Thinkorswim vs. Interactive Brokers
Two of the most popular online brokers out there today are Thinkorswim and Interactive Brokers, and thus traders are always looking to compare the two.
You can go through commission rates and charges all you want, but choosing between these two guys is actually pretty easy, because they are very different.
Interactive Brokers is built for traders doing serious volumes. Their commission charges are rock bottom, perfect for those who execute dozens or even hundreds of trades a day. However, Interactive Brokers is not known for having the most reliable customer service. So if you’re looking for handholding and the ability to reach a fellow human at a moment’s notice, look elsewhere.
Thinkorswim is pretty much the opposite. Thinkorswim is best known for its options-trading capabilities, but the company’s biggest strength is actually customer service. They are incredibly responsive either on the phone or online via chat (my preferred contact method). They don’t have the cheapest commissions in the industry, but they’re far from worst.
So what do you need? Cheap price, maximum speed, and less service, or moderately priced and stellar service. Go for Interactive Brokers if price is your #1 priority, and Thinkorswim if you’re cool with simply okay pricing but awesome service.
Here’s a simplified (and not guaranteed to be perfect!) breakdown of each broker’s commission rates:
Thinkorswim options commissions were calculated using the company’s standard rate plan, while stock commissions calculated using per-share pricing. The company also has flat pricing of $9.95 per stock trade if you wish to use that. In addition, the company will match the commission plans of most online brokers.
Interactive Brokers’ stock commission are calculated using the bundled option. Option commissions are calculated with the assumption they are smart-routed, carry a premium equal to or above 10 cents, and in an account trading less than 10,000 contracts per month. The pricing gets cheaper as your volume increases.
Please keep in mind that most discount and online brokers’ commission and margin rates are negotiable for traders who move big volume. If you make hundreds or thousands of trades a month, you should be able to negotiate a sweet deal for yourself.
Here’s a table comparing commission rates between the two. I know it looks like crap, but I’ll try to spruce it up a bit if I can find the right Wordpress plugin:
| Thinkorswim* | Interactive Brokers | |
| Stock Commissions | ||
| 100 shares | $5 | $1 |
| 500 shares | $7.50 | $2.50 |
| 1,000 shares | $15 | $5 |
| 5,000 shares | $75 | $25 |
| Options Commissions | ||
| 1 contract | $2.95 | $1 |
| 5 contracts | $14.75 | $3.50 |
| 20 contracts | $39.95 | $14 |
| 50 contracts | $84.95 | $35 |
| 100 contracts | $159.95 | $35 |
| 1,000 contracts | $1,509.95 | $70 |
Extras:
Thinkorswim Offers the Following Goodies:
- Account transfer rebate to cover ACAT fees up to $100
- High-Speed Internet Rebate for those who make 40+ trades or 4 million RT in currencies per month
- 3 Free Mutual Fund Trades Per Month
- Free Stuffed Monkey
Interactive Brokers Offers the Following Goodies