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Interactive Brokers Reports Record Earnings & Expands Markets at Trader’s Narrative

interactive brokers logo fullToday, most financial companies are an endangered species. But other brokers and investment banks may be struggling and getting government bailout money to spend on bonuses, Interactive Brokers (IBKR) goes from strength to strength.

They recently reported earnings for 2008 and for the first time they broke the billion dollar mark for income (before taxes and minority interests). When you consider this was done on revenues of only $1.85 billion, you get an idea of how tight a ship they run.

I’ve mentioned before that they are one of my favorite brokers and arguably the best broker out there for the non-proprietary trader. As a customer, it’s good to know that your broker is on solid financial footing - one less thing to worry about.

If you trade with them you soon get to love their SMART routing which gets you better prices at surprising frequency. Based on independent analysis by the Transaction Auditing Group, IB’s SMART routing beats the competition. You can get the full details here.

As well, they are continuing to roll out new products and expand their already impressive market reach:

  • Korean Kospi 200 Futures and Index Options (for US resident customers) soon
  • National Stock Exchange of India (NSE) equity - initially to residents of India but eventually to others
  • …to be then followed by NSE index futures trading
  • addition of American Century no-load mutual funds

You could argue that IB is becoming a quasi-prime broker. They are a one stop shop for equities, derivatives (options, as well as futures) in more than a dozen international stock markets. And they have forex to boot. Add to that mutual funds marketplace they implemented in recent years and you’ve got a top-notch brokerage firm.

But that doesn’t mean they are the perfect fit for you. I think they are definitely worth a look if you are an active trader or have a large portfolio. But you should do your own due diligence to find a broker that you’re happy with.

Here’s a chart of Interactive Broker’s (IBKR) stock price since their IPO:

ibkr reports 2008 record earnings but languishes

As you can see from the chart, fundamentals count… but not really ;-)

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11 Responses to “Interactive Brokers Reports Record Earnings & Expands Markets”  

  1. 1 pej

    yep, IB is my broker, and I think they’re the best both in terms of platform and price

  2. 2 afrey

    Interesting article. Check out this related story about media hype myths at Fisher Investments MarketMinder

  3. 3 alpha trading

    I also use IB and am very happy. They have a great trading platform (maybe not up to professional standard but pretty damn close!), cheap commission, and access to markets all over the world. Put it this way, a couple years ago I was using CIBC and I called them and asked if I could trade something on the London Stock exchange. They almost laughed and then said they probably couldn’t do that and even if they could I wouldn’t want to pay the commission because it would be so much. With IB its no problem at all.

    Only thing i don’t like is they are making it hard for the average IA to compete!!

  4. 4 Mike

    I have and account with IB traded with them for years never made any money at all. There trader will trade against you. I traded YM e mini on simulation was doing good as soon as real cash bend over hear it comes this is not a accident i have thousands of trades and I’m a expert in probabilty

    Trading has nothing to do with supply and demand

  5. 5 Patrick

    Mike: I have an acct at IB and I make money. What the heck do you mean that “their trader will trade against you”?
    Please let me know. I want to know if there’s anything that I need to watch out for.

  6. 6 Babak

    Patrick, this is a myth that still lingers from the olden days. IB has a massive market making operation but it is separate from its brokerage business. The sort of charge that Mike has alleged is very serious and there is no way that IB would be able to get away with it.

  7. 7 Patrick

    Babak: thx very much for that reply.
    On another note, you said that the SMART routing gets you better prices at “suprising frequency”. What exchange do you usually trade on? Nasdaq? I usually trade on the TSX, and I rarely get execution on the SMART.

  8. 8 Babak

    Patrick, yeah Nasdaq usually gets more smart price improvements, at least for me.

  9. 9 Patrick

    AH ok, the Nasdaq. Thx.

  10. 10 ryan

    IB traded against me today just to pop my stop loss…there was no downward movement except with their market maker and only long enough to pop my stop loss and climb back to the 15 SMA that it was $.40 below

  11. 11 Dave

    No IB trades against you. Even an industry rep told me that and I have experienced it first hand. Day trading margin is a suckers game with them because they absolutely can keep the market most days against you until you have to close out your position then magically the market will rise as you expected. THat’s happened over and over and over with them way beyond what would be considered random. And I can’t tell you how many tops I’ve picked the wrong way — usually to the tick. LOL. But when paper trading I do exceptionally well. Or when picking bottoms (which I could do regularly on paper), you won’t get it UNLESS you’re negative for the day. And then how about those days when the you buy lower, market keeps going agiainst you, then stops, and comes back 2,3,4,5 times right to your entry but won’t past it. You get out and then as soon as you get out, it goes past. That one too has happened way more often than what would be considered random. Most people don’t understand what’s going on but someone experienced like myself does. They’re crooks. Absolutely. This sort of thing happens far to regularly to be of coincidence. If this happened once in awhile both ways, that would be random behavior and be acceptable. But it happens far too regularly against you to be anything but a con. Think about - they started their market making operation because most people without even trying lose money and they want the other side of that. If 80% of the people lose money, doesn’t it make sense to take the other side of that 80%? And for people with large accounts — you can make them lose regardless and keep their cash.

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