As an individual who has been investing for over five years, I am constantly looking for the best options when it comes to investment platforms.
Over the years, the number of options has grown substantially, and long gone are the days when the only choices were to invest through trading platforms of the big six banks.
This increase in competition has driven commissions down but has also made the process of selecting a platform more difficult.
Currently, I am using the Interactive Brokers Canada platform. I believe that their combination of low fees, great research tools, and choice of products gives me the most flexibility in terms of reaching my investing goals.
Fees and Pricing
|Stocks||Fixed rates: US equities $0.005/share – Min $1, Max 1% of trade value (USD)
Canadian equities $0.01/share – Min $1, Max 0.5% of trade value (CAD)
|Tiered: US equities – $0.0035 per share on first 300,000 shares (minimum of $0.35), down to $0.0005 for highest volume tier
Maximum of 1% of total trade value
Fixed: $0.65 per contract – Min $1 (USD)
Fees vary from $0.15 to $1 per contract depending on volume and type (USD)
|ETFs||A limited set of ETFs listed on U.S markets can be traded for no commissions. All others follow the same structure as stocks listed above.||Same pricing for both tiered and fixed|
While originally catering towards high-frequency traders, Interactive Brokers has shifted its strategy to accommodate the needs of retail investors as well.
As this pricing model shows, commissions on trading can reach as low as 35 cents a trade.
This is one of the lowest amongst Canadian brokerage platforms.
The ability to trade both U.S. and Canadian-based securities for equally low fees is unmatched in Canada.
For example, Wealthsimple Trade offers commission-free trading for Canadian stocks but charges a 1.5% currency conversion fee for purchasing U.S. stocks.
Accessing U.S. markets is extremely important for me as it is for many other traders.
In this regard, Interactive Brokers is simply one of the best choices.
Low commissions on trading, particularly for high-frequency traders as well as those with high account balances.
Lots of options when it comes to the type of investment products (stocks, options, bonds, warrants, futures, forex, etc.)
Accounts can hold most major currencies, allowing for access and exposure to different markets around the world.
The trading platform is less user-friendly than the competition.
It may take some time for new users to adjust and understand all the features.
With both fixed and tiered trading options that include multiple pricing structures, understanding the fees you are charged on trades may be confusing at first.
Interactive Brokers Platform Features
In my experience, Interactive Brokers is a versatile platform that has dozens of features to meet the needs of a wide range of investors.
Whether for first-time investors or seasoned veterans, I found that Interactive Brokers was a great platform to use.
Here are some of the top features that I felt make Interactive Brokers stand out in a crowded market.
One of the biggest upsides to Interactive Brokers is the ability to open a wide range of account types.
While some platforms are limited to only one or two types, Interactive Brokers boasts a diverse range of options, including Tax-Free Savings Account (TSFA), Registered Retirement Savings Plan (RRSP), Spousal RRSP, Margin, and various Trust accounts.
When I started trading, I only used TFSA and RRSP as these were the only two available on other platforms.
Moving over to Interactive Brokers has opened up more choices for me, and keeping these options open will allow me to change my investing strategy as necessary.
While beginner investors may not need such a wide range of options, it is always beneficial to have them available should you need to access them.
Another advantage Interactive Brokers holds over its competition is the ability to trade an extensive variety of securities.
For most traders, the most important feature would be access to U.S. and Canadian markets.
The ability to trade stocks on the major exchanges in these two countries is standard and available on just about every platform in Canada.
Where Interactive Brokers sets itself apart is its ability to gain exposure to international markets.
From Europe to Asia, Interactive Brokers gives users the ability to buy, sell, and hold stocks, ETFs, warrants, and options from companies around the world.
Other notable securities that can be traded include precious metals like gold as well as fixed-income products.
This range of tradeable securities means that those with lower risk tolerances that do not wish to invest in the stock market still have other options within the Interactive Broker platform.
One of the most common complaints about Interactive Brokers is the user experience.
Generally, new users may find the platform overly complicated.
Packed full of features, navigating through either the web or mobile application requires time and patience.
There are so many options to sort through, and understanding what each one does can require a great deal of effort.
In the end, the learning curve is well worth it, as the features are all great tools to help investors gain more information and make more informed choices regarding their investment decisions.
Setting up accounts is another area where Interactive Brokers lags behind their competition.
While users can get set up on other platforms with just a few simple clicks, Interactive Brokers generally requires more steps than other platforms.
Initial verification of identity can take a while, and there are many posts online claiming that a commissioner of oaths or guarantor was necessary in order to verify and sign off on your ID.
While this problem did not happen to me, it is something to keep in mind for those who are eager to start trading in order to avoid any unexpected roadblocks
Research Tools / Data Streams
The platform had a decent number of research tools at the disposal of users.
Several tools can be used to scan charts and perform technical analysis.
The platform also has partnerships with major research firms like Morningstar that provide users with stock related news and information.
I found this feature great for conducting research and gaining a better understanding of the companies I was interested in investing in.
For a monthly subscription fee, users can gain access to a variety of market data tools.
Prices for subscriptions to real-time streaming market data vary, and users can pick and choose which markets they would like to receive data for.
These subscription fees can be waived once a certain amount of commission is paid each month.
Frequently Asked Questions
- Is Interactive Brokers trustworthy?
Like most trading platforms in Canada, Interactive Brokers has several measures in place to ensure consumer confidence and safety. Interactive Brokers is part of both the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF.) These organizations ensure that consumers and their assets are insured and protected in the event of bankruptcy or other unforeseen circumstances. Membership in these organizations means that Interactive Broker customers are provided with an equal level of protection as those who are using the trading platforms of any of the big six banks.
- Can I buy Canadian stocks on Interactive Brokers?
Yes. In addition to allowing access to worldwide markets, Interactive Brokers also allows Canadian investors to buy and sell most Canadian stocks. Specifically, stocks listed in any of the following Canadian exchanges are available to trade on the Interactive Brokers platform:
- Toronto Stock Exchange (TSX)
- TSX Venture
- Canadian Securities Exchange (CSE)
- Alpha ATS
- Aequitas NEO
- Aequitas NEO Lit
- OMEGA ATS
- Why is Interactive Brokers Cheaper Than the Big 5 Banks?
In general, discount brokerages like Interactive Brokers offer lower fees and commissions than the Big 5 Banks. While the banks have long dominated in Canada, discount brokerages have been able to disrupt the market by offering lower costs.
Several reasons can explain why Interactive Brokers is able to offer lower rates. With the internet changing the way we access financial services, one reason could be that discount brokerages are usually online-only companies, and as a result, are able to lower their own costs due to not having any physical locations. These lower operational costs allow them to pass on savings to consumers.
Another explanation could be that some people still trust banks more and prefer to pay higher fees to stay with their financial institution.