […] thinkDesktop – a software based trading platform, I assume that it's the same idea as Interactive Brokers. […]

  4. Tim on February 15, 2008 at 12:06 am

    I was searching the internet to see if I could do exactly what you were talking about. Put 10k in a Ib account then pull out down to 4k or because of loss of loss of interest on that 10k they require. The reason I want to possibly return to Ib is the other brokerage accounts won’t let me sell puts at all with my income level (under 25k a year). I cannot even sell cash secured puts or naked puts. You have to have like a 100k in your brokerage account and make over 50k a year to sell naked puts at mb or tradeking, even if you have the cash to cover it grr. I would like to double check with you guys. Are you guys allowed to sell puts at Ib? are there any income requirements that you had to fill out or minimums to sell puts?

    Any help appreciated great discussion!

  5. Steve on March 16, 2008 at 4:29 am

    How do they know what your income is? Just change your profile to say you make $100K+. It’s not like a casino where if you’re found to be under 18, they can keep your winnings…

  6. jazzy on April 4, 2008 at 11:17 pm

    I am closing my IB account, or maybe I will just keep it for US stocks and currency trades.

    They upped the commish for Can stocks. If you trade large quantities of can penny stox, you`re almost better off with investorline or the likes of, comish is sometimes higher now on IB when you add in exchange and other fees much higher than comish on a penny stock. Ask how much comish to buy 10000 shares of XYZ at 30 cents – should be 0.5% of 3000$, e.g. 15, then amother 20$ of fees, versus 9.99 at IL or others. IL has quotes and frankly, IB is very hard to use. I am not a freaking accountant or internal auditor, so the poorly designed interface, although providing every single detail and metric a beancounter could ever imagine, simply has a whole bunch of useless data for me.

    Note: webtrader does not work well (at least not for me) if you work from an office with a picky firewall. Now they have a mobile site access is very basic but fine, can be used on a phone screen, also supports secureid,

    Pros: USD comish dirt cheap on stox, smart routing, great forex, great eft and wire capabilities, no paper at all, immediate execution,

    Cons: maintenance fee $10/m (20 if your account falls below 2K), no quotes unless you pay, terrible user interfaces you may hate unless you`re a closet back office type, not user friendly, web trader very limited functionality, no research whatsoever (can get fundies though), brutal customer service dudes in canada (montreal), statements, what statements? (like reading greek), no simple trading summary, Access mostly closed down all weekends, tax forms download may be innacurate or missing in some cases

    Basically this is like giving you a DOS based word processor back in those days where everything was user configurable and the look and feel sucked. If you like using the F keys with wordperfect, you’ll love IB. The possibilities are endless for the bookkeeper or back officer in all of us!

    NOTE: make sure you capture all statements and tax forms before you CLOSE your account. After the fact you won’t have much time. Remember the only copies are the ones you download onto your machine.

  7. cebolao on April 5, 2008 at 9:20 pm

    Jazzy care to elaborate on the fees?
    So far for most of my trades the commission has been always 2 bucks or even just 1 dollar. I cant really complain about that, and as for penny stocks, as far as i know they are one of the cheapest on the market. If you have a link to their fees page that would be great, never bothered looking for it.

    As for the maintanance, i was wondering if lets say i use only 6 bucks on commission fees, are they just gonna charge 10? or 10 + 6 so 16? just wanna be sure.

  8. FrugalTrader on April 5, 2008 at 9:29 pm

    cebolao, it really depends on the volume of shares that you trade. If you’re trading 100-200 shares/trade, then IB will be the cheapest brokerage in Canada by far. However, if you’re trading penny stocks, then other brokerages that have “unlimited shares” type trades would be cheaper.

    With regards to the montly fee, if you trade $4 worth in a month, they will charge you an extra $6 at the end of the month.

  9. cebolao on April 5, 2008 at 9:35 pm

    thanks frugal
    i guess thats fair enough,
    I just didnt get the “amother 20$ of fees” that Jazzy was talking about.

  10. Bruno D on April 7, 2008 at 12:44 pm

    An important note: you don’t NEED to pay the data fees, as you can trade without having the real time quotes.

