Interactive Brokers Review
Well, trade long anyway, shorts have crazy margin requirements. If you are looking to buy long contracts, however, their 50% margin requirement is the best in the market.
$5 on CBOE, $10 on CMETrading Fees
- Bank Wire, ACH, BPay, EFT, Check
- USD, EUR, GBP, AUD, CAD
- 50% margin requirement is the best in the market
- Lowest fees in the market – aside from bitcoin contracts, those are sort of high.
- The IB workstation has a cult-like following
- Short positions require massive margin requirements
- Fees are higher than the competition and you need to pay for live bitcoin futures prices
- Nobody really appreciates IB support
Interactive Brokers is one of the leading online brokerages for experienced traders and offers access to more international markets than any other platform online. The entire program is engineered to appeal to these experienced traders, with the advanced platform, the fee structure, and the account minimums all targeting that particular demographic. Every Interactive Brokers review you will read on the internet will stress that the product is not at all designed for beginning or even intermediate traders.
Some of the advantages and disadvantages, which we will run through in a minute, are irrelevant for bitcoin futures traders in particular. The $10k account minimum is not such a deterrent when the absolute minimum investment possible in the market is interactive broker’s 50% margin requirement. And of course, the per-share commission structure which is so favored by high-frequency traders simply is not relevant for bitcoin futures.
Of course, if you do plan to use interactive brokers, you best be ready for the trader workstation, the Moby Dick of online platforms, with people spending a lifetime on an obsessive quest to master it.
Bitcoin Futures at Interactive Brokers
First things first. Interactive Brokers offers Bitcoin Futures on both the CBOE and CME exchange, with the lowest margin requirement in the market – a still very high 50%.
|CME Bitcoin Futures||CBOE Bitcoin Futures|
|Index tracker||Bitstamp, GDAX, itbit, Kraken||Gemini|
|Trading hours||Mon 17:00 - Fri 16:00, CST||Sun 17:00- Fri 15:15 CST
|Price intervals||5 points||1 point|
|Position limit||1,000 contracts||5,000 contracts|
|Order types||Limit and stop limit only||Limit and stop limit only|
|Interactive Brokers Fee||$10||$5|
Live CBOE and CME quotes are available ONLY on a paid subscription basis.
Few things jump right out. If you are only planning to go long on bitcoin contracts great, you have a lower margin requirement here than elsewhere – but note that the minimum required to open an account is $10k. For those planning to go short, we have no idea what the deal is with the crazy margin going on here. It might be, in retrospect, that IB was concerned that large traders would manipulate the market by buying massive amounts of bitcoin pre-launch, shorting the futures markets, and then crashing the market by dumping all their bitcoin.
Note also that the fees are quite a bit higher than the competition – CME is running close to 700% higher than Tradestation’s market best fee of $1.50. I guess our point is – if you are interested in longing bitcoin futures only – then Interactive Brokers is a suitable choice despite higher fees, thanks to the lowest margin requirements amongst its direct competition.
The Interactive Brokers Platform
First thing’s first. Interactive Brokers provides the lowest fee schedule in the market, which is of utmost interest to anyone reading this, aside from bitcoin futures-only traders where the fees are sort of rubbish.
|Stocks: per share||.005||N/A||N/A||.01|
|Stocks: per trade||N/A||$6.95||$4.95-$6.95||$5|
|Options: per contract||$0.70||$0.75||$0.75||$0.50|
|Futures: per contract||$0.85||$2.25||$1.50||$1.50|
So it is not really close on the fees – which makes one wonder why bitcoin futures are priced so highly above the rest of the market, but we digress.
The Trader Workstation services a global clientele, and so the platform is directly connected to multiple global exchanges and offers tons and tons of international instruments – which is great if you trade the international markets, but the various similar symbols can get a bit overwhelming.
Trader Workstation has 60+ different order types, which blew my fragile little mind, as I am used to trading with just a few options on the standard bitcoin platforms. I compared this to the competition, and this is well more than offered anywhere else. There are about 150 different technical indicators, which is more than someone like me could ever hope to use, but substantially trails competitors like Ameritrade. Multiple trading platforms may be plugged in using Interactive Brokers robust API, and we found that many traders prefer trading Interactive Brokers via NinjaTrader which is compatible. Traders may easily monitor existing positions, or open new ones, using adequate mobile apps on iOS or Android devices.
A word on support
One ubiquitous sentiment on the internet is the weakness of Interactive Broker’s support. Beginner’s will find support standoffish and generally not very helpful. To be frank, if you are a beginner you should probably be using a different platform anyway, and support sort of amplifies this sentiment.
Might Look elsewhere if:
You are looking to trade USD-settled bitcoin futures.
Yes, this is sort of the reason we are reviewing interactive brokers to begin with, but it is clear to us that there are better options within this specific niche. The fees are the highest in this market, and shorters are required to hold substantially more account equity than the nominal position. The 50% margin on longs is better than can be found anywhere else, so if you are long only, perhaps it is worth going with Interactive Brokers – otherwise, try out have a look at the other options out there.
You are willing to collateralize and settle your bitcoin trades in bitcoin
You can get much better margins, much higher volumes, 24 hour markets with no shutdowns, and very low minimum trade amounts at bitmex or any of the bitcoin-only exchanges. Oh, and there are basically no fees if you use limit orders.
Interactive Brokers is an exceptional brokerage for professional traders that trade stocks, options, futures, CFDs or any other spot or derivative instrument following mainstream markets. If this describes you, give IB a try. It is not great for bitcoin futures at the moment – if this is what you are after, we recommend looking elsewhere.