Interactive brokers offer online trading services for financial products. Factors to consider when choosing a broker include order accuracy and speed, software adequacy, fees, data access, support, and currency considerations.
The term interactive broker refers to a broker of financial products such as stocks, commodity futures or forex trading who interacts with clients via the Internet. Many different financial firms offer interactive brokerage services through their websites. The ordering process, data rates and fees, as well as support services differ among the companies that offer these services.
A prospective client may want to consider several points before choosing a specific online brokerage service. The first question should be whether orders are sent quickly and accurately to the relevant exchange. Most online brokers use a software system through which the client places his order, which eliminates the broker’s mistake. The actual rate at which the order is submitted can only be judged when the trader submits an order and looks at his market depth screen, which tracks general interest in a particular product at a specific price, to see that the number of bids or offers at the price that has submitted changes. A second question might be whether the software provided by the interactive broker is adequate for the traders needs and if not, the trader will need to find out if the broker has an interface available for the trader to use other software.
Commissions and data fees are always worth looking into because they can have a significant impact on a trader’s profit margin. Fees vary slightly and should be monitored carefully because some interactive brokers have layered multiple fees in a non-transparent manner. Some brokers have been known to charge for data streams, while other brokers will provide data streams for free. A prospective forex trader will want to investigate to see if it is better to use a paid broker or a spread based broker. Another item to check is if and when telephone access is available because the trader may need a contingency trading backup method if his internet connection goes down.
Help desk, technical support and banking support should be available both via the internet and by telephone for any interactive broker a trader is considering. Non-US traders may have language and currency considerations. If a trader is skilled enough to draw money monthly, he should inquire if Automated Clearing House (ACH) processing is available or if the brokerage will send paper checks in the mail. Wire transfers should be available, but are usually expensive unless the trader is transferring large amounts of money.
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