    For example, I don’t pay for TSX Venture real time quotes at IB, but I still did a few trades on a few occasions without any problem. Their software gives you a warning that it doesn’t recommend doing that (duh obviously), but for a small account and since I have access to another broker with real time quotes on TSXV it’s easy to get the quotes. Unless you do daytrading / big size orders you can do without the real time quote fees at IB, if you’re on a budget / want to save on costs. Though when you do that you won’t be able to see any quote price for whatever stocks you want to watch on these markets you don’t have the data for (they still show up in your watchlists but you see all blanks for price, open high low close etc).

    I’ve been with them for about 2 years, and I really praise their low fees. I mostly trade options on US stocks, typically it costs me about 1$ and rarely more than 2$. But IB does NO HAND HOLDING, meaning they are typically quite blunt and customer service will only answer exactly your question without going out of their way. Typical answer is YES / NO, lol. And then you need to ask another question for details / explanations. But keep in mind they handle much larger accounts than yours.

    I also like the fact I can get futures quotes on IB for no extra fee (part of the package for US stocks). So I can get real time quotes on oil, gold, forex.

    Another important point which you might miss at first is that IB charges an order cancellation fee. For example, you put in a good till cancelled order, but then you change your mind and want to cancel it. I think it’s something like 4$ or so. I’ve got a lot of these at first until I figured out when you put an order leave it at the default “day order” and the order expires at the end of the day, without any extra fee. You can chance the price of the order at any time, that also doesn’t cost anything. So when I’ve put in an order I want to cancel I simply change the price to something outside of the range to make sure it doesn’t execute and wait for it to cancel at the end of the day. I also never use good till canceled, I use good till date and specify a date explicitely (so again the order will expire by itself).

    Also their software is kind of crappy, but it works and does the job. Just don’t expect to do a whole lot with it, like doing T.A. with charts for example. Their charts suck. I signed up with StockCharts instead, 7$ per month is reasonable. But you can do without that too, or still use their charts for most part, just that it’s slow and unreliable.

    I definitely recommend them for folks who want super cheap commissions, don’t mind the “no hand holding” factor but keep in mind the few gotchas about penny stocks and stuff.

    Bottom line is run through their fees page and write down a few scenarios of what your typical trades are. For me it was a big saving compared to my other broker (Disnat).

  11. cebolao on April 7, 2008 at 2:00 pm

    Wow bruno, thanks lots for the tips, had no idea that IB charged 4 bucks for cancelled orders, god knows how many i have used, and i still didnt know. I guess i better go check.

  12. Bryan on April 7, 2008 at 9:02 pm

    IB is the best by far.

    If you don’t know what you’re doing, then by all means, stay away from it. You’re just clogging up customer service with your stupid questions.

  13. Bruno D on April 7, 2008 at 11:59 pm

    cebolao, take a look at your activity statements, there is a section in there where you will see your costs for market data fees, cancel order fees, etc.

    Just to clarify though a cancelled order is an order you hit “transmit” already. There’s no penalty for preparing an order but cancelling it before it’s transmitted (duh) ;-)

  14. Steve on April 9, 2008 at 5:00 pm

    That would be incorrect. Modifing an order by changing the limit price WILL incur a cancelation fee. Not sure why you would say this. I think you’re confused by the fact that you get a credit back on trades after the modify/cancellation. For example You have a Smart order for 10 contracts that happens to go through ISE and then change the limit order; you would be charged the $1.50 cancellation fee, but you would be credited UP to $0.25 a contract or the full $1.50. Depending on what exchange and how many contracts you’re doing, your credit will not always match the cancellation fee though.

    By the way, When moving to IB from other brokers, This (unfamiliar for me) cancellation charge was a bit intimidating, but it turns out to be a non issue. The most you will ever be charged for a cancellation order is $1.50, often less and if you measure it by contract it is even more insignificant. The Commission savings you get with IB over other brokers simply overwhelms the cancellation charge. So (IMHO) I would not let cancellation charges be a deciding factor if deciding whether or not to transfer to IB.

    Disclaimer: If you’re busy doing Butterfly spreads on just one contract, I guess the cancellation fees can start racking up, but I still think for most traders, the cancellation fee is no big deal.)

