Interactive Brokers: how to open an account and get started

Interactive Brokers opens accounts for residents of most countries and gives access to exchanges worldwide. Its interface is complex, but a long-term investor needs only five actions.

What to prepare

• A passport or another identity document.
• Proof of address — a bank statement or utility bill in your name, no older than a few months.
• The tax number of the country you live in.
• A bank account in your name. You cannot fund from someone else's account: such a transfer is returned.

Step 1. The application

You apply on the broker's website; it takes about half an hour. It asks about income, savings and experience — a regulatory requirement, not an exam. Answer honestly: the answers determine which instruments you get access to.

• Account type — individual.
• “Cash” or “Margin”. A beginner needs “Cash”: you buy only with your own money. “Margin” lets you trade on borrowed money — a long-term investor does not need it.
• Base currency — the one you want totals shown in. You can buy securities in any currency regardless.

At the end you fill in a tax form for non-Americans (W-8BEN). It confirms you are not a US tax resident. It affects how much tax is withheld from dividends of US companies.

Step 2. Funding

The account is funded by bank transfer. In the client portal you create a deposit notification and get the bank details; in the payment reference you put your broker account number.

• Ask your bank about the international transfer fee and timing — it is the main cost.
• Send a small amount the first time and make sure it arrives.
• Fewer, larger transfers cost less than frequent small ones.

Step 3. Currency exchange

If you sent one currency and the security trades in another, the money has to be exchanged. At the broker this is an ordinary trade: you “buy” the currency you need with your own. The rate is close to the market rate and the fee is small — noticeably better than exchanging at a bank.

Step 4. Your first purchase

1. Find the security by ticker and check the exchange and currency: the same fund can trade on several exchanges.
2. Choose a “Limit” order and set the highest price you are willing to pay. A “Market” order fills at any price — at a bad moment it can be worse than expected.
3. Enter the quantity and submit. Trade during the main exchange's hours.

Step 5. Order for years ahead

• Turn on two-factor protection in the broker's app.
• Download the account statement once a year — you will need it for taxes in your country.
• Dividends arrive as cash. To keep them working, reinvest them or choose funds that do it themselves.

Common mistakes

• A “Margin” account without need. It is easy to accidentally buy more than you have and pay interest.
• A transfer from someone else's account or card. It will not be accepted.
• Buying US funds when you do not live in the US. For non-Americans European funds are often the better deal — see the UCITS guide.
• Subscribing to paid market data. A long-term investor does not need it.

Checklist

• Confirmed that the broker opens accounts for residents of your country.
• Account type is “Cash”, base currency chosen.
• Tax form completed.
• A trial transfer has arrived.
• First purchase made with a “Limit” order.
• Two-factor protection is on.

This article is educational and is not investment or tax advice or an advertisement for a broker. Terms and fees change — check them on the broker's website.