Interactive Brokers vs. Robinhood
If you are reading this article, you’re likely having trouble deciding whether IG Markets or Interactive Brokers is the better Forex trading platform for you. While both platforms generally provide positive user experiences, there are some essential differences to note.
In this Interactive Brokers vs. Robinhood review, we outline the highlights of each trading platform to help you make a more informed decision. We evaluate:
|Feature||Robinhood (visit site)||Interactive Brokers (visit site)|
|SIPC, SEC, FINRA|
Type of Broker:
|Market Maker||Market Maker|
U.S. Clients Allowed:
|$0||$10,000, $5,000 for an IRA|
Commissions / Spreads:
|Spread||Fixed, Volume Tiered|
Features and Platforms
Investors and traders seeking one of the best overall brokers will feel at home at Interactive Brokers. Formerly, this powerhouse served established traders only but opted to offer its competitive products and services to all traders. Its proprietary trading platform, which supports algorithmic trading, and the Investor’s Marketplace, home to 1,500+ services, create a distinct advantage. Robinhood principally counts on commission-free trading from its mobile app geared towards first-time millennial and GenZ traders. Two of its primary offers consist of fractional share dealing and access to IPOs, with limited educational content.
|Type of Platform:||Proprietary platform||Web-based, Other|
Guaranteed Stop Loss:
Guaranteed Limit Orders:
Interest on Margin:
Neither broker maintains a detailed asset list on their websites, but Interactive Brokers is home to one of the broadest choices of trading instruments versus all online brokers. Clients have access to 135 markets across 33 countries in 23 currencies, presenting investors and traders with almost unrivaled opportunities for in-depth portfolio diversification. Given its dominance in available markets, Interactive Brokers also caters to institutional clients, including hedge funds. Retail traders get access to the same products. Robinhood presents a narrow focus on popular assets often trending on social media and offers stocks, ETFs, IPOs, options, gold, and cryptocurrencies.
Typical Spreads and Fees
Committed traders benefit from the cost structure at Interactive Brokers, presenting one of the best pricing environments. While Forex traders get a minimum spread of 0.1 pips for a commission of $2.00 per order or $3.00 per lot, equity traders pay as little as 0.05% per trade plus mark-ups. It is up to 50% cheaper than the industry standard and makes a notable difference in profitability. Financing costs for margin trading commence with a benchmark rate of 2.50%. Robinhood presents commission-free trading, but spreads are higher, creating higher final trading costs while pricing transparency is absent.
Security and Trust
Interactive Brokers is a publicly listed company on the NASDAQ stock market in the US. Its primary regulators are the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), with well-known international regulators governing other subsidiaries. Both brokers are members of the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization operating with SEC oversight. Clients remain protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per net equity or $250,000 for cash claims at Interactive Brokers and Robinhood. Client deposits remain segregated at both, but Robinhood engages in dishonest business practices.
Robinhood vs Interactive Brokers – Verdict
The proprietary trading platform at Interactive Brokers is highly competitive, with extensive support for algorithmic and API trading. It ensures clients manage their portfolios with an edge. Interactive also offers managed portfolios and maintains one of the broadest asset selections available industry wide. Complementing the in-depth choice of trading instruments is quality research and one of the best educational programs. The Investor’s Marketplace at Interactive Brokers features more than 1,500 services. It adds to excellent trading conditions, which most competitors are unable to match. Interactive Brokers also shines with its commission-based pricing environment, cheaper than the commission-free offer available at Robinhood. Millennial and GenZ traders who prefer using their mobile phones to buy trending names on social media may prefer the simplicity at Robinhood, despite worse trading conditions. Robinhood also does not always act in the best interest of its young traders and has been known to deploy questionable business practices.
Is Robinhood better than a broker?
Robinhood is unable to compete with well-established brokers. It enjoys popularity among younger traders who prefer to buy assets their peers accumulate, but Robinhood does not have a product portfolio catering to committed investors or traders.
Can I trust Interactive Brokers?
Interactive Brokers ranks among the most trusted brokers as a publicly listed company in the US and is fully compliant with numerous regulators globally.
Why is Interactive Brokers so cheap?
Interactive Brokers benefits from scale and can keep trading costs low, creating a distinct competitive advantage.
What is better than Interactive Brokers?
Interactive Brokers remains one of the best overall brokers with few competitors. They consist of other market-leading brokers like IG Markets and tier-1 investment banks.
How much money do you need to open an Interactive Brokers account?
Interactive Brokers eliminated its minimum deposit, except for margin trading, which requires $2,000.