  15. jazzy on April 9, 2008 at 11:51 pm

    I just reviewed my 2007 activity. I have had numerous cancels on gtc stocks orders, I see absolutely no cancel fees under Other Fees or anywhere else.

  16. Bruno D on April 13, 2008 at 2:44 pm

    @ Steve:

    Gee I guess you’re right. Though looking at a few of my statements I see so little of these cancellation fees that I wonder howcome I don’t have more of them. Anyway, I just didn’t notice I guess.

    But then it goes to prove your other point, which is that yes the fees are not meaningful when you look at the overall package. In my case I only get 3-4 of these fees on an average of maybe 30 transactions per month.

  17. gordie on April 15, 2008 at 10:07 am

    Does anyone trade options on IB? I have been using Questrade but they do not have options strategies any longer since losing Cybertrader. You now must call it in and pay a broker fee for the transaction.

  18. Jos on May 4, 2008 at 9:17 am

    IB is a really AMAZING Broker. Simply access to much international exchanges arround the world. Simply forget other US or Euro brokers which only focus mainly on domestic exchanges.

    IB is really GREAT for all people which want (potential) access most markets and which don’t want to pay for things they don’t need such as market feeds, research, etc. etc.

    So: DEEP MARKET ACCESS FOR LOW PRICES.

  19. JJVA on May 4, 2008 at 9:55 am

    I’ve been an IB account holder for a number of years and have only a few complaints. Their stock trading fees are generally far less for me than what I would pay other discount brokers, UNLESS my trade if for thousands of shares. Then the formula IB used raises the fee to a level above some other brokers. However, generally I pay only a dollar or two or three per trade.

    IB’s best feature for me is its extremely competitive margin interest rates. No one else comes close, to my knowledge.

    A couple of complaints:

    I use Quicken to track my finances. IB used to let you download into my Quicken account up to 15 days of data with a few clicks. Now, if I don’t wait until the next month and then download an entire month of data at a time, I have to go through the download process for each and every day, separately. A real pain. Why the change to the worse?

    IB takes FOREVER to credit deposits into your account, even ACH deposits take days. Why?

    IB rejected check deposits from my on a joint account I hold with my spouse. IB claims these checks were “third party” checks. How could they be “third party” when I was a joint account holder? No explanation was forthcoming. I asked in writing and was told simply that “that’s what they were told.” I can’t see opening a separate non-joint bank account just to make deposits in my IB account. Inexplicably, IB will accept an ACH deposit from the same joint account from which it won’t accept a hand written check. Why?

    IB restricts ACH deposits to $100,000 per 7 working days. ETRADE allows $100,000 per day. Why IB is so tight on this is a mystery to me.

  20. JTT on May 12, 2008 at 12:29 pm

    I have been with IB for years and I think Bruno and Steve hit the nail on the head. I specially agree with them on the irrelevance of CXL fees. Don’t lose sight of the big picture. If cancellations are your main concern, you shouldn’t be trading at all, anywhere.

    You also must look at the grand balance. There are brokers who offer sexy gimmicks but how they are on balance? How are their fees? Coverage? Speed of execution? IB could and should improve their coverage of Bulletin Board stocks n the U.S. and TSX Venture stocks in Toronto.

    I go through waves of activity but generally do 10 – 20 trades a day and IB cannot be beaten for my style.

  21. MoneySheep on May 25, 2008 at 6:14 pm

    For those who use IB, does any one have experience of using IB as forex instead of the banks. For example, 1) initiate ACH from IB to deposit CAD. 2) Forex CAD to USD. 3) Then ACH from IB to withdraw the USD to big bank USD account.

    • FrugalTrader on May 25, 2008 at 8:15 pm

      Hey moneysheep, yes you can do that providing that you have both a regular bank account and usd bank account connected to your IB account. That is actually one way to get extremely cheap forex conversion.

  22. cebolao on May 26, 2008 at 4:45 am

    hey frugal, correct me if I am wrong, but dont you need to wait 60 days before you can actually withdraw the money?
    IE if you did CAN to US, you have to wait 60 days before you can withdraw US.??

