Interactive Brokers (IBKR) Guide

The case for IBKR rests on three things: access to almost every relevant exchange in the world, genuinely low commissions on the products a long-term investor uses, and the ability to hold and convert currencies at institutional spreads rather than the 1-3% a retail bank charges. If you buy US, European and Asian listings from one account, no mainstream competitor comes close on total cost.

It is the wrong choice if you want a bank-like experience with a single button and a phone number. Support is functional but slow, the platform exposes complexity you must decide to ignore, and tax documentation is delivered as raw activity statements rather than a country-specific pre-filled form. If those things matter more to you than cost, a local broker may be the better answer.

During onboarding you pick an account type, a base currency and a margin setting. All three are changeable later, but two of them create friction, so decide deliberately.

Base currency is not where your money must sit; it is the currency your statements, performance and margin are expressed in. Choose the currency you actually spend, because that is the yardstick against which your real return is measured. Holding USD assets while reporting in EUR is normal and correct: the currency exposure exists whatever the base currency says.

The cash versus margin decision is about capability, not intention. A margin account allows you to trade a currency pair and settle a purchase before a conversion clears, and it allows short-term overdrafts on settlement mismatches. You do not have to borrow to hold one. A cash account will block ordinary operations that a long-term investor performs monthly.

Never let the platform auto-convert your deposit at the moment of purchase if you can convert deliberately instead. Deposit in your home currency, then convert with a currency order on the IDEALPRO venue: choose the pair, enter the amount, and use a limit order at or near the mid price. The commission is a few dollars on a five-figure conversion, versus tens or hundreds through implicit spreads.

The mechanical detail that confuses everybody: converting EUR to USD means buying USD.EUR or selling EUR.USD depending on how the pair is quoted, and the platform will show the pair in the market convention rather than the direction you had in mind. Read the confirmation screen and check which currency ends up positive.

Conversions settle in two business days. Because a margin account tolerates the mismatch, you can buy the same day and let the settlement catch up. In a cash account you wait.

Market orders are for liquid large caps in the middle of the session and nothing else. In anything thinner, the spread you cross is a permanent cost that no amount of research recovers.

Limit orders are the default for a long-term investor. Set the price you are willing to pay, mark the order good-til-cancelled, and let the market come to you. A limit order that does not fill has cost you nothing, whereas a bad fill compounds against you for the entire holding period.

Two more are worth knowing. A market-on-close order is useful when you want the official closing print, for example to match an index rebalance. A stop order is a risk instruction, not an investment one: it converts a temporary decline into a realised loss, so use it only where you have a defined trading reason.

Even if you never borrow, understand the margin panel, because it is where the platform tells you how close you are to a forced sale. The number to watch is excess liquidity, not buying power. Excess liquidity is the cushion between your portfolio value and the point at which the system begins liquidating positions automatically, in whatever order suits its risk model rather than yours.

Liquidations are automated and unsentimental: there is no call, no grace period and no discretion. If you use any leverage at all, run a stress test in your head at a 40% portfolio decline and confirm the cushion survives it.

Related trap: an unconverted negative cash balance in one currency is a margin loan, accruing interest, even when the account overall is in profit. Sweep those balances deliberately.

Once a year you will need an activity statement and a dividend report, and once a year you will discover that they are easier to produce in January than in June. Configure a custom annual statement that includes trades, dividends, withholding tax, interest and currency conversions, and export it as CSV as well as PDF.

The dividend report is the important one: it separates gross dividend, withholding tax and net amount per position and per country, which is the exact breakdown a foreign tax credit claim requires. Keep the yearly files somewhere permanent; brokers do not keep them forever.

Turn on two-factor authentication, and use the app-based method rather than SMS. Set a withdrawal whitelist so funds can only leave to bank accounts you have pre-approved. Both take five minutes and remove the two most common ways retail accounts are drained.

Then simplify the interface. Build one watchlist, one portfolio view showing position, average cost, currency and unrealised return, and ignore everything else. The platform is built for traders; the discipline of a long-term investor is to leave nine tenths of it untouched.