If you’re interested in trading stocks online, you will want to know about Interactive Brokers and Robinhood. Here you will find a detailed evaluation of these two popular stock trading platforms.
At a Glance
At a glance, you might think that Interactive Brokers and Robinhood are extremely similar and at a glance, you might be right. That said, there are definitely some major differences between the two. These differences become more apparent when you take a close look at these platforms and weigh the pros and cons of each.
When weighing the pros and cons associated with Robinhood and Interactive Brokers, it would appear that Interactive Brokers has the lion’s share of the pros. This review will walk you through the pros and cons of each platform ending with a summarized analysis of which one is better and why.
Interactive Brokers vs. Robinhood, A Detailed Comparison
Now that you know more about Robinhood and Interactive Brokers it’s time to take an even closer look at these platforms and compare them in detail. The platform that you choose for trading stocks online has a significant impact on the quality of your trading experience.
While the online trading platform you work with might not be able to point out the next hot stock like Google, factors like the quality of customer service, research tools, and pricing structure make a big difference.
For example, would you rather pay an arm and a leg in fees to use an online stock trading platform with poor customer service? Or would you rather use an online stock trading platform with prompt, knowledgeable customer service and higher fees?
Conversely, would it be better to use an online stock trading platform that has no fees, but comes with practically nothing in the way of research tools or a platform with higher fees and abundant research tools?
Decisions like this are very subjective, meaning it depends on what kind of trader you are. More experienced traders may not be as concerned about the availability of research tools while beginners might find the availability of research tools more important.
Customer Service Comparison
When it comes to customer service, Interactive Brokers is the clear winner. Robinhood offers very little in the way of customer service or support. In fact, getting a hold of anyone at Robinhood can take a very long time.
Some traders just don’t have the kind of time it takes to wait around for a response from one of Robinhood’s representatives. That said, their decidedly minimalist approach to customer support makes sense when you consider the fact that their services are free.
Everyone knows that the most effective way to offer free services is to limit the value of those services as much as possible, which is exactly what Robinhood has been doing. In the end, you get what you pay for, and if you’re not paying anything for it, you shouldn’t be too surprised if it falls short of your expectations.
On the other hand, Interactive Brokers offers two layers of customer support. First of all, you can reach one of Interactive Broker’s knowledgeable representatives via email 24/7. Alternatively, phone and live chat support is provided 24/5.
Although Interactive Brokers operates exclusively online and lacks a physical office, they maintain a full-time customer support team which makes this platform a great choice for traders that want someone that they can reach out to.
When it comes to the debate of Interactive Brokers vs. Robinhood, Interactive Brokers definitely gets the win for customer service.
For most traders, pricing is going to be a big factor in deciding which online stock trading platform to use.
Here’s an overview of Interactive Broker’s pricing system. This information will help you make a smart decision when choosing an online stock trading platform.
|Number of Contracts||Tiered Commission, Contract|
|1,001 – 10,000||$0.65|
|10,001 – 20,000||$.45|
|Volume per month||The commission, X Value of the trade|
|<= $1,000,000,000||0.2 basis point|
|$1,000,000,001 – 2,000,000,000||0.15 basis point|
|$2,000,000,001 – 5,000,000,000||0.1 basis point|
|$5,000,000,000 <||0.08 basis point|
Of course, you can look into more details to find pricing information on options, margin rates, Warrants, ETFs, and Stocks, etc. The information above should give you plenty of insight into Interactive Broker’s pricing system.
Although Interactive Broker’s pricing system may look somewhat complex, it’s primarily based on trading volumes. The more you use the platform and the more trades you make, the more you will get used to it.
Compared to Interactive Brokers, Robinhood’s pricing is very simple in that it is free to use. This includes commissions. The fact that Robinhood is completely free with no commissions, no fees, no miscellaneous charges, or anything of the sort has done much to improve the platform’s popularity.
While Robinhood might be a good option for beginners who can’t afford to lose money to fees, seasoned traders find that Interactive Broker’s fees are worth every penny. Even if you are a beginner, Interactive Brokers is a solid choice. All in all, it’s just a better value.
Comparing Research Tools
No discussion of Robinhood vs. Interactive Brokers would be complete without a comparison of their research tools. Many investors prefer to have a variety of research tools at their fingertips when using online stock trading platforms.
We can tell you right off the bat, if you value research tools, Interactive Brokers is the one for you. Compared to Interactive Brokers, Robinhood just doesn’t measure up in terms of research tools. Sure they have a library of basic information on investing, but that’s about it.
If you’re looking for an online stock trading platform that can provide you with a wealth of investment research tools, you will want to check out Interactive Brokers.
In addition to educational videos, Interactive Brokers features desktop software with scanners for stocks, bonds, and more. The availability and quality of research tools on an online stock trading platform is part of what separates legitimate trading sites from a dressed-up version of a casino.
Robinhood vs. Interactive Brokers on Security
Another common concern that many investors have, is security. When you call up your broker to make a trade, you can be fairly certain that your information is perfectly secure, especially when you are trading with a large organization. Some folks have reservations about trading online because they simply don’t trust online trading platforms to keep their information secure.
Security happens to be one of the categories where Robinhood performs just as well as Interactive Brokers. For starters, both firms are based in the United States which tends to give investors a great deal of reassurance.
As U.S.-based stock trading platforms, they both adhere to strict and rigorous regulations as well as SEC regulations. Robinhood and Interactive Brokers are both FINRA/SIPC/FDIC members. The only major difference here is that Interactive Brokers features both SIPC and FDIC insurance while Robinhood only has SIPC insurance.
The Winner Is… Interactive Brokers! Here’s Why
At this point, you might have guessed that Interactive Brokers is the winner. If so, you would be spot on! After carefully examining both Interactive Brokers, and Robinhood we have decided that the former is the clear winner here.
If you are a beginner, Robinhood might suit your needs while you get your feet wet, but once you have made the transition into becoming a serious trader, Interactive Brokers will be your weapon of choice.
So why did Interactive Brokers win as opposed to Robinhood? In the end, it all came down to comparing which platform performed better in each category. Interactive Brokers performs better overall and offers traders more value.
The biggest thing that Robinhood has going for it is the fact that it is free. The complete and utter lack of fees, charges, and the like is Robinhood’s greatest strength. The biggest weakness, however, is the fact that in order to be completely free, Robinhood simply cannot offer the same breadth of features and services that Interactive Brokers brings to the table.
They measured up pretty closely in terms of security and ease-of-use, but when it comes to things like customer support, research tools, and overall value, Interactive Brokers leaves Robinhood in the dust.
We are not saying that Robinhood is not worth using. On the contrary, Robinhood can be very beneficial to new traders, however, Interactive Brokers is better.
The takeaway here is that with Robinhood, you are on your own. The platform is free to use but does not provide traders with much in the way of education, tools, or support whereas Interactive Brokers has all of these things in spades. This, of course, is why Interactive Brokers is the winner.
If you are ready to start trading stocks online, you are ready to sign up with Interactive Brokers, check it out and open an account today!