  23. jim on May 31, 2008 at 7:40 am

    cebolao, the 60 day waiting period is for non originating bank accts. As stated on their site (under deposits & transfer):

    “If funds are withdrawn to a bank other than the originating bank/instruction, a 60-business-day withdrawal hold period will be applied.”

    I would like to register for IB but I am a bit worried about the EFTs.

    Anyone have any bad experiences with this? it appears like they can randomly go into my bank account and withdraw money

    thanks for any input

  24. rae on July 15, 2008 at 2:37 pm

    how safe is one’s money, when deposited with Interactive brokers. Could they go belly up?
    thanks
    RAE

    • FrugalTrader on July 15, 2008 at 3:43 pm

      Hi Rae, Interactive Brokers is a member if CIPF which will insure your investment account up to $1million dollars incase they go bankrupt.

  25. […] of the more trader friendly discount brokerages, like Interactive Brokers, have margin rates below prime which makes it an ideal choice for leveraged equity […]

  26. t-bone on August 22, 2008 at 6:43 pm

    I’ve yet to figure out exactly how IB works. I would want to trade primarily in US stocks. Would I set up my acct in USD or CAD? If I set it up in CAD am I able to purchase US stocks?(without being on margin)

  27. cebolao on August 22, 2008 at 7:29 pm

    t-bone,

    the answer is no. You can either have a CAN account or a US accound. Only one currency under 1 account. Not sure if you can have 2 accounts under 1 name. ( if anyone can answer that, it would be great)

    If you wanna purchase stocks demoninated in currency other than you account default, you will have to do it on marging, and thus paying a interest on whatever amount you are on margin at the end of the day.

    To put it simple: you got CAN$10,000 in your CAN account. You buy US$10,000 of stocks and hold it for a year. You will be paying interest on that US$10,000 regardless the fact that you have 10,000 canadian just lying there doing nothing

  28. FrugalTrader on August 22, 2008 at 9:45 pm

    t-bone, if you are Canadian, then setup interactive brokers with Canadian currency. From there, you can use the FOREX to convert your CAD to USD with which you can trade with. Alternatively, you can keep your CAD and trade USD with margin thus eliminating currency risk but now with interest exposure.

  29. Ingar on September 11, 2008 at 4:47 pm

    Today I finally closed my IB account after 2 years of having IB chip away at my account equity and telling me “too bad”. I also filed a compliant with the NFA regarding IB’s order execution practices, in particular IB’s failure to execute stop loss and stop limit orders on overnight forex trades. This has happened at least 4 times since I opened the account. In addition, there is no information in the TWS manual which explains how to “zero” your currencies back to your base currency. Even though you’ve closed your FX spot positions and no open positions are displayed in your portfolio page, IB somehow automatically opens currency conversions (using IDEAL) at a later date. If you don’t monitor your forex account at least once a day, you can lose at lot of money. Please make sure you fully understand IB’s forex trading practices before placing any FX trades.

    • Ahmed on September 25, 2017 at 2:20 pm

      I totally agree with you. I lost a lot of money because there are huge confusions regarding how to “zero” your currencies back to your base currency. It is very confusing because no open positions are displayed in your portfolio page. It is really big trap !! be careful.

  30. tws user on September 12, 2008 at 12:22 am

    Ingar, how about this one…
    http://www.interactivebrokers.com/en/software/tws/usersguidebook/realtimeactivitymonitoring/view_fx_portfolio_values.htm

    or this one…
    http://www.interactivebrokers.com/en/software/tws/usersguidebook/institutionalservices/market_value.htm

    or the following explanation…
    “Fill/trigger outside RTH – When displayed, checking this option allows orders the flexibility to fill (and/or trigger in the case of stop and other trigger orders) both during regular hours and outside of regular trading hours.”

    which is on this page…
    http://www.interactivebrokers.com/en/software/tws/usersguidebook/ordertypes/time_in_force_for_orders.htm

    all 3 found with a simple keyword search in the user’s guide…

  31. Ingar on September 16, 2008 at 2:04 pm

    TWS User, thanks for the follow-up and sending me those “help” links. Unfortunately the links do not explain how to convert foreign currencies back to your base currency. For example, I have a $900 USD credit in my account and would like to close the position in my base currency, Canadian dollars. The process for doing this is to sell 900 USD.CAD on IDEAL. Once the order is accepted, you need to open your account window, go to “FX Portfolio”, then right click on the contract (in this case it would be USD.CAD -900), scroll down to “Adjust Position Or Average Price”, then manually change the position field to “0”. I found that out after being kept on hold for 15 minutes waiting to speak to an IB Canada rep.
    As for the failure to execute stop orders, of course the duration is “GTC”… the point was that IB Canada has acknowledged receiving my transmitted stop loss order but, for various reasons, failed to execute the order. Fast market, has come up several times even though my stop price would be reached at 1:15 am, the position would still be open at 7:00 am… much to my astonishment.
    I do appreciate your attempt to help me but since my previous comment I have experienced more suspicious trade activity, including opening positions on my account around rollover time (just after midnight). I have started keeping a print screen journal of my portfolio and account which clearly shows the time and date, and can prove that I did not have any open positions or limit orders in effect when IB opened these positions ( 2 in total) which cost me an additional $2,020 CAD. In fact, Carlo the IB rep said that there were certain inconsistencies with the trades and would call me back… of course there was no call back. I filed a complaint with the CFTC who responded by stating that IB Canada is not registered with the CFTC and suggested I seek arbitration through the NFA. Yesterday I began the process by filing a second complaint and intend on initiating arbitration against IB Canada.
    On Sep 11-08, I also instructed IB Canada to close my account and transfer the remaining account equity back to my bank.

  32. Stat on October 4, 2008 at 12:24 am

    I don’t mean any disrespect guys, but I read through a lot of these posts and it seems to me a lot of you are amateur traders (like me!). When I tried to open an account, it actually refused me because of lack of experience. I have been trading on and off for the past 10 years!!! Most of you seem to be fresh blood though…. I am not opening an account with them at this point because I figure if they put such restrictions, it is because they want to tailor their offer to the needs of specific client types. That means there will be less for me here simply because they aim at another sector of clients.

  33. cannon_fodder on October 4, 2008 at 12:44 am

    Stat,

    For me, I have bought my own stocks for almost 30 years. The IB interface and lack of user friendliness was hard to get used to at first but now I’m quite comfortable. It is not what I would have chosen except that their margin rates are the best that I could find.

  34. Fred on November 25, 2008 at 4:07 pm

    Tried IB for about a year and a half. My recommendation is to avoid them like the plague. Here’s why:

    1. Live market data feed (TSX-V) is unreliable. At times, I would go on for a good month before it would work again. And they would not refund my money.
    2. There used to be unlimited levels for level 2 data. Then one day, they limited it to 5 on both the ask and bid sides. They claim that it was a gift from them to offer unlimited levels yet it is mentioned nowhere on there website.
    3.Generally bad helpdesk. There were a few good helpdesk technicians that were very responsive. However, anything complicated which gets escalated take forever to resolve. I guess it’s just shitty 2nd tier support.
    3. They violate their terms of service whenever they please. Eg. changing the fee schedule without giving the allotted notice time as mentioned in the contracts. I made so much fuss about it that they escalated my case to their top legal guy. I explained to him that the two weeks isn’t enough time for me to move my money away from IB. Basically, he told me off and said that since I wasn’t a major customer, they would not care.

    Despite these cons, there were some positives:
    1. love the worksheet and how I could see how my portfolio is doing at a glance.
    2. customization ability of their trader workstation.

    But these positives were greatly overshadowed by the many problems I have had with this broker. AVOID.

  35. Zack on January 27, 2009 at 12:44 am

    Hi there,
    I am in Canada. Thinking about moving accounts from TradeFreedom to IB or TDW.

    At this moment looking at trading platform and TWS looks like it has everything you can imagine, but because of that very, very complicated. Is that right or just (bad) first impression?

    TF and TDW share same kind of platform, different names though.

    Zack

  36. bman on February 12, 2009 at 9:40 pm

    I was thinking of changing from TD to either Qtrade or IB. The main problem I had with TD is they abruptly reduced the margin loan value on my stocks from 70% to 25% even though both stocks were well above 5$. They said something like they had low volume and were volatile even though both had a beta of only around 1.5 and traded more than 2% of the float per day. You can say what you want about bad service and computer glitches but at least Qtrade isn’t arbitrarily droping the margin loan percentage by a huge factor for no particular reason and putting their customers into incredibly difficult margin calls. TD is the worst broker now in my opinion for people that use a margin account. I’m willing to put up with a few computer and service glitches so I won’t be worried about TD pulling the rug out from underneath of you at any moment. For cash or RSP account TD is OK, but I would never invest on margin with them.

  37. m on April 1, 2009 at 12:19 pm

    You have to convert base currency amounts to pay for stocks in other currencies. You cannot choose to settle in another currency, and if you are in Canada, your base currency is C$ so get your calculator out to figure out exactly how much US you will need to settle a trade of us stox.

    On the – side, I got forced liquidation of my sole position in my account (not using it much rigtht now, paying the indecent $10 a month), although trade was settled and no margin being used. The explanation was BS. Fortunately, the stock then proceeded to lose another 50%, but I was in cash.

    Can someone explain the logic here. You buy 1 stock for 5K, no margin used, cash used. Then it is worth 2500 (-50%) and they liquidate stating that you don’t have enough equity to support the excess liquidity or something like that.

    I am mistaken here?

  38. FrugalTrader on April 1, 2009 at 1:35 pm

    m, it sounds like you were on margin. Do you have a CAD account and bought a USD stock without converting to USD first?

  39. JB on April 13, 2009 at 1:58 pm

    Hi – was thinking of opening an account to strictly trade stocks on foreign markets, like Australia and London Stock Exchange (Questrade charges $150/trade for the order size I want). I do not trade on margin – cash only. With Questrade my LSE order, once filled, is converted to CAD at the exchange rate of the day and then settled, but others on this forum seem to imply that with Interactive Brokers they would actually treat a similar trade (buying UK stocks) as purchasing on margin and charge me interest? Is that correct?

    If this is true, does anyone have another suggestion of a web broker that Canadians can access who won’t charge an arm and a leg to access foreign stock markets? (and who could even provide direct access – I think IB will let you, but Questrade needs me to call them to put in those trades)

  40. Tom on April 22, 2009 at 2:42 pm

    Yes, but only if you carry a negative GBP balance.

    There is no automatic currency conversion on IB. If you buy an LSE stock, but have no GBP, then you will end up with a negative GBP cash balance, on which you will be charged interest. It is *your* responsibility to make a forex trade to buy GBP with CAD, so that your GBP cash balance goes above zero.

    The base currency on your account is for accounting purposes only. You can keep your cash in any currency you want. You can have a CAD account and keep all of your cash in GBP, or half in GBP and half in AUD, or any combination you like. Since interest is tiered, you will earn less interest if you spread your money than if you keep it all in one currency. However, at current interest rates, this factor is less important than it once was.

  41. Steve on May 22, 2009 at 12:59 pm

    Excuse my language, but my current broker (RBC Direct Investing) is a total d-bag. Besides insulting me by opening my account with my name misspelled, shorting leveraged ETFs costs a leg and an arm and quite possibly a head if I stay with them.

    As far as I understand, to short a security at RBC, your order is routed to the loan desk which verifies the current inventory and then fills or rejects your order. The lead time is usually 4-5 minutes. I had been accustomed to a success rate of 1 out of 6 for the securities I had been shorting (which isn’t that bad per my standards).

    However, all so suddenly they begin rejecting all my orders and call to tell me “to stop trying to short the stocks” because “they aren’t elligible for shorting since they’re leveraged”. Really? Care to tell me why I hold a negative position in these ETFs as of now? “You just can’t”.

    Later, I am told they “aren’t elligible for shorting” because they’re “too expensive to loan”.

    Which brings me here – I am in the process of looking for a new broker. I don’t care too much about fees – for the size of my account, I’m willing to pay $30 per trade if it means shorting leveraged ETFs without being rejected 5 times out of 6 and lead times under 4 minutes.

    I noticed IB has a nice section of elligible securities for shorting (the ETFs I’m eyeing are all there) and even shows the available inventory! That’s already a huge plus for me. I’m just wondering how successful people have been at shorting leveraged ETFs. Are orders immediate? Does IB need to do a custom check of the available inventory?

    I don’t mind the small glitches with EFTs, or the lack of user-friendliness of their interface. I could do without the real time data (I use Google finance) and I already have my own spreadsheet setup to update my own portfolio value and log everything every 5 minutes. The customer service drawback is a bit of a downer but I should know what I’m doing.

    I already had an account with Trade Freedom and I wasn’t impressed with the trading platform. I never even figured out how to convert from CAD to USD. My only concern is that I run into the same difficulties with a poorly designed trading platform. Any comments?

  42. cannon_fodder on May 22, 2009 at 3:38 pm

    Steve,

    I have had very little experience with IB and shorting ETFs but it was very fast and no issues so far. But, that is one person’s very limited experience.

  43. Kirk Enston on June 17, 2009 at 3:22 pm

    I’m considering opening IB account to trade S&P e-mini futures, crude oil futures and maybe also DAX futures on Eurex, mostly during N. American overnight hours. I have account with Scotia iTrade (AxisPro platform), no complaints so far, but I keep missing lots of opportunities because of overnight gaps.

    Has anyone had any experience trading those instruments with IB. For some strange reason there are no brokers in Canada that offer futures trading. TradeFreedom dropped futures in 2008 and more and more US brokers without Canadian office get scared of our regulators and ask Canadian residents to close accounts, like Transact did last year.

    Are there any better choices than IB, as it seems to be a mixed bag:

    1) TWS is Java based, archaic technology.

    2) Opening a new account takes a few weeks instead of 2-3 days.

    3) Electronic Fund Transfers between IB and Canadian bank account take five business days compared to one day with Scotia iTrade or TDW.

    4) They apply US rules to residents from other countries, like “pattern day trader rule” ($25,000 minimum to day trade stocks).

  44. Kirk Enston on June 17, 2009 at 4:30 pm

    I’ve just done some google search and picked up two little known futures brokers operating in Canada:

    1) Union Securities Ltd.

    http://www.unionsecuritiescommodityfutures.com/

    This is a Canadian company, but there are two problems:

    a) no trading platform is mentioned on the website
    b) I couldn’t set them up as a “payee” on my Royal Bank account page

    2) MF Global Canada Co

    http://www.mfglobal.ca/index.html

    This seems to be a British company with global presence and so far it looks better than IB:

    a) there is a choice of Windows desktop trading platforms

    b) it can be setup as as “payee” with Royal Bank, so fund transfers should take one day and there is no need to authorize them to look into my bank account.

    Does anyone have any experience with MF Global?

  45. […] FrugalTrader wrote an interesting post today onInteractive <b>Brokers</b> Review | Million Dollar JourneyHere’s a quick excerpt […]

  46. alan on July 14, 2009 at 1:32 pm

    Worst company that I have ever dealt with! They have so many problems that I would have to spend hours enumerating them. But just to list a few of their major flaws, 1. They take you out of positions for margin calls as low as $1.00 without giving you anytime to send in money. 2. They don not integrate their statements and accounts so you have to log in twice. 3. If their system is down, you can only get out of positions with a market order and you cannot put on a new position, no limit orders period! 4. They don’t care about any of their problems or mistakes. 5. Everything that goes wrong is the traders fault. If you want any refund you have to arbitrate. Should i go on….

  47. […] stock trading and currency exchange.  While most discount brokers charge 1%-1.5% per exchange, Interactive Brokers charges: 1 basis point (0.01%) + $2.50 […]

  48. Lena on October 10, 2009 at 7:52 pm

    Are brokerage fees tax deductable?

  49. Greg Coffey on October 23, 2009 at 4:48 pm

    To see what you should know about IB and their current level or service, I recommend reading this review from a 9 year client http://www.bestchartsoftware.com/interactivebrokers.php

  50. Josh on December 5, 2009 at 4:08 am

    think of IB like the ‘soup nazi’ from seinfeld